Annual Report and Accounts 2022 ## LEADERS IN ## LIQUIDITY ## TP ICAP Group is a world-leading liquidity and data ## solutions specialist. ## We connect clients to liquidity, seamlessly and responsibly, ## across the world’s financial and commodities markets, through ## a full range of broking protocols. We also provide clients ## with the data and analytics they need to do business better. ## Our capacity to connect builds trust with clients, ## supports the communities in which we operate and equips ## us to anticipate, respond to, and drive change. It’s what ## makes TP ICAP a mainstay in the effective functioning of ## global markets, now and in the future. ## Our Purpose: ## To provide clients with access to global financial ## and commodities markets, improving price discovery, ## liquidity and distribution of data, through responsible ## and innovative solutions. ## Our Vision: ## To be the world’s most trusted, and innovative, liquidity ## and data solutions specialist. ## Our Mission: ## Through our people and technology, we connect clients ## to superior liquidity and data solutions. | Overview | 90 Board of Directors | | 153 Notes to the Consolidated Financial | | | --- | --- | --- | --- | --- | | IFC TP ICAP at a glance | 94 Corporate governance report | | | Statements | | 1 2022 highlights | 100 Report of the Nominations & | | | | | 4 Delivering on our purpose | | Governance Committee | Additional information | | | | 106 Report of the Audit Committee | | 210 TP ICAP Group plc Shareholder | | | Strategic report | 112 Report of the Risk Committee | | | Information | | 8 Chair’s statement | 116 Report of the Remuneration Committee | | 212 Group undertakings | | | 12 Chief Executive Officer’s review | 136 Directors’ report | | 218 Appendix – Alternative Performance | | | 18 Financial and operating review | 139 Statement of Directors’ responsibilities | | | Measures | | 32 Our market | | | 220 Glossary | | | 36 Our strategy and KPIs | Financial statements | | | | | 38 Our business model | 140 Independent Auditor’s Report to the | | | | | 40 Stakeholder engagement | | Members of TP ICAP Group plc | | | | 50 Sustainability | 147 Consolidated Income Statement | | | | | 71 Viability statement and going concern | 148 Consolidated Statement of | | | | | 72 Principal risks and uncertainties | | Comprehensive Income | | | 149 Consolidated Balance Sheet | Governance report | 150 Consolidated Statement of Changes in | | | --- | --- | --- | | 84 Compliance with the Code | | Equity | | 86 Board Chair’s governance letter | 152 Consolidated Cash Flow Statement | | 88 Governance at a glance ## 2022 highlights Overview ## REPORTED FINANCIAL HIGHLIGHTS | Revenue¹ | | Profit before tax | | | | | --- | --- | --- | --- | --- | --- | | | 1,865 | | 24 | | | | | 1,794 | | | | 129 | | | 1,833 | | | 93 | | | £2,115m | | | | | £113m | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Operating profit (EBIT) | | | | | Basic EPS | | | | | | | | | 163 | | | | | 13.2 | | | | 97 | | | | | 0.7 | | | | | | | | | 178 | | | | | 15.4 | | | | 142 | | | | | 10.7 | | | ## £163m 13.2p Operating profit (EBIT) margin 7.7 5.2 9.9 7.7 ## 7.7% 1 Revenue in 2021 includes Liquidnet post acquisition revenue from 23 March to 31 December of £159m. ## DIVIDEND | 7.9p | 12.4p +31% | 2x | | --- | --- | --- | | Final dividend of 7.9 pence per share | Total dividend for the year of 12.4 pence | Dividend policy targets dividend cover | | recommended for 2022, and payable to | per share (2021: 9.5p), an increase of 31%. | of c.2 times on adjusted post-tax earnings | | shareholders on 23 May 2023. | | (50% pay-out ratio). Typically based on | a pay-out range of 30-40% of half-year adjusted post-tax earnings with the balance paid in the final dividend. 2022 2,115 2022 113 2022 2022 2022 TP ICAP GROUP PLC Annual Report and Accounts 20221 | 2021 2021 2021 2021 2021 | | --- | | 2020 2020 2020 2020 2020 | | 2019 2019 2019 2019 2019 | ## TP ICAP at a glance ## KEY FACTS ## 5,200 ## EMPLOYEES ## INCLUDING ## 2,600 ## 28 BROKERS ## COUNTRIES ## 5 ## CORE ## PREMIUM ## BRANDS ## FULL RANGE COVERAGE CLIENTS Banks | Asset Managers | ## OF BROKING ACROSS ALL Hedge Funds | Corporates | ## PROTOCOLS MAJOR ASSET Trading Houses | Voice | Hybrid | Market Makers ## CLASSES Pure Electronic Rates | FX | Credit | Equities | Energy | Renewables | Other Commodities | Digital Assets | #01 | #01 | #01 | | --- | --- | --- | | Inter-dealer broker | Energy & Commodities | World’s leading provider of | | (by revenue) | broker | OTC pricing data | (by revenue) ## A WORLD-LEADING AWARD-WINNING FRANCHISE ## LIQUIDITY AND DATA ## SOLUTIONS SPECIALIST Global Capital Global Derivative Awards TP ICAP Inter-dealer Broker of the Year Weather Derivatives Service Provider of the Year ICAP Equity Derivatives Inter-dealer Broker of the Year FX Derivatives Inter-dealer Broker of the Year Interest Rate Derivatives Inter-dealer Broker of the Year – Americas Credit Derivatives Inter-dealer Broker of the Year – Americas TP ICAP has long-established, trusted relationships with both Tullett Prebon top tier global investment banks and investment institutions. Credit Derivatives Inter-dealer Broker of the Our client-facing brands are recognised globally for their high Year – Europe & Asia quality products, solutions and client service. Interest Rate Derivatives Inter-dealer We offer world-leading liquidity, commensurate with being Broker of the Year – Europe & Asia the largest inter-dealer broker globally. Parameta Solutions Data and Analytics Vendor of the Year – Americas We invest continually in technology to improve clients’ experience of our trading ecosystem, connecting the world’s market participants through our platforms and venues. The TRADE ‘Leaders in Trading’ Awards. Liquidnet The outstanding market expertise of our brokers, across a wide Best Electronic Trading Initiative range of asset classes and complex financial instruments, aligned with our technology, means TP ICAP plays a central role in the effective functioning of global markets. Waters Rankings Winner 2022 Liquidnet Leveraging the strength of our broking franchise, we are also Best Agency Broker the world’s leading provider of scarce, neutral over-the-counter (‘OTC’) pricing data. We strive to innovate and develop new data-led solutions that provide clients with greater insight. Risk Awards 2022 We distribute our offering to a growing client base through TP ICAP a range of channels, from new cloud-based technology, OTC Trading Platform of the Year to channel partners, or directly via our webstore. Armed Forces Covenant Gold Award ## 2022 highlights ## STRATEGIC HIGHLIGHTS Diversification ## We are transforming our Group Digital Assets ## to future proof our core broking > FCA registration was obtained for our spot crypto assets institutional platform in December 2022. ## proposition. We are doing this through ## technology, by rolling out our client- Parameta Solutions > In May 2022, Parameta Solutions became the first inter-dealer ## led, award-winning electronic platform broker to be authorised by the FCA as a benchmark administrator. ## called Fusion. > In August 2022, we launched ClearConsensus, an enhanced consensus pricing tool, in partnership with PeerNova, a Silicon ## We are also diversifying the Group Valley data management and analytics firm. > A new partnership with Numerix, a leading global OTC ## by focusing on new clients, new asset analytics company, was announced in March 2023. We will ## classes, and more non-broking revenue. leverage our market-leading OTC data with Numerix’s analytical capability. Transformation > We plan to implement Fusion on desks comprising 55% of total Liquidnet Global Broking revenue, by the end of 2025. > The dealer-to-client (‘D2C’) Credit proposition is live. > The rollout is on track – Fusion has been implemented on desks > We are diversifying the core Equities franchise and expanding covering 40% of in-scope revenue (2021: 20%). the product suite in algo, cross-border and programme trading. > A dedicated Fusion sales team has been created to drive client adoption, working closely with our brokers. > In Energy & Commodities, Fusion is live in the Environmentals business, and the first trades have been completed. TP ICAP GROUP PLC Annual Report and Accounts 20222 Overview ## OPERATIONAL HIGHLIGHTS ## Through our programme of dynamic ## capital management and ongoing >£30m ## cost discipline we are on track to free Liquidnet synergies of at least £30m by end of 2023. . ## up cash and reduce debt. Dynamic capital management ## > We are focused on managing our capital dynamically, by £100m identifying and returning, where possible and appropriate, surplus capital to shareholders. Cash to be generated or freed up by end of 2023. > The return of capital will be subject to our ongoing assessment of our balance sheet and investment requirements. > We announced at our 2022 half-year results that we aimed to free up £100m of cash by the end of 2023, to reduce debt. We ## £25m are on track with around £30m already freed up in H2 2022. Group targeted savings of £25m delivered in 2022. Cost savings > We achieved our target to deliver £25m of Group P&L savings by the end of 2022. > We are on track to deliver at least £30m of Liquidnet integration costs synergies by the end of 2023, at which point we expect the integration to be complete. TP ICAP GROUP PLC Annual Report and Accounts 20223 ## Delivering on our purpose Our purpose is to provide clients with access to global financial and commodities markets, improving price discovery, liquidity and distribution of data, through responsible and innovative solutions. ## FUSION: GATEWAY TO THE SOLAR POWER ## GROUP’S LIQUIDITY Fusion is our electronic, multi-asset, platform. From a single sign Climate is playing an increasingly important role in energy on, Fusion connects clients to TP ICAP’s liquidity pools across generation outcomes and the way in which portfolios products, brands and regions. It brings together dedicated hubs manage risk. for the Rates, FX, Credit and Energy asset classes, offering material scope for trading correlation opportunities. Recognising this, ICAP is the first broker to connect a renewable energy provider and a reinsurance company participant through Fusion was recognised as the ‘OTC Trading Platform of the Year’ a fixed agreement. The transaction has enabled an Australian at the 2022 Risk Awards. The Risk Awards are the industry’s utility company to lock in a fixed price for the electricity longest-running and most prestigious awards, recognising firms generated by its solar plant, with the volume of power in the for performance and innovation across all over-the-counter trade determined by the amount of sunshine on the day. (‘OTC’) derivatives platforms. As a result, the Australian utility firm has the certainty of a fixed price in a market that is highly volatile, ensuring that it can effectively manage investment in the solar plant. The reinsurance company benefits from exposure to the variability in sunshine and power prices, enabling it to diversify its risk exposure across different weather elements and regions. Delivering on our purpose Delivering on our purpose Embracing features such as a common look-and-feel user The first trade of its type, this innovative and environmentally interface covering all TP ICAP screens, Fusion enables clients to responsible solution enables market participants to diversify trade the way they want with highly customisable screens. This their risks, increase investment in the renewable energy industry scalable and innovative solution improves workflow efficiency and accelerate the transition to a low-carbon economy. for traders active across multiple instruments or asset classes, better enabling them to process information pre-trade, at point of trade, and post-trade. TP ICAP GROUP PLC Annual Report and Accounts 20224 Overview ## INNOVATING IN BENCHMARK ELECTRONIFYING PRIMARY ## AND INDICES MARKETS In 2022, Parameta Solutions, the data and analytics division of The process of issuing new bonds is one of the last parts of TP ICAP, became an FCA-authorised benchmark administrator, the capital markets to electronify. Throughout, the workflow making it the first inter-dealer broker to administer OTC is manual, error prone, and inefficient. benchmarks and indices. The Liquidnet Primary Markets offering addresses this pain point. Parameta Solutions administers the nine TP ICAP interest rate swaps benchmarks that cover the mid-price interest rate swaps from By way of illustration, an investment management firm decides TP ICAP’s Global Broking business. This increases transparency to buy a new bond to be issued that day via Liquidnet. The for market participants for whom data-driven insight is crucial, syndicate banks send the live deal announcement to Liquidnet, especially for risk and compliance purposes. Visibility into the who then makes it available in Liquidnet Primary Markets. level of the implied mid-price in the relevant underlying swap The investment manager trader sets up the deal in their Order rate is key for clients as they adopt these benchmarks. Management System. The trader is then able to send orders straight to multiple syndicate banks in a single message. This reduces operational risk, expense, and ultimately brings better value to the investment management firm’s end clients by eliminating time-consuming tasks, meaning they can instead focus on the critical stages of the investment process. Delivering on our purpose Delivering on our purpose Parameta Solutions is leveraging its position as the world’s An industry-first solution, Liquidnet Primary Markets addresses leading provider of OTC pricing data to develop new, innovative the challenges of fragmented new issue dissemination and data-led solutions. Independent, bespoke and transparent improving the format of new issue announcements. For clients, benchmarks and indices help clients accurately compare this means access to primary and secondary markets through performance against their asset allocation strategy, drive a single Liquidnet application, so creating a network where innovation and better manage risk. market participants can engage with each other seamlessly. TP ICAP GROUP PLC Annual Report and Accounts 20225 ## STRATEGIC ## REPORT CONNECTED CONTENT Our transformation We are transforming our business through technology, and by expanding and diversifying our activities and client base. Page 12 TP ICAP GROUP PLC Annual Report and Accounts 20226 CONNECTED CONTENT Sustainability Our sustainability strategy is formed of three priorities: ‘Reporting and Performance Management’; ‘Supporting our Clients’; and ‘Community Impact’. Page 50 Strategic report ## STRATEGIC In this section 8 Chair’s statement 12 Chief Executive Officer’s review 18 Financial and operating review 32 Our market 36 Our strategy and KPIs 38 Our business model 40 Stakeholder engagement 50 Sustainability 71 Viability statement and going concern 72 Principal risks and uncertainties ## REPORT TP ICAP GROUP PLC Annual Report and Accounts 20227 ## Chair’s statement CONNECTED CONTENT Stakeholder engagement Page 40 TP ICAP GROUP PLC Annual Report and Accounts 20228 #### Dear fellow shareholder In this review, I will concentrate on three key areas of focus for the Board in 2022: (a) growth of major businesses, (b) key areas of review, and (c) further strengthening our senior management bench, particularly the cohort just below Board level. I will also touch on our Board capabilities, including the important issue of diversity. #### Our performance and market commentary Before dealing with these topics, I would like to set out the main elements of our performance as a Group last year. Overall, we delivered a strong performance in 2022. Key features include: high single-digit revenue growth, another uptick in productivity in Global Broking (our largest division), a strong performance by Parameta Solutions, and an increase in overall profitability. Markets, always a major consideration for us, saw a significant shift which benefited TP (CAP) particularly our Global Broking business (59% of total revenues). Central banks embarked on the first major monetary tightening programme since before the Global Financial Crisis. Interest rates moved up to levels not seen in more than a decade. Around the world, central banks also began to withdraw liquidity. This new environment was particularly beneficial to our Rates business – the biggest, and most profitable, part of our Global Broking franchise. Conversely, the extraordinary conditions in the energy sector generated by the war in Ukraine resulted in a pronounced 'risk-off' stance for many participants and led to excessive volatility and reduced activity in parts of our European Energy & Commodities division. The acquired Liquidnet business also experienced difficult markets, pronounced falls and high levels of volatility in many stock markets – the most significant for some years – drove a marked disinclination by institutions to engage in larger block trading, a key market segment for us. Parameta Solutions delivered a strong revenue performance (up 8%) whilst again broadening its product range and extending its partnership base. "The Group has stretching, but achievable, strategic priorities: transformation, diversification, and dynamic capital management." Against this backdrop, our diversified business model enabled us to deliver a 7% increase in Group revenue. Group adjusted EBIT (£275m) increased by 8% (2021: £255m). Group reported EBIT (£165m) was up 68% (2021: £97m). In line with our dividend policy, the Board is pleased to recommend a final dividend of 7% per share to be paid on 23 May 2023 and with a record date of 14 April 2023. This brings the total dividend for the year to 12.4 pence per share, 37% ahead of 2021. #### Growing key businesses A key emphasis for the Board in 2022 was the growth, and strategic development, of a number of our key businesses, including Global Broking and Parameta Solutions. As I mentioned earlier, market dynamics were particularly advantageous for our Global Broking business. What is especially pleasing, however, is the way in which Global Broking seized the opportunities to hand. The collective experience of our brokers is significant – they have seen a number of interest rate cycles over the decades. That experience, and the insights that go with it, were deployed with clients at a time when some market participants had not previously witnessed the monetary tightening that we saw unfold last year. Global Broking also delivered substantial progress on the rollout of Fusion, our market-leading electronic platform. As Nicolas Brezeau, our Group Chief Executive, notes elsewhere in this report, the Fusion rollout is on track. We hope that the target we set ourselves for this year. Even more importantly, the Board has concentrated this year, working with key Global Broking executives like Dan Fields (see page 11), on how we ensure a smooth, and successful, adoption of Fusion over the next few years by our colleagues and clients alike. Developments included our review of the Fusion rollout and the incorporation of specific internal KPIs related to adoption – client usage, for example – into our overall approach. We were also pleased to see the establishment of a dedicated Fusion sales team. There will be a greater emphasis on client marketing as part of the overall Fusion rollout. Parameta Solutions, our market-leading data and analytics division, is another business that has made substantial progress. A key focus for the Board this year has been on Parameta Solutions' continued strong overall performance, and future ongoing options for growth. This is essentially about two things. First, ensuring that we are fully leveraging the data generated by our broking businesses, Global Broking and Energy & Commodities. Second, expanding Parameta Solutions' proposition to include more substantial partnerships as well as additional higher-value products to offer new and existing clients. 1 Inconsistent currency. 2 Refer to page 218 for Appendix – Alternative Performance Measures. 9 TP (CAP GROUP PLC Annual Report and Accounts 2022 Chair’s statement continued Regulatory change, which is ever constant, is driving a demand Turning to Liquidnet’s move into Fixed Income, another strategic for ever more quality data and insights. Parameta Solutions is priority, good progress has been made with the Primary Markets capitalising on this pronounced trend through new partnerships offering. Our overarching strategy is to work with market and initiatives. For example, the efficient deployment of regulatory participants to electronify the full life cycle of a bond, an area capital is, of course, a key priority for financial institutions. In August, which has not experienced the full force of technology in the way Parameta Solutions announced a new partnership with PeerNova, equities have, for example. We are now partnered with 30 banks; a Silicon Valley data management and analytics company, to help a number of platform enhancements have been implemented. institutions improve their fair value assessments, a key enabler for more efficient capital utilisation. Earlier in the year, the division The Board also reviewed progress in relation to the rollout of the became an FCA-authorised benchmark administrator. This is D2C proposition. As our Group CEO has noted in his Review in this another growing area where new entrants like Parameta Solutions report, progress has been slower than we would have liked – despite can provide quality data, and insights, as well as introducing our best efforts – because of the impact of COVID-19. We believe greater choice for clients. A win-win, in short, for us and them. the prize, which is significant, very much remains in sight; the Board has been highly focused on the crystallisation of this opportunity. Key review areas for the Board In this vein, the much closer working relationship that has been The Board has spent a substantial amount of time on a number of developed between Global Broking and Liquidnet should prove important business, and regulatory, issues. The two areas that I will very advantageous as we progress the D2C rollout. That collaboration focus on here are (a) Liquidnet: strategy and execution, and (b) will leverage the combined connectivity of both divisions – clients sustainability, particularly the embedding of the Task Force for and their great expertise in Credit – as we bring more institutions Climate-related Financial Disclosures (‘TCFD’) requirements across our onto the platform. Company – especially in relation to the UK’s regulatory framework. Sustainability Liquidnet We recognise the increasing importance of sustainability matters The Liquidnet division, as I noted earlier, has had a challenging for our stakeholders, including shareholders, colleagues, and clients. twelve months given the marked downward shift in stock market In 2021, the Board approved the Group’s current sustainability valuations around the world and high levels of volatility. Against strategy which is focused on three priorities: (a) reporting and this backdrop, the Board has focused on three things. First, ensuring performance management (b) supporting our clients, and (c) our that we are on track to deliver by the end of 2023 at least £30m of community impact. Liquidnet integration cost savings, exceeding our £25m target – we are. Second, working with the senior executive team, including This year, the Board has been focused on the impact of climate Mark Govoni (see page 11), the new CEO of the division, to ensure change on our business, and the specific UK regulatory requirements that we build out, and diversify, Liquidnet’s core Equities franchise. related to TCFD. Accordingly, the Board and its Committees Third, reviewing the rollout of the Fixed Income franchise, including reviewed our state of preparedness for TCFD and approved a new the Dealer-to-Client (‘D2C’) proposition. climate change planning framework for the Group. We monitored how we are progressing our Scope 1 and 2 emissions reduction Progress has been made – with more to do – on underpinning, targets and our work on Scope 3. A great deal has been done but, and diversifying, the core Liquidnet Equities franchise. As the Board as we set out in our Sustainability chapter on page 50, there is reviewed developments, we were keen to ensure there was an more to do. In particular, in 2023 we will conduct, and complete, emphasis on the development of existing clients, and the winning a detailed qualitative, and quantitative, scenarios analysis. of new ones, through product expansion and diversification. This work will give us a much greater insight into the potential A range of initiatives are in place to do so, including the expansion impact of climate change on our business, and the related risks of the product suite: programme trading, algorithmic trading, and and opportunities. cross-border flows. These initiatives are bearing fruit. However, we are conscious that we will need to maintain the momentum Alongside our sustainability work programme, we completed given the uncertain outlook for equities, and larger block trading. a review in 2022, drawing on the relevant FRC guidance, of our purpose, and expanded the project to include our mission and vision statements: they are closely related. Following the conclusion of this project, we have updated our purpose, mission, and vision statements; they can be found on the inside front cover. TP ICAP GROUP PLC Annual Report and Accounts 202210 Our senior management and Board capabilities Conclusion and looking ahead The Group has stretching, but achievable, strategic priorities: As Nicolas Breteau notes in his review on page 12, we have a clear transformation, diversification, and dynamic capital management. strategy and are fully focused on its execution. We have a strong, and highly experienced, senior management cohort in place, led by our Group CEO, who are actively delivering The end of ‘easy money’ positions us well for a world where central these priorities. bank liquidity is more limited and there is a greater role for liquidity providers like our Group. As always, there are challenges ahead A continued emphasis, nevertheless, by the Board on further and areas we need to address. However, I hope that this review has strengthening our senior talent pool – vital for our continued success given stakeholders the sense that the Board is actively working with – has been another priority in 2022. Considerable progress has been management to meet the challenges and seize the opportunities Strategic report achieved with the recruitment of two senior executives to lead the we face. Global Broking and Liquidnet divisions respectively. Daniel Fields joined us in the early summer; he was previously a Head of Global One final, and very important, point. Our colleagues are integral Markets at Société Générale. Dan has significant transformation to our success. They have again delivered for all of us in 2022. On expertise, connectivity, and a background in capital markets: behalf of the Board, I want to extend our warmest thanks to them valuable attributes as we execute our Global Broking strategy. for their steadfast work, integrity and commitment. I would also Mark Govoni joined us shortly before Dan and is leading the Liquidnet like to express my thanks to all our stakeholders, including our division. Mark is a former President of US Brokerage at Instinet; shareholders, for their continued support. I, and the Board, look Mark again has considerable connectivity and market expertise forward to welcoming shareholders to our AGM in London on which will be important as we underpin, and diversify, Liquidnet. 17 May 2023. Turning to the Board, we believe we have a team in place with the appropriate skills, diversity and experience to oversee the overall Richard Berliand direction of the Group and the successful delivery of our strategy. Board Chair We remain committed to being a diverse Board and are meeting 14 March 2023 the Parker Review and Hampton Alexander representation targets (36% of our Board is female). Four of the last five Board appointments were female, a good demonstration of our commitment. More information about the work of the Board, and the Nominations & Governance Committee, can be found on page 100. On 7 February 2023, I was pleased to announce that Kath Cates has agreed to become TP ICAP’s Senior Independent Director, replacing Michael Heaney with effect from 1 March 2023. Michael remains a valuable Non-executive Director on the Board and Committees. TP ICAP GROUP PLC Annual Report and Accounts 202211 Chief Executive Officer's review # **Introduction** Our ambition is to be the world's most trusted, and innovative, liquidity and data solutions specialist. To achieve this, we are focused on the delivery of three strategic priorities: - Transforming our business; - Diversification; and - Dynamic capital management. We aim to deliver sustainable shareholder value in the medium term. We have a clear strategic roadmap and a strong franchise to do so. We are well positioned for current market conditions through our developed business model, market-leading positions, major geographical presence, deep liquidity pools, and cutting-edge technology. # **Our business performance** # **Strategic delivery: Future proofing our business** Our operational leverage delivered an increase in profitability as clients sought out the deep liquidity we provide. As the world thankfully returned to normality following the challenges posed by COVID-19, we delivered a smooth return to the office and the successful execution of important deliverables. Our markets have been transformed by, for example, regulatory changes following the Global Financial Crisis, including the move away from proprietary trading by investment banks. We have embraced those changes. We have done so through the deployment of new technology and a client-centric approach with a menu of voice, hybrid and electronic broking protocol options. The recent return to elements of the pre-Global Financial Crisis environment – more elevated interest rates and a bigger role for private sector liquidity providers – underlines the enduring relevance of our broking franchise. The role our brokers play, facilitating liquidity and price discovery, is – and will remain – a key part of the financial services architecture. We are seeking to future proof our core broking proposition. We are doing so through key initiatives like Fusion, our reward-winning, client-focused electronic platform. We are on track to embed Fusion as the 'go-to' platform for clients. In 2022, we moved from 20% to 40% of targeted in-scope revenue in Global Broking covered by Fusion. We are an plan to complete the rollout by 2025 when it will encompass all the in-scope revenue (55% of total Global Broking revenue). This is only part of the story, however. A key focus is the adoption of Fusion by our clients as an essential daily working tool (see page 15). # **Market developments** Global Broking, particularly Rates, benefitted from the increased volatility across a range of asset classes. Volatility was driven by the terrible events in Ukraine, substantive monetary policy tightening, and a marked slowdown in economic growth. The Federal Reserve, in one year, moved the short-term target Federal Funds Rate to a range of 4.25% to 4.5%. For two years, it had been at zero. Our Energy & Commodities ('E&C') division initially benefitted from volatility too. But, as the year progressed, the geopolitical impact of war in Ukraine had a pronounced impact on energy markets, especially European Gas & Power, leading to an inauspicious trading environment. Excessive volatility – ICE Gasoil registered an average volatility of 81%, a record high – generated a major increase in exchange margin requirements and sharp volume contraction. Average daily volumes on CME West Texas Intermediate ('WTI') – an important benchmark – fell below one million contracts for the first time since 2015. Equity markets were challenging. In the US and Europe, key Liquidnet markets, many indices recorded very significant declines in 2022, accompanied by high levels of volatility, which negatively impacted block trading. The S&P 500 fell by 19%, its worst performance since 2008, the Stixx 600 declined by 13%. Accordingly, the commission wallet, in the third quarter, was the smallest since early 2009's Parametex Solutions, on the other hand, benefitted from growing demand for high-quality, financial markets data. Regulatory change, a key data driver, continues apace. One interesting example: the annual growth rate for new pages of US regulation was recently up over 1%. These pages deliver significant change, and a need for the insights we provide. We are well positioned for current market conditions through our developed business model, market-leading positions, major geographical presence, deep liquidity pools, and cutting-edge technology. 1 Source: McLogan. 2 Source: The ISW Regulatory Studies Centre, The George Washington University. 12 TP/CAF GROUP PLC Annual Report and Accounts 2022 Revenue ## £2,115m Adjusted EBIT Strategic report ## £275m Reported EBIT ## £163m CONNECTED CONTENT Financial performance A detailed analysis of our financial performance can be found in the Financial and Operating review. Page 18 TP ICAP GROUP PLC Annual Report and Accounts 202213 Chief Executive Officer's review continued # Strong revenue performance At the Group level, we delivered 7% revenue growth. On a reported currency basis, we recorded 13% revenue growth. Global Broking delivered a strong performance: revenues up 7%. All Global Broking asset classes reported high single-digit growth. Energy & Commodities revenue declined by 2% – in line with exchange volumes. Revenue at the Liquidnet division was up 18%, driven by a 12-month contribution in 2022 from the acquired Liquidnet platform (which completed in March 2021). On a like-for-like basis, revenue for the Liquidnet platform declined. This reflected the difficult market conditions for many asset managers and subdued larger block trading – an important segment for us. Parameta Solutions delivered an 8% increase in revenues. It continued to leverage our high quality, and unique, OTC data. As a leading liquidity provider, we again recorded market share gains: for example, in Global Broking³, Parameta Solutions underlined its position as the leading provider of inter-dealer OTC data – we account for around three-quarters⁴ of this market. # Increased profitability and CMD targets update We saw a substantial increase in market activity at the short-dated end of the yield curve. This benefitted the Rates franchise, our biggest, and most profitable, asset class. Coupled with our operational leverage, this generated an uptick in margin. Adjusted EBIT was up 8%, or 18% in reported currency. Group revenue per broker was up 11% driven by the revenue uplift and a reduction in the average number of brokers. Prior to the impact of the Russian P&L charge of £21m, adjusted EBIT margin increased to 14.0% (2021: 12.9%). Including the Russian impact, adjusted EBIT margin was 13.0%. The reported EBIT margin increased to 7.7% (2021: 5.2%). We are also providing today an interim update on our progress against the three-year targets set out at our Capital Markets Day (CMD) in December 2020. For a more detailed discussion, see page 25 in the Financial and operating review. We will update the market in due course about our progress in relation to the CMD medium-term targets. # Transforming our business # Delivering Fusion Our transformation is being delivered at pace, including Fusion, our award-winning electronic platform. Fusion is about providing more client-led technology, and deeper liquidity. It has a range of client-centred features, including a single login access, and access to aggregated liquidity for specific asset classes. Client benefits include lower cost, greater speed and increased efficiency. Benefits for us include enhanced profitability, and sticker client revenue. In our EMEA Rates business, for example, there was a material outperformance in contribution margin in 2022 for Fusion-derived activity compared to desks without the platform. We are receiving ever more positive Fusion feedback from our clients. It has been a productive year for Fusion. As previously noted, the rollout is on track. 40% of targeted in scope Global Broking revenue is on the platform. Highlights include Fusion's implementation across the Tulleit Preban ("TP") and ICAP desks covering Inflation and Interest Rate Swaps. Fusion is live on the TP and ICAP EUR Inflation desks, including volume matching and Central Limit Order Book ("CLOB") functionality. Our focus in 2023 remains on Rates and FX, our largest asset classes. We will also commence rolling out Fusion across Credit, another significant asset class, and TP and ICAP Sterling Interest Rate Swaps: Volume Matching. In Energy & Commodities, brokered markets have not been electrontified to any great degree. Our emphasis is therefore on the internal implementation of a new Order Management System ("OMS"). This is an essential prerequisite. It captures all orders and trades electronically. We continue to implement the rollout of OMS across our Oil desks, the largest asset class in Energy & Commodities. 3 All percentages within the CED review are in constant currency, unless otherwise indicated. 4 As previously announced in our Q3 Trading Update on 19 November 2022, the Liquidnet division includes the Liquidnet platform (the acquired liquidnet), CCEX Partners, ICAP Relative Value, and from October 2022 onwards, WalCap Partners, following the transfer into Liquidnet from Global Broking. 5 Computed with the two other listed years for H1 2022 vs FY 2021. 6 Source: TP, ICAP estimates. 14 TP/ICAP GROUP PLC Annual Report and Accounts 2022 Driving client adoption Maintaining the momentum, Parameta Solutions has announced The Fusion delivery programme can be broken down into two key today a new partnership with Numerix, a leading global OTC components. In Phase One – from 2020 to end-2023 – the focus is analytics company. Together with Numerix, Parameta Solutions will on IT development and implementation. In the Second Phase – to provide a best-of-breed solution to clients. We will do so by leveraging end-2025 – there will be an emphasis on adoption by clients. In fact, our market-leading OTC data with Numerix’s analytical capability. the process is already underway. A dedicated Fusion sales team has Our goal is to ensure that clients have automated, high-quality, been established in Global Broking to facilitate adoption. Working independent fair valuations of OTC derivatives. This is a high closely with our brokers, the team will engage with existing clients, growth sector with a large addressable target market (US$6bn). and new ones too. They will help clients to get the best out of Fusion, collecting and acting on their feedback, and delivering Energy & Commodities Strategic report a comprehensive marketing programme. We will work with clients We are the leading OTC energy and commodities broker, delivering on their Fusion utilisation with a range of internal KPIs covering for clients through three key brands: Tullett Prebon, ICAP and PVM. pace of delivery, client usage, and return on investment. Alongside well-developed market positions in major areas like Oil, Gas and Power, we are making good progress expanding our Transformation, of course, is about ensuring we have the revenue streams in two new segments: renewables and crypto assets. leadership in place to drive every aspect of the change programme. It was therefore pleasing to announce some new, key senior level The energy transition is, of course, already under way. The end state appointments at this important time in our strategic development. remains unclear, however, and may remain so for some time to Daniel Fields, previously a Global Head of Markets at Société come. It is clear, though, that there will be a continued, and Générale, joined in June to lead Global Broking and drive the important role, for Oil: currently our largest asset class. The Fusion programme. Mark Govoni came on board in May and is International Energy Agency (‘IEA’), for instance, in its recent STEPS leading our Liquidnet division; Mark was the President of US scenario, sees Oil demand reaching a high point in mid-2030 before Brokerage at Instinet. slightly moderating at that stage. Natural Gas – another key asset class for us – was designated at the recent COP27 as a low-emission Delivering on diversification energy source. We are diversifying our business through a three-pronged approach focused on: new clients, new asset classes, and more non-broking revenue. Parameta Solutions This strategy is exemplified by Parameta Solutions’ emphasis on products, clients and distribution to grow revenue and contribution. There has again been good progress across these areas. In May, Parameta Solutions became an FCA-authorised benchmark administrator – the first inter-deal broker to do so. We are now administering the nine TP ICAP interest rate swaps benchmarks; they cover the mid-price interest swaps from our Global Broking division. This enables Parameta Solutions to provide more data- driven analysis for clients, including for risk and compliance purposes: a growing area. Parameta Solutions announced in August the launch of ClearConsensus, an enhanced consensus pricing tool tailored to our global client base. We are delivering this solution in partnership with PeerNova, a Silicon Valley data management and analytics firm. This is a compelling proposition – it helps our clients improve their fair value assessments, enabling more efficient capital allocation and optimisation. TP ICAP GROUP PLC Annual Report and Accounts 202215 Chief Executive Officer’s review continued Emissions credits trading will play a key role during the energy Equity markets, in particular block trading, as previously discussed, transition. This is an area we are focusing on: we are building an were challenging. Against this backdrop, Liquidnet is focused on environmental hub and developing new products. In February, growing – and diversifying – its core Equities franchise. The plan Tullett Prebon launched a well-received Brazilian energy desk includes an even greater emphasis on developing existing clients, majoring on renewables. We also launched a client-facing Fusion expanding the product suite into fast-growing market segments, screen covering Green Certificates in Norway, voluntary emissions and new client acquisition. in Europe, and Australian renewables. Client reaction is positive; trades have already been completed through the platform. Client development initiatives include the successful launch of a pre-market block trading capability at the full day Volume- Turning to crypto assets, we obtained FCA registration in December weighted Average Price (‘VWAP’) in Hong Kong and Australia. as a crypto asset exchange provider. We are planning to launch our Expansion of the product suite is being delivered through initiatives wholesale marketplace in 2023. Our Fusion-enabled platform – for designed to exploit changing market features. Expanding in institutional clients only – combines our expertise in operating algorithmic (‘algo’) trading is delivering results with algo revenue venues, alongside the industry-leading custodial expertise provided now 31% of total revenue, compared with 29% in 2021. Algo trading SM by Fidelity Digital Assets . We are also working closely with a – the ability to process large amounts of data and automatically range of market makers, including Virtu Financial, Flow Traders, execute trades at speed based on intelligent rules – is growing Jane Street, Susquehanna and Hudson River Trading. rapidly. Mordor Intelligence estimates CAGR growth of just over 10% up to 2028. The US is the biggest market with Asia the Our Digital Assets proposition provides the credible infrastructure, fastest-growing segment. and assurance, needed for institutions to allocate capital to this growing asset class. Research by Grayscale Investments suggests Another focus area is programme trading where Liquidnet has seven out of ten professional investors believe institutions will hold recorded a number of new business wins. In addition, cross-border 60% of all Digital Assets within seven years; they currently hold 3% trading now accounts for 18% of total Liquidnet revenue. New client with retail investors owning 97%. Longer-term, we believe acquisition has included establishing, for the first time, a presence in blockchain will lead to the tokenisation of traditional asset classes, Paris, Madrid, Frankfurt and South Africa, including sales capability. resulting in more efficient, automated trading and settlement. We are well placed to capitalise on this structural shift. Early client Growing Fixed Income is a priority: it is a substantial opportunity reaction to the Fusion Digital Assets trading and operating model for the Group. Liquidnet is making good progress on its Primary is positive. Markets Offering, a strategic initiative towards our goal to electronify the full life cycle of a bond. Liquidnet has partnered Liquidnet with 30 syndicate banks and increased new issue announcements Liquidnet is a leading, technology-driven agency execution coverage (now at 80%). In Secondary, Liquidnet now has around specialist with a global Equities and Fixed Income footprint. 450 active firms and average daily liquidity of £15bn. On D2C, the Liquidnet’s strong, and long established, buy-side connectivity proposition went live, as planned, last summer. All of the client- brings us considerable client diversification. So too does the facing tech has been built and is in place. Feedback is good; the key Dealer-to-Client (‘D2C’) Credit proposition. Our strategy is focused issue now is growing the liquidity on the platform. Major banks are on: (a) completing the Liquidnet integration, (b) expanding the already connected to the platform, and we are working with many product suite to meet the changing needs of clients, and (c) additional institutions. COVID-19 has had a material impact on exploiting new growth opportunities like D2C Credit. how dealers and potential clients for the platform have been prioritising projects and IT tasks. We are pushing hard to be further As I touched on earlier, Mark Govoni, joined in May as CEO of up their priority list. We have also identified opportunities for Liquidnet. Mark has reviewed the business, and implemented an greater collaboration between the Credit teams in Liquidnet and action plan, at an opportune time. The integration programme is Global Broking, including leveraging the latter’s extensive dealer progressing well. The majority of deliverables are completed. We connectivity. The D2C opportunity is substantial, however it will are on track to complete the integration by the end of 2023 and take us longer, given these client realities, to move within our 3% deliver at least £30m of integration cost synergies, ahead of our to 6% target market share range. £25m target. TP ICAP GROUP PLC Annual Report and Accounts 202216 Final dividend pence 7.9p Total full year dividend pence 12.4p Dynamic capital management Our focus on capital management – returning, where possible, and appropriate, surplus capital to shareholders – is an important element of our strategy. We announced at our H1 2022 results, that we aimed to free up £100m of cash by the end of 2023. Progress has been good. We have freed up around £30m of cash in H2 2022. We are on track to free up the targeted £100m. We also previously said that we are focused on identifying, and returning, any potential surplus capital to shareholders, subject to the ongoing assessment of our balance sheet and investment requirements. Our emphasis on capital management is accompanied by a clear distribution policy: a 50% pay-out ratio of adjusted post-tax earnings for the year as whole. Well advantaged with a clear strategic roadmap We are well positioned as central banks withdraw liquidity and clients look to us even more than before. Our deep liquidity posts, scale businesses, and geographical reach and expertise are significant advantages in a world of elevated interest rates. Our strategy of transforming, diversifying and dynamic capital management is about delivering sustainable shareholder returns, now and in the future. We delivered a strong performance in 2022 and advanced our strategic agenda. Our transformation continues at pace. The Fusion rollout is on track. Our focus is increasingly turning to client adoption of the platform. A dedicated team, overseen by our senior management in Global Broking, will drive adoption. The enduring strength of our core franchise is coupled with the significant diversification opportunities we are pursuing. The strategic rationale for LiquidNet remains in place: client and asset diversification. The prize is substantial. We see real opportunities in Environmental and Digital Assets. These opportunities play to our strengths: deep expertise, true connectivity and a track record of innovation. As we move forward in 2023, I want to thank all my colleagues for their contribution during a year when we delivered a great deal for stakeholders. We look to the future with confidence. Our strategy of transforming, diversifying and dynamic capital management is about delivering sustainable shareholder returns, now and in the future. Outlook Our market-leading businesses, and our focus on transformation, diversification and dynamic capital management, mean the Group is well positioned to benefit from the continued withdrawal of central bank liquidity. We expect the impact of inflation on our business in 2023 to be broadly mitigated by our ongoing focus on cost efficiencies. Global interest rates are expected to remain elevated in 2023; we expect that volumes will continue to be solid, but moderated from the peaks at the beginning of the war in Ukraine. The recent decline in the European gas price has supported a more liquid, and stable, market so far this year. A sustained recovery continues to depend on geopolitical developments. Hicolor Bureau Executive Director and Chief Executive Officer 14 March 2023 17 TP ICAP GROUP PLC Annual Report and Accounts 2022 ## Financial and operating review All percentage movements quoted in the analysis of financial During the year, we took a P&L charge, net of recoveries, of £21m results that follows are in reported currency, unless otherwise on Russian exposures, primarily in Global Broking. These unsettled stated. Reported currency refers to prior year comparatives trades resulted from the imposition of sanctions in February 2022 being at prior year foreign exchange rates. against Russian clients and counterparties. Introduction In the new combined Liquidnet division (comprising of the The Group delivered a strong financial performance in 2022. acquired Liquidnet platform, COEX Partners, ICAP Relative Group revenue increased 13% to £2,115m on a reported basis Value and MidCap Partners), market conditions for the Liquidnet (7% ahead in constant currency). Markets were heavily impacted platform (predominantly Equities) were very challenging. by geopolitical events, and substantial monetary tightening by Equity indices declined significantly across the US and Europe, central banks all around the world. Against this backdrop, market accompanied by high volatility levels. This reduced trading volatility increased during the year, driving higher revenue. activity of larger blocks in these markets where Liquidnet has a leading position. Our planned investment in the Dealer-to-Client Global Broking benefitted from this increased volatility delivering (‘D2C’) Credit proposition also impacted profitability. The high single digit revenue growth across all asset classes and an remaining Liquidnet division performed well, driven by the uplift in overall contribution. Energy & Commodities (‘E&C’) also growth in the Relative Value business as well as in Rates, initially benefitted from market volatility; the war in Ukraine Futures and FX. however drove the price of European gas in Q2 and Q3 to levels not seen in some time and this sharply increased margin Parameta Solutions, our market-leading provider of neutral requirements for our clients and led to a major reduction in OTC data, delivered strong revenue growth. The division trading activity. While gas prices have since receded from the continues to leverage the increased demand for high quality mid-year highs, they remain well above historic averages. financial markets data. Key financial and performance metrics 2021 | | | 2021 | Constant | | | Constant | | --- | --- | --- | --- | --- | --- | --- | | 2022 | Reported | | Currency | | Reported | Currency | | £m | | £m | | £m | change | Change | Revenue 2,115 1,865 1,976 13% 7% Reported – EBIT 163 97 112 68% 46% – EBIT margin 7.7 % 5.2% 5.7% Adjusted – Contribution 763 702 74 4 9% 3% – Contribution margin 36.1% 37.6% 37.7% – EBITDA 357 315 342 13% 4% – EBIT 275 233 255 18% 8% – EBIT margin 13.0% 12.5% 12.9% Average – Broker headcount 2,637 2,770 n/a (5%) n/a – Revenue per broker¹ (£’000) 659 562 592 17% 11% – Contribution per broker¹ (£’000) 236 202 212 17% 11% Period end – Broker headcount 2,561 2,707 2,707 (5%) n/a – Total headcount 5,161 5,304 5,304 (3%) n/a 1 Revenue per broker and contribution per broker are calculated as external revenue and contribution of Global Broking, Energy & Commodities and Liquidnet excluding the Acquired Liquidnet platform divided by the average brokers for the year. The Group revenue and contribution per broker excludes revenue and contribution from Parameta Solutions and Liquidnet Division. TP ICAP GROUP PLC Annual Report and Accounts 202218 Average revenue per broker (productivity) increased by 17% in 2022 compared with 2021 (+11% in constant currency). The average contribution per broker increased by 17% (+11% in constant currency). We ended the year with a contribution margin of 36.1% compared with 37.6% in 2021 (37.7% in constant currency). Including the full year cost of the Liquidner platform and our investment in the D2C business, the management and support costs were 4% higher on a reported currency basis (flat in constant currency). Alongside continued investment in the business, we maintained a strong focus on cost efficiency and delivered our targeted Group savings of £25m in 2022 which helped offset inflationary pressures. Our adjusted EBIT margin increased from 12.5% to 15.0% in reported currency, or 14.0% excluding charges relating to Russian exposures (2021: 12.9% in constant currency). The Group's revenue and EBIT margin benefitted from a foreign exchange (FX) tailwood as GBP weakened by, on average 10%, against the USD. The Group reported EBIT of £16.5m increased by 68% from £97m in 2021, benefitting from diversification and strength of our core franchise. The Group incurred significant items of £113m pre-tax (2021: £15.5m), of which around 80% are non-cash, in reported earnings. This is broadly in line with our previous guidance of £110m. Further details on significant items are on page 24. We are managing our capital dynamically. The Group is on track to generate or free up approximately £100m of cash by the end of 2023, to reduce debt. We continue to assess our balance sheet and investment requirements and are committed to identifying, and returning, any potential surplus capital to shareholders. Robin Stewart Executive Director and Chief Financial Officer 14 March 2023 ![img-0.jpeg](img-0.jpeg) "We delivered a strong financial performance, higher revenues from diversified sources and continued cost discipline in a tough environment." 19 TIFICAR GROUP PLC Annual Report and Accounts 2022 Financial and operating review continued # **Income Statement** The Group presents its reported results in accordance with International Financial Reporting Standards (IFRS). The Group also presents adjusted (non-IFRS) measures to report performance. Adjusted results and other alternative performance measures ('APMs') may be considered in addition to, but not as a substitute for, the reported IFRS results. The Group believes that adjusted results and other APMs, and should be considered together with reported IFRS results, provide stakeholders with additional information to better understand the Group's financial performance and compare performance from year to year. These adjusted measures and other APMs are also used by management for planning and to measure the Group's performance. Reported results are adjusted for significant items to derive adjusted results. Adjusted measures exclude significant items to aid comparability of financial performance from year to year and to provide additional information to better understand the Group's financial performance, and should be considered together with reported IFRS results. Significant items can be either cash or non-cash costs. A reconciliation from reported to adjusted metrics is provided in the Group income statement below. Analysis of performance by Business Division follows the Group income statement analysis. | | Adjusted £m | Significant items £m | Reported £m | | --- | --- | --- | --- | | **2022** | | | | | **Revenue** | **2,115** | **-** | **2,115** | | Employment, compensation and benefits | (1,296) | (24) | (1,320) | | General and administrative expenses | (474) | (32) | (506) | | Depreciation and impairment of PPE and ROUIA | (49) | (9) | (58) | | Amortisation and impairment of Intangible assets | (33) | (65) | (98) | | **Operating expenses** | **(1,852)** | **(130)** | **(1,982)** | | Other operating income | 12 | 18 | 30 | | **EBIT** | **275** | **(112)** | **163** | | Net finance expense | (49) | (1) | (50) | | **Profit before tax** | **226** | **(113)** | **113** | | Tax | (58) | 22 | (56) | | Share of net profit of associates and joint ventures | 29 | - | 29 | | Non-controlling interests | (3) | - | (3) | | **Earnings** | **194** | **(91)** | **103** | | Basic average number of shares (millions) | 7791 | 7791 | 7791 | | Basic EPS (pence per share) | 249p | (11.7p) | 13.2p | | Diluted average number of shares | 790.6 | 790.6 | 790.6 | | Diluted EPS | 24.5p | (11.5p) | 13.0p | | **2021** | | | | | **Revenue** | **1,865** | **-** | **1,865** | | Employment, compensation and benefits | (1,140) | (12) | (1,152) | | General and administrative expenses | (420) | (56) | (476) | | Depreciation and impairment of PPE and ROUIA | (52) | (16) | (68) | | Amortisation and impairment of Intangible assets | (30) | (52) | (82) | | **Operating expenses** | **(1,642)** | **(136)** | **(1,778)** | | Other operating income | 10 | - | 10 | | **EBIT** | **233** | **(136)** | **97** | | Net finance expense | (56) | (17) | (73) | | **Profit before tax** | **177** | **(153)** | **24** | | Tax | (44) | 21 | (25) | | Share of net profit of associates and joint ventures | 18 | (11) | 7 | | Non-controlling interests | (3) | - | (3) | | **Earnings** | **148** | **(143)** | **5** | | Basic average number of shares | 759.5 | 759.5 | 759.5 | | Basic EPS | 19.5p | (18.8p) | 0.7p | | Diluted average number of shares | 768.2 | 768.2 | 768.2 | | Diluted EPS | 19.5p | (18.6p) | 0.7p | 20 TP/ICAP GROUP PLC Annual Report and Accounts 2022 All percentage movements quoted in the analysis of financial results that follows are in constant currency, unless otherwise stated. Constant currency refers to prior year comparatives being retranslated at current year foreign exchange rates to support comparison on an underlying basis. Revenue by division Total Group revenue in 2022 of £2,115m was 7% higher than the prior year (+13% in reported currency). Revenue grew across all divisions with the exception of Energy & Commodities. Global Broking benefitted from increased market volatility and revenue was up 7%, growing across all asset classes. Market volatility from the war in Ukraine resulted in a higher volume of trading activity, particularly in the first half. This generated higher revenue and contribution, which more than offset the impact of Russian P&L charges, which totalled £21m in 2022. Energy & Commodities revenue fell by 2% as markets continued to be very subdued, driven primarily by the war in Ukraine and the Strategic report resulting sharp price rises in European gas and power. Oil markets demonstrated greater resilience particularly in the US and Asian markets. Revenue in the Liquidnet division was challenged by volatile equity markets but grew 18% due to a full year contribution from the Liquidnet Platform, and growth in the Relative Value business and as well as in Rates, Futures and FX. Parameta Solutions was up 8% benefitting from growing demand for high quality financial markets data. | | | | 2021 | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | (restated² | | (restated² | | | | | | | reported | | constant | | Reported | Constant | | | 2022 | currency) | | currency) | | currency | currency | | By Business Division | £m | | £m | | £m | change | change | Rates 566 509 531 11% 7% Credit 118 102 109 16% 8% FX & money markets 302 263 277 15% 9% Equities 243 214 227 14% 7% Inter-division revenues³ 22 19 20 16% 10% Total Global Broking¹ 1,251 1,107 1,164 13% 7% Energy & Commodities 384 367 393 5% (2)% Inter-division revenues³ 3 3 3 n/m n/m Total Energy & Commodities 387 370 396 5% (2)% Total Liquidnet⁴ 325 261 275 25% 18% Total Parameta Solutions⁵ 177 149 164 19% 8% Inter-division eliminations³ (25) (22) (23) (14)% (9)% Total revenue 2,115 1,865 1,976 13% 7% 1 In prior year reporting, the revenue breakdown of Global Broking included Emerging Markets revenue as a separate line item. This revenue has now been reclassified to the relevant asset classes within Global Broking. Emerging Markets revenue reported in 2021 of £179m has been reclassified as follows: Rates: £65m; Credit £20m, FX & Money Markets £93m, Equities £1m. 2 Post Trade Solutions revenue has been reclassified from Parameta Solutions to Global Broking and Liquidnet. Post Trade Solutions revenue reported in 2021 of £17m has been reclassified as follows: Rates (Global Broking): £15m & Liquidnet Platform: £2m. MidCap Partners revenue reported in 2021 of £13m has been reclassified out of Global Broking and into Liquidnet. 3 Inter-division charges have been made by Global Broking and Energy & Commodities to reflect the value of proprietary data provided to the Parameta Solutions division. The Global Broking inter-division revenue and Parameta Solutions inter-division costs are eliminated upon the consolidation of the Group’s financial results. 4 As previously announced in our Q3 Trading Update on 1 November 2022, the Liquidnet division includes the Liquidnet platform (the acquired business), COEX Partners, ICAP Relative Value, and from 1 October 2022 onwards, MidCap Partners following the transfer from Global Broking). 5 In previous reporting, Parameta Solutions included D&A and Post Trade Solutions (‘PTS’). The Matchbook and ClearCompress brands within PTS are now reported under Global Broking, while e-Repo is now reported in the Liquidnet division. TP ICAP GROUP PLC Annual Report and Accounts 202221 Financial and operating review continued Operating expenses The table below sets out operating expenses, divided principally between front office costs and management and support costs. Front office costs tend to have a large variable component 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. | | | | 2021 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | (restated¹ | | | (restated¹ | | | Constant | | 2022 | reported currency) | | | constant currency) | | | Reported | Currency | | £m | | | £m | | | £m | Change | Change | Front office costs – Global Broking² 780 694 729 12% 7% – Energy & Commodities² 263 248 266 6% (1%) – Liquidnet² 246 170 182 45% 35% – Parameta Solutions² 63 51 55 24% 15% Total front office costs 1,352 1,163 1,232 16% 10% Management and support costs – Employment costs 268 226 238 19% 13% – Technology and related costs 87 79 83 10% 5% – Premises and related costs 29 28 29 4% – – Depreciation and amortisation 82 82 86 (2%) (5%) – FX (gains)/losses (14) 11 11 (227%) (227%) – Other administrative costs 48 53 52 (9%) (8%) Total management and support costs 500 479 499 4% – Total adjusted operating costs 1,852 1,642 1,731 13% 7% Significant items 130 136 n/a (4%) n/a Total operating expenses 1,982 1,778 n/a 11% n/a 1 Post Trade Solutions front office costs have been reclassified from Parameta Solutions to Global Broking and Liquidnet. Post Trade Solutions front office costs reported in 2021 of £10m has been reclassified as follows: Rates (Global Broking): £9m & Liquidnet Platform: £1m. . Includes all front office costs, including broker compensation, sales commission, travel and entertainment, telecommunications, information services, clearing and settlement fees as well as other direct costs. TP ICAP GROUP PLC Annual Report and Accounts 202222 Total front office costs of £1,352m, which are predominantly variable with revenue, increased by 10% compared with 2021, (an increase of 16% in reported currency) include an additional quarter of Liquidnet and the £21m P&L charge relating to Russian exposures. Total management and support costs of £500m were flat, year-on-year in constant currency. Excluding FX gains/(losses) on retranslation of net financial assets the costs increased by 5%. As a result, the total adjusted operating costs were £1,852m, which was 7% higher than 2021 in constant currency (13% in reported currency). We achieved in-year cost savings of £25m as per our target, including cost savings initiatives on Liquidnet cost synergies. During 2022, we incurred total strategic IT investment spend amounting to £22m (£8m of operating expenses, £14m of capital expenditure). #### Capital and liquidity management ##### Capital management TP ICAP successfully redomiciled from the UK to Jersey, Channel Islands in February 2021. This, together with the progress we are making on consolidating legal entities, has enabled the Group to undertake a review to identify opportunities to unlock cash. In aggregate, we expect to generate or free up approximately £100m of cash by the end of 2023. The exact timing of release for certain initiatives will be impacted by external (e.g. regulatory) dependencies. Example initiatives include, but are not limited to: - Consolidation of broker-dealer entities in the US; - Distribution of the surplus following the wind-up of the UK. Defined Benefit Pension Scheme (dependent on approval from Trustees); - Proceeds from the Liquidnet purchase price adjustment (see significant items section below); - Sale of office space in Paris; - Closure of dormant UK regulated entities; and - Efficiencies from reorganisation of settlement and clearing arrangements. We made good progress during the second half of the year and have already freed up £30m of cash. The cash generated or freed up from the above short-term initiatives will be used for the repayment of debt – to increase our investment-grade credit rating headroom – and to reduce future finance costs. We are also exercising prudence in the current environment of rising interest rates. The Board is committed to identifying and returning any potential surplus capital to shareholders, subject to the ongoing assessment of our balance sheet and investment requirements. #### Liquidity management Following our successful debt refinancing in November 2021, we renewed our Revolving Credit Facility ('RCF') for a further three years on 31 May 2022. The RCF increased from £270m to £350m, providing additional liquidity flexibility, and adding new providers. The terms of the new facility were also improved, including a reduction in margin from 2.00% to 1.75% over the reference rate. #### Significant items The significant items are categorised as below. ##### Restructuring and related costs Restructuring and related costs arise from initiatives to reduce the ongoing cost base and improve efficiency to enable the delivery of our strategic priorities. These initiatives are significant in size and nature to warrant exclusion from adjusted measures. Costs for other smaller scale restructuring are retained within both reported and adjusted results. ##### Disposals, acquisitions and investments in new businesses Costs, and any related income, related to disposals, acquisitions and investments in new business are transaction dependent and can vary significantly year-on-year, depending on the size and complexity of each transaction. Amortisation of purchased and developed software is retained in both the reported and adjusted results as these are considered to be core to supporting the operations of the business. ##### Legal and regulatory matters Costs, and recoveries, related to certain legal and regulatory cases are treated as significant items due to their size and nature. Management considers these cases separately due to the judgements and estimation involved, the costs and recoveries of which could vary significantly year-on-year. 23 TP ICAP GROUP PLC Annual Report and Accounts 2022 Financial and operating review continued The table below shows the significant items in 2022 vs 2021, of which around 80% of the total 2022 costs are non-cash. | 2022 | 2021 | | --- | --- | | Total | Total | | £m | £m | Restructuring & related costs – Property rationalisation 16 25 – Liquidnet integration 9 7 – Group cost saving programme 21 5 – Business restructuring/re-domiciliation¹ 2 3 – Remeasurement of employee long-term benefits² (7) 1 – Other – 1 Subtotal 41 42 Disposals, acquisitions and investment in new business – Amortisation of intangible assets arising on consolidation 45 46 – Liquidnet acquisition related³ 5 14 – Foreign exchange losses 5 4 – Reversal of US Tax indemnity provision – 13 – Adjustment to deferred consideration 8 2 – Strategic project costs 3 – Subtotal 66 79 Legal & regulatory matters – subtotal⁴ 5 15 Total pre-financing and tax 112 136 – Financing: Debt refinancing – 16 – Financing: Liquidnet interest expense on Vendor Loan Notes 1 1 Total post-financing cost 113 153 Tax relief (22) (21) Associate write down – 11 Total 91 143 1 £2m of Business restructuring/re-domiciliation costs include legal entity separation work to operationally separate Parameta Solutions to enable it to benefit from commercial partnerships and other venture arrangements. 2 (£7m) Remeasurement of employee long-term benefits Group credit relates to the reduction to the present value of the Group’s income protection liability. 3 £5m Liquidnet acquisition related costs mainly includes £20m impairment of customer relationship related intangible assets as a result of challenging equity market conditions, partly offset by £16m reimbursements following the ruling of an independent arbitration on the purchase consideration which is recognised in the income statement. 4 £5m Legal & regulatory matters mainly includes costs related to the cum-ex investigation by the Frankfurt and Cologne Public Prosecutors in Germany. Net finance expense Tax The adjusted net finance expense of £49m (reported net finance The effective rate of tax on adjusted profit before tax is 25.7% expense £50m), is comprised of £40m interest expense and £15m (2021: 24.9%). The effective rate of tax on reported profit before of net lease financing costs, offset by £6m interest income. The £7m tax is 31.9% (2021: 95.8%). The higher rate on reported profit before reduction compared with £56m in 2021 is mainly from: tax in the prior year arose primarily due to a £16m increase in the deferred tax liability recognised in respect of intangible assets > £3m interest cost saved from liability management exercise arising on consolidation following the announcement of a future in 2021 redeeming 2024 Sterling Notes; increase in the UK corporation tax rate, which was included within > £2m non-recurring hedging costs incurred in 2021 for Liquidnet significant items. acquisition consideration; > £4m interest income from higher interest on cash balances; and > Offset by £2m increase in net lease financing costs. TP ICAP GROUP PLC Annual Report and Accounts 202224 #### Basic EPS The average number of shares used for the 2022 Basic EPS calculation is 779.1m (2021: 759.3m) which reflects 788.7m shares in issue less 9.1m shares held by the TP ICAP plc Employee Benefit Trust ('EBT') at 31 December 2021 and 0.5m of the time apportioned movements in 2022 in shares held by the EBT used to acquire and settle deferred share awards. The TP ICAP plc EBT has waived its rights to dividends. The reported Basic EPS for 2022 was 13.2p (2021: 0.7p) and adjusted Basic EPS for 2022 was 24.9p (2021: 19.5p). #### Dividend The Board is recommending a final dividend for 2022 of 79p, which, when added to the interim dividend of 4.5p, results in a total dividend for the year of 12.4p, an increase of 31% from prior year. This aligns to the Group's dividend policy which targets a dividend cover of approximately two times an adjusted post-tax earnings. The dividend distribution during the year is typically based on a pay-out range of 30-40% of H1 adjusted post-tax earnings with the balance paid in the final dividend. The final dividend will be paid on 23 May 2023 to shareholders on the register at close of business on 14 April 2023. The ex-dividend date will be 13 April 2023. The Company offers a Dividend Reinvestment Plan ('DRIP'), where dividends can be reinvested in further TP ICAP Group plc shares. The DRIP election cut-off date will be 28 April 2023. #### Group Guidance ##### 2020 Capital Markets Day ('CMD') targets (for 2023) At our CMD in December 2020 we set out financial targets for the end of 2023. As we often highlight, it is difficult to predict future levels of market activity, given the highly uncertain macro and geopolitical outlook. We are making good progress with more to do. Subject to current market conditions continuing until the end of 2023, we expect Parameta Solutions to exceed its contribution margin target (50%) by the end of 2023. We anticipate Global Braking (40%) to be close to its target, while Energy & Commodities (35%) is expected to be relatively close to its target. At the adjusted EBIT margin level, we expect Parameta Solutions to exceed its target (45%). Global Braking (19%) and Energy & Commodities (15%) are expected to be relatively close to their targets. Guidance that refers to being 'close' to target is defined as within one percentage point of target. 'Relatively close' is defined as being within one to two percentage points of target. A contribution margin target for the new combined Liquidnet division has been set at 30% for 2023, and, as a result, the Group adjusted EBIT margin target has been updated from 18% (the original CMD target) to 14%. This reflects the impact of the pandemic on the Group and the challenging equity market conditions for the Liquidnet platform due to market volatility, alongside the D2C Credit proposition moving within its targeted 3 to 6% market share range later than planned. Our additional guidance for 2023 is as follows. - > Liquidnet synergies for end of 2023 to realise annualised cost savings of at least £30m, an increase on the previous target of £25m. - > Significant items in 2023 are expected to be c.£85m (pre-tax), excluding potential income and costs associated with legal and regulatory matters. - > The UK corporate tax rate will increase from 19% to 25% in April 2023. - > Group net finance expense expected to be broadly in line with 2022 despite significant increase in the interest rate environment, and - > Dividend cover of c.2 times adjusted post-tax earnings. 33 TP ICAP GROUP PLC Annual Report and Accounts 2022 Financial and operating review continued # **Performance by Primary Operating Segment (Divisional basis)** The Group presents below the results of its business by Primary Operating Segment with a focus on revenues and alternative performance measures ('APMs') used to measure and assess performance. | 2022 | GB £m | ESG £m | UK £m | PT £m | Comp £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | | **Revenue** | | | | | | | | - External | 1,229 | 384 | 325 | 177 | - | 2,115 | | - Inter-division^{1} | 22 | 3 | - | - | (25) | - | | | **1,251** | **387** | **325** | **177** | **(25)** | **2,115** | | **Total front office costs** | | | | | | | | - External | (780) | (263) | (246) | (63) | - | (1,352) | | - Inter-division^{1} | - | - | - | (25) | 25 | - | | | **(780)** | **(263)** | **(246)** | **(88)** | **25** | **(1,352)** | | **Contribution** | **471** | **124** | **79** | **89** | **-** | **763** | | Contribution margin | 37.6% | 32.0% | 24.3% | 50.3% | - | 36.1% | | **Net management and support costs** | | | | | | | | - Management and support costs | (224) | (65) | (78) | (8) | (45) | (418) | | - Other operating income | 2 | - | - | - | 10 | 12 | | **Adjusted EBITDA^{2}** | **249** | **59** | **1** | **81** | **(33)** | **357** | | Adjusted EBITDA margin | 19.9% | 15.2% | 0.3% | 45.8% | n/m | 16.9% | | - Depreciation and amortisation | (36) | (10) | (25) | (2) | (9) | (82) | | **Adjusted EBIT^{3}** | **213** | **49** | **(24)** | **79** | **(42)** | **275** | | Adjusted EBIT margin | 17.0% | 12.7% | (7.4)% | 44.6% | n/m | 13.0% | | Average broker headcount | 1,856 | 632 | 149 | n/a | n/a | 2,637 | | Average sales headcount | - | - | 318 | n/a | n/a | 318 | | Revenue per broker (E'000)^{4} | 662 | 608 | 879 | n/a | n/a | 659 | | Contribution per broker (E'000)^{5} | 254 | 196 | 151 | n/a | n/a | 236 | | 2021 (reported currency) | GB^{6} £m | ESG^{6} £m | UK^{6} £m | PT^{6} £m | Comp £m | Total £m | | **Revenue** | | | | | | | | - External | 1,088 | 367 | 261 | 149 | - | 1,865 | | - Inter-division^{1} | 19 | 3 | - | - | (22) | - | | | **1,107** | **370** | **261** | **149** | **(22)** | **1,865** | | **Total front office costs** | | | | | | | | - External | (694) | (248) | (170) | (51) | - | (1,163) | | - Inter-division^{1} | - | - | - | (22) | 22 | - | | | **(694)** | **(248)** | **(170)** | **(73)** | **22** | **(1,163)** | | **Contribution** | **413** | **122** | **91** | **76** | **-** | **702** | | Contribution margin | 37.3% | 33.0% | 34.9% | 51.0% | - | 37.6% | | **Net management and support costs** | | | | | | | | - Management and support costs | (200) | (63) | (63) | (8) | (63) | (397) | | - Other operating income | 2 | - | - | - | 8 | 10 | | **Adjusted EBITDA^{2}** | **215** | **59** | **28** | **68** | **(55)** | **315** | | Adjusted EBITDA margin | 19.4% | 15.9% | 10.7% | 45.6% | n/m | 16.9% | | - Depreciation and amortisation | (29) | (9) | (25) | (2) | (17) | (82) | | **Adjusted EBIT^{3}** | **186** | **50** | **3** | **66** | **(72)** | **233** | | Adjusted EBIT margin | 16.8% | 13.5% | 11% | 44.3% | n/m | 12.3% | | Average broker headcount | 1,971 | 652 | 147 | n/a | n/a | 2,770 | | Average sales headcount | - | - | 234 | n/a | n/a | 234 | | Revenue per broker (E'000)^{4} | 552 | 563 | 695 | n/a | n/a | 562 | | Contribution per broker (E'000)^{5} | 210 | 187 | 158 | n/a | n/a | 202 | 18 TP/CAF GROUP PLC Annual Report and Accounts 2022 | 2021 (constant currency) | GBP bn | E&C bn | LN** bn | PS* bn | Corp/ Elm bn | Total bn | | --- | --- | --- | --- | --- | --- | --- | | **Revenue** | | | | | | | | - External | 1,144 | 393 | 275 | 164 | - | 1,976 | | - Inter-division^{1} | 20 | 3 | - | - | (23) | - | | | **1,164** | **396** | **275** | **164** | **(23)** | **1,976** | | **Total front office costs** | | | | | | | | - External | (729) | (266) | (182) | (55) | - | (1,232) | | - Inter-division^{1} | - | - | - | (23) | 23 | - | | | **(729)** | **(266)** | **(182)** | **(78)** | **23** | **(1,232)** | | **Contribution** | **435** | **130** | **93** | **86** | **-** | **744** | | Contribution margin | 37.4% | 32.8% | 33.8% | 32.4% | - | 37.7% | | **Net management and support costs** | | | | | | | | - Management and support costs | (207) | (65) | (72) | (12) | (56) | (412) | | - Other operating income | 2 | - | - | - | 8 | 10 | | **Adjusted EBITDA^{2}** | **230** | **65** | **31** | **74** | **(48)** | **342** | | Adjusted EBITDA margin | 19.8% | 36.4% | 77% | 45.7% | n/a | 17.3% | | - Depreciation and amortisation | (56) | (11) | (28) | - | (12) | (87) | | **Adjusted EBIT^{3}** | **194** | **54** | **(7)** | **74** | **(60)** | **255** | | Adjusted EBIT margin | 16.7% | 13.6% | (2.5)% | 45.7% | n/a | 12.9% | | Average broker headcount | 1,971 | 652 | 147 | n/a | n/a | 2,770 | | Average sales headcount | - | - | 234 | n/a | n/a | 234 | | Revenue per broker (£'000)^{4} | 580 | 603 | 722 | n/a | n/a | 592 | | Contribution per broker (£'000)^{5} | 221 | 199 | 166 | n/a | n/a | 215 | GB = Global Braking, E&C = Energy & Commodities, LN = Liquidnet, PS = Parameia Solutions, Corp/Elm = Corporate Centre, eliminations and other unallocated costs. 1. Inter-division charges have been made by Global Braking and Energy & Commodities to reflect the value of proprietary data provided to the Parameia Solutions division. The Global Braking Inter-division revenue and Parameia Solutions Inter-division costs are eliminated upon the consolidation of the Group's financial results. 2. Post Trade Solutions revenue and front office costs have been reclassified from Parameia Solutions to Global Braking and Liquidnet. Post Trade Solutions revenue reported in 2021 of £70m has been reclassified as follows: Rates (Global Braking), £15m & Liquidnet Platform, £2m. Post Trade Solutions front office costs reported in 2021 of £10m has been reclassified as follows: Rates (Global Braking), £95m & Liquidnet Platform, £71m. MidCap Partners revenue reported in 2021 of £13m (with front office costs of £9m) has been reclassified out of Global Braking and mid-Liquidnet. 3. Revenue and contribution per broker are calculated as external revenue and contribution of Global Braking, Energy & Commodities and Liquidnet division, excluding the Liquidnet Platform, divided by the average brokers for the year. The Group revenue and contribution per broker excludes revenue and contribution from Parameia Solutions and Liquidnet. 4. 2021 includes Liquidnet Platform post acquisition results from 23 March 2021, the date the transaction completed. 5. Adjusted EBITDA and Adjusted EBIT for each division has been reclassified to remove the IFRS 16 interest charge, previously charged to divisional Adjusted EBIT. The restatement aligns with IFRS statutory reporting where the IFRS 16 interest rate is disclosed within Group finance costs. #### Global Braking Global Braking revenue of £1,251m (which represents 59% of total Group revenue) was 7% higher (13% higher in reported currency) than 2021, reflecting increased market volatility across all asset classes and all regions. Revenue from Rates increased by 7% to £566m. Rates is our most profitable asset class and represents 45% of Global Braking revenue, and 27% of Group revenue. After more than a decade of low interest rates, 2022 saw a return to interest rate movements across most economies. Revenue in FX & Money Markets increased by 9% to £302m in 2022. Revenue from Credit increased by 8% to £118m, whilst Equities increased by 7% to £243m. Front office costs, which are largely variable with revenue, of £780m were 7% higher than 2021. Lower average broker headcount, cost savings during the year, and a shift towards higher margin business resulted in higher profitability. The resulting contribution margin was 37.6% compared with 37.4% in 2021 (37.3% on a reported basis), including the £20m P&L charge relating to Russian exposures. Excluding this charge, the contribution margin was 39.2%. Management and support costs of £224m were 8% higher than 2021 due to increased investment in the roll-out of Fusion, our electronic platform, Depreciation and amortisation expense of £56m was flat to prior year. The adjusted EBIT of £215m resulted in an adjusted EBIT margin of 17.0% (2021: £194m, 16.7% in constant currency, £188m and 16.8% in reported currency). 17 TP ICAP GROUP PLC Annual Report and Accounts 2022 Financial and operating review continued #### Energy & Commodities Energy & Commodities revenue of £387m in 2022 was 2% lower than in 2021 (5% higher on a reported basis), due to challenges in the European Gas and Power market. The number of oil, gas and other energy products traded on the Intercontinental Exchange ('ICE') reduced by 4% in 2022. The major reduction in the supply of gas from Russia led to sharp price rises for gas and power. This resulted in increased margin requirements for clients and a severe contraction in OTC bilateral credit lines leading to reduced trading activity. Gas prices have trended down from the extreme highs in the summer but are still many times higher than the historical average. Oil revenue has been more resilient in the US and Asia where the impact of the war has been less pronounced than in Europe. Revenue growth from our environmental's business slowed in the second half, clients were focused on managing the volatility from the war in Ukraine, rather than the energy transition. Revenue growth outperformed exchange volumes. Front office costs of £265m were 1% lower. This resulted in a contribution margin of 32.0% (2021: 32.8% in constant currency and 35.0% in reported currency). Management and support costs of £65m were flat from 2021, while depreciation and amortisation decreased by £1m. The adjusted EBIT was £49m in 2022, with an adjusted EBIT margin of 12.7% (2021: £54m and 15.6% in constant currency, £50m and 13.5% in reported currency) with the lower revenue more than offsetting the decline in total costs. #### Liquidnet Division$^{1}$ At £325m, Liquidnet's revenue (15% of total Group revenue) was up 18%. This includes a full-year contribution from the acquired Liquidnet platform compared to nine months in 2021 (the acquisition completed March 2021). The Liquidnet equities platform experienced challenging market conditions during the year, including high levels of volatility, leading to subdued volumes in larger block trading. In the US, block market volumes by the top 5 Agency Alternative Trading System ('ATS') venues were flat, while in Europe, Large in Scale ('LIS') transaction volumes decreased by 15%. These are the two-market segments in which Liquidnet is most active. Liquidnet's block market share within the top 5 Agency ATS venues moved from 24.8% in 2021 to 25.2% in 2022. Our European market share of LIS transactions went from 29.1% to 27.7%. The rest of the division delivered a strong performance, driven by the Relative Value business as well as from growth in Rates, Futures and FX. Front office costs of £246m increased 35%, reflecting a full year of Liquidnet platform costs and investment to drive future organic growth in the business. The resulting contribution was £79m (2021: £93m in constant currency and £91m in reported currency) with a contribution margin of 24.3% (2021: 33.8% in constant currency and 34.9% in reported currency). Management and support costs were £78m in 2022 compared with £72m for nine months of ownership in 2021. The adjusted EBIT was £(24)m and the adjusted EBIT margin was (7.4)% (2021: £(7)m and (2.5)% in constant currency and £3m and 1.1% in reported currency). $^{1}$ As previously announced in our Q3 Trading Update on 1 November 2022, the Liquidnet division includes the Liquidnet platform (the acquired business), COLX Partners, ICAP Relative Value, and from 1 October 2022 onwards, MidCap Partners (following the transfer from Global Banking). 28 TP/ICAP GROUP PLC Annual Report and Accounts 2022 ### Parameta Solutions$^{2}$ Revenue of ETT$^{3}$m was 8% higher than the prior year. 95% of total Parameta Solutions revenue is subscription-based, and therefore recurring. Parameta Solutions is benefitting from the successful delivery of its solar-strategy, including the establishment of a Global Strategic Accounts function, client segmentation and revenue diversification. 53 new clients were onboarded in 2022; 90% of which were non-self-side clients including buy-side, corporates, professionals services and energy and commodities firms. This has been supported by the direct to client distribution strategy where an online product inventory enables clients to explore content. Clients are licensing historical, intraday and streaming multi-brand data, set up to be delivered directly into their cloud environment or data warehouse. Clear Consensus, our independent price verification tool that allows clients to manage risk and optimise capital allocation, has made good progress with additional dealers participating in the proposition. Client data onboarding has taken longer than initially anticipated which has delayed revenue generation to 2023. Following benchmark administrator authorisation, Parameta Solutions now has licensed clients paying for use of its benchmarks for issuance activity. Parameta Solutions onboarded its first client, a prominent bank in Asia, on its Transaction Cost Analysis (TCA) platform. The rates evaluated pricing service was launched for non-linear rates with further expansion of the service scheduled for 2023. Parameta Solutions has announced two further commercial partnerships in key high growth areas. The first is with Numerix, a global leading OTC analytics and derivatives pricing company where the business will work with them to develop an OTC Derivatives Valuation service. The second partnership is with General Index, a challenger benchmark provider in commodity markets, focused on launching indices covering EU LNG markets. Front office costs of £88m increased by 13%. The resulting contribution was £89m, at a contribution margin of 50.3% (2021: 52.4% in constant currency and 51.0% in reported currency). Management and support costs were £8m in 2022 compared with £12m in 2021. The adjusted EBIT, also taking into account FX gains and losses, was £79m, which is a margin of 44.6% (2021: £74m and 45.1% in constant currency, £66m and 44.3% in reported currency). ### Cash flow The table below shows the changes in cash and debt for the year ending 31 December 2022 and 31 December 2021. | £m | 2022 £m | 2021 £m | | --- | --- | --- | | **EBIT reported** | **165** | **97** | | Depreciation, amortisation and other non-cash items | 178 | 165 | | Change in Net Matched Principal balances | 27 | (36) | | Movements in working capital | 62 | (17) | | Taxes and interest paid | (106) | (98) | | **Operating cash flow** | **324** | **111** | | Capital expenditure | (55) | (58) | | Disposal of property, plant and equipment | 12 | - | | Acquisition consideration paid | - | (455) | | Cash acquired with acquisition | - | 202 | | Deferred consideration paid on prior acquisitions | (10) | (14) | | (Purchase)/sale of financial assets | (50) | 11 | | Other investing activities | 23 | 21 | | **Investing activities** | **(78)** | **(289)** | | Net proceeds from rights issue | - | 509 | | Dividends paid to shareholders | (78) | (47) | | Net funds received from issuance of 2028 Sterling Notes | - | 247 | | Repayment of 2024 Sterling Notes including premium | - | (200) | | Repayment of loan from related party | (47) | - | | Other financing activities | (38) | (13) | | **Financing activities** | **(165)** | **296** | | **Change in cash** | **83** | **118** | | Foreign exchange movements | 38 | - | | Cash at the beginning of the period | 767 | 649 | | **Cash at the end of the period** | **888** | **767** | $^{2}$ In previous reporting, Parameta Solutions included data and analytics (D&A) and Post Trade Solutions (PTS). The Matchbook and Clear Complex brands within PTS are now reported under Global Banking, while in Reps is now reported in the Liquidner division. 29 TP ICAP GROUP PLC Annual Report and Accounts 2022 Financial and operating review continued The Group’s net cash inflow from operating activities increased Debt finance to £324m from £111m in 2021 driven primarily by the following: The composition of the Group’s outstanding debt is summarised below. | > Reported EBIT increased by £66m to £163m compared with 2021; | At 31 December | | At 31 December | | | --- | --- | --- | --- | --- | | > £27m cash inflow (2021: outflow of £36m) from changes in | | 2022 | | 2021 | | | | £m | | £m | matched principal financial assets and liabilities; 5.25% £247m Sterling Notes > £62m cash inflow (2021: outflow of £17m) from movements in January 2024¹ 253 252 working capital including an additional £47m bonus accruals and 5.25% £250m Sterling Notes £15m of trade and other payables as well as £12m decrease in May 2026¹ 250 250 stock lending balances; this was partly offset by a £24m increase | in trade and other receivables; and | 2.625% £250m Sterling Notes | | --- | --- | | > £106m cash outflow (2021: outflow of £98m) from taxes and | November 2028¹ 248 248 | | interest paid comprises of £51m taxes and £55m interest | Loan from related party | | payments. Tax payments increased by £12m in line with increased | (RCF with Totan) – 51 | | profit and interest payments reduced by £4m as a result of | Revolving credit facility drawn – | | refinancing activity in 2021 at lower interest rates. | banks – – | 3.2% Liquidnet Vendor Loan Notes 43 38 The key investing activities in the year were: Overdrafts – 17 Debt (used as part of net > £53m capital expenditure mainly represents technology and (funds)/debt) 794 856 strategic project spend. This compared with £58m in 2021 Lease liabilities 279 286 which included office development expenditure; Total debt 1,073 1,142 > £12m cash inflow from the disposal of a freehold property in Paris; 1 Sterling Notes are reported at their par value net of discount and unamortised issue costs and including interest accrued at the reporting date. > £50m financial assets outflow driven by the purchase of additional financial assets held as collateral; and The Group’s gross debt, excluding lease liabilities, has decreased to > £23m other investing activities mainly includes dividends from £794m as a result of the repayment of the related party loan of associates and joint ventures. £51m, and a £17m decrease in settlement overdrafts at 31 December 2022 compared with 31 December 2021. The primary financing activities in the year were: The Group refinanced its main bank revolving credit facility in > £78m dividend paid to shareholders comprised of the 2021 final May 2022 increasing its capacity to £350m and with a new initial dividend of 5.5p and 2022 interim dividend of 4.5p paid in 2022; maturity of May 2025. As at 31 December 2022, this facility was > £47m repayment of the loan drawn down from the Totan credit undrawn. The Group also has access to a Yen 10bn Totan facility facility; and that, as at 31 December 2022, was undrawn and has a maturity of > £38m other financing activities mainly include finance lease February 2025. capital repayments. Foreign exchange gain: > The weakening of GBP, particularly against the USD in 2022, has resulted in a retranslation gain of £38m. As a result of the above, the Group’s cash balance increased by £121m. TP ICAP GROUP PLC Annual Report and Accounts 202230 #### Exchange rates The income statements and balance sheets of the Group's businesses whose functional currencies are not GBP are translated into GBP at average and period end exchange rates respectively. The most significant exchange rates for the Group are the USD and the Euro. The Group's current policy is not to enter into formal hedges of income statement or balance sheet translation exposures. Average and period end exchange rates used in the preparation of the financial statements are shown below. Foreign exchange translation has been a tailwind for the Group in 2022, caused largely by GBP depreciation against the USD, with approximately 60% of Group revenue and approximately 40% of costs in USD, resulting in a currency mismatch. The average and the period end GBP/USD rate weakened 10% year-on-year. | Average | 2022 | 2021 | | --- | --- | --- | | US Dollar | $1.24 | $1.50 | | Euro | €1.18 | €1.15 | | Period End | 2022 | 2021 | | US Dollar | $1.19 | $1.32 | | Euro | €1.16 | €1.18 | #### Pensions The Group has one defined benefit pension scheme in the UK that is currently in the process of being wound up. The wind-up of the Scheme commenced in 2019. During the year the Trustee completed the buy-out of the Scheme's principal pension liabilities, a process that transferred each pension obligation from the Scheme to Rothesay Life. The remaining Scheme's obligations are expected to be settled in Q2 2023 allowing the wind-up to be completed. Under UK legislation, once a Scheme commences wind-up, the assets of the Scheme pass unconditionally to the Trustee to enable it to settle the Scheme's liabilities. As a result, the Group applies the requirement of IFRIC 14, fully restricting the Group's recognition of the £45m (31 December 2021: £46m) net surplus by applying an asset recognition ceiling. Changes as a result of the application of the asset ceiling are recorded in Other Comprehensive Income. During the wind-up period, the Group continues to restrict the recognition of the net surplus. Any benefits augmented during this time represent a past service cost and are recorded as a significant item in the Income Statement as and when such benefits are agreed. Costs associated with the settlement of the Scheme's liabilities will also be recorded as a significant item in the Income Statement as and when incurred. There were £1m past service and settlement costs in 2022 (2021: £1m). Following the final settlement of the Scheme's liabilities and costs, the Scheme will be wound up, and the Group expects to receive the remaining asset, subject to applicable taxes at that time, currently 55%. #### Regulatory capital Since February 2021, Group level regulation falls under the Jersey Financial Services Commission. The FCA is the lead regulator of the Group's EMEA businesses, which are sub-consolidated under a UK holding Company, for which the consolidated capital adequacy requirements under the Investment Firms Prudential Regime ('IFPR') apply. This sub-group maintains an appropriate excess of financial resources. 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. #### Climate change considerations We are in the process of considering how material climate-related issues affect our business strategy. In 2022, this has been carried forward by engagement with senior management across the business. A high-level climate change impact assessment has highlighted areas of exposure across our key sites and business operations. We have also strengthened our understanding of the exposure of our largest suppliers to climate change and the level of their own emissions. Our understanding of the impact of climate change grew as a result of our engagement in 2022. By the end of 2023, following the completion of a detailed qualitative, and quantitative scenario analysis, we expect to have mapped out how climate-related issues could affect financial performance (eg revenue, costs) and financial position (eg assets, liabilities) and to have that understanding inform our business plans. 31 TP ICAP GROUP PLC Annual Report and Accounts 2022 ## Our market ## CONNECTING TRENDS, INSIGHTS AND ACTIONS ## Understanding the key industry trends ## that affect our business means we are well ## positioned to seize market opportunities. TP ICAP GROUP PLC Annual Report and Accounts 202232 | TREND 1: | TREND 2: | | --- | --- | | ELECTRONIFICATION OF FIXED | EVOLVING REGULATORY | | INCOME MARKETS CONTINUES, | LANDSCAPE | ## BUT DEMAND REMAINS FOR ## VOICE BROKING Strategic report The trend of electronification of the Fixed Income market With heightened market volatility, regulator expectations have continues. This is being driven by the increased acceptance of continued to evolve with most regulatory bodies combining automating trade execution, wider use of algorithmic trades, a conservative view with a more proactive approach. and greater prevalence of programme trading. Multiple new technologies and trading platforms have been launched and In April 2022, the UK’s Financial Conduct Authority (‘FCA’) are being more widely utilised (eg LedgerEdge, an electronic set out its three-year results focused strategy. This included a corporate bond trading platform, launched in May 2022). statement from its CEO that the FCA will use, “our enforcement and intervention powers more actively, pushing the boundaries However, the role of the broker continues to be vital in ensuring where we need to.”³ effective market infrastructure. As The Trade (2022)¹ states, “human-to-human interaction remains a crucial part of fixed In May 2022, the European Central Bank (‘ECB’) published initial income trading – a facet that cannot be fully automated”. findings of its desk-mapping study that reviewed risk management practices of trading desks. It found 21% required “targeted In 2022, there were several major macroeconomic events that supervisory action.” Later in October, the European Commission caused significant market volatility. These included the conflict proposed fundamental regulatory reform on bank branches in Ukraine, the energy crisis, the high inflationary environment operating in a third country (third country branches or TCBs)⁴. that triggered central banks to raise interest rates sharply, and the greater than anticipated slowdown in China. In the USA, The Trade reports that the SEC will continue to propose new regulations on fixed income trading to address In a publication from the IMF², Dodd (2017) suggested inter- pre- and post-trade transparency and electronic platform rules. dealer brokers, “help market participants get a deeper view of the market”. This can significantly benefit clients looking to trade in and out of certain holdings, particularly if their position is illiquid and/or complex and in periods of heightened volatility with substantial price fluctuations. It is in these markets that a strong broking franchise, with access to multiple deep liquidity pools, is able to generate strong value for its clients. What does it mean for TP ICAP? What does it mean for TP ICAP? Recognising the advance of electronification, we are TP ICAP has a global presence with offices in 28 countries, each transforming to future proof our core broking proposition. supervised by a different regulator under a different jurisdiction. Developing and deploying Fusion provides clients and brokers With regulatory oversight evolving as outlined above, TP ICAP with an electronic platform that aggregates multiple liquidity continues to maintain strong relations with its regulators. pools across asset classes. We believe the role of brokers will Dedicated teams monitor and maintain the firm’s regulatory continue to be critical for market participants. The Fixed Income compliance. We have also continued to invest in this area by market is unlikely to evolve into a fully-automated, electronified adding new hires dedicated to regulatory compliance, and by system, particularly with products that are more tailored and engaging with consultants to ensure standards are being met less liquid (eg an interest rate swap with an unusual maturity). from an independent perspective. We will therefore continue to serve clients by providing an electronic offering, complemented by the value that voice broking provides. TP ICAP GROUP PLC Annual Report and Accounts 202233 Our market continued | TREND 3: | TREND 4: | | --- | --- | | DEMAND FOR MARKET DATA | GREATER FOCUS ON CLIMATE | | CONTINUES TO GROW | CHANGE | Demand for data and analytics has continued to grow. Burton From 1 January 2022, UK-listed companies, banks and insurers Taylor estimates global spend in market data and analysis could are required to report on climate change-related matters, grow up to 14% in 2022, after already increasing 7.4% in 2021⁵. including statements and policies consistent with the Task Force This growth has been accelerated by greater adoption of Artificial on Climate-related Financial Disclosures (‘TCFD’). Further to this, Intelligence to process and analyse data more efficiently and the Financial Reporting Council (‘FRC’), on behalf of the FCA, effectively. In addition, increased acceptance of new technology provided guidance in July 2022 on how companies should to manage and store data ‘in the cloud’ has facilitated more agile approach assessing and reporting climate-related risks and working, is a cheaper, more flexible solution to data access, opportunities from a governance, strategy, risk management, and mitigates some of the previous challenges with physical and metrics and targets perspective. ‘on-premises’ technology. In addition, the rise of ESG (Burton Taylor estimates ESG indices grew c.80% in 2021⁵) has driven Similar measures are being implemented in Europe with the a spike in the demand for ESG-related data. European Commission requiring similar ‘Level 2’ Sustainable Finance Disclosures Regulation (‘SFDR’) reporting from January All these trends illustrate an expanded use case of market data 2023 for banks, asset managers, insurers and investment firms, and ultimately, the value of having access to the underlying with the standard to apply to a broader group of companies data. A study by PwC suggested “organisations have rightly in the following years. ESG-related disclosure obligations for the started to fear big data players”⁶ given the high concentration US and the rest of the world (including Asia) are likely to follow in valuable data ownership. As a result, owners and producers in due course, although nothing to date has been formally of proprietary data are in a prime position as they control how announced by regulators in these regions. their data is distributed and utilised thereafter. What does it mean for TP ICAP? What does it mean for TP ICAP? TP ICAP’s data and analytics division Parameta Solutions is the As a UK-listed company, TP ICAP must comply with climate- world’s leading provider of scarce, neutral, over-the-counter related reporting requirements set by the FCA. We have duly set pricing data. The division has continued to deliver strong, out our TCFD report in the Sustainability chapter on page 50. consistent financial performance by offering a comprehensive suite of data products and services, derived predominantly from In 2023, we will continue to improve our approach to embedding TP ICAP’s broking divisions, and by adapting to client needs as the TCFD framework. We have a detailed work plan in place that they change. For example, Parameta Solutions developed an will be executed throughout the year. inflation benchmark product in response to the high inflationary environment around the globe. Outside of our reporting obligations, we also recognise the emergence of new opportunities that climate change brings. As our electronic platform, Fusion, is rolled out to more broking Specifically, we can play a key role in providing the market desks with greater adoption of electronic trading, Parameta infrastructure, liquidity and data solutions necessary to help Solutions will have access to additional, more enriched data points. clients advance their transition journeys. As the owner of the underlying proprietary data via TP ICAP’s broking divisions, Parameta Solutions has been able to successfully Our renewable energies broking desks in Energy & Commodities, leverage its position and differentiate itself from competitors, and the dedicated environmental offering from Parameta evident by its continued strong financial performance. Solutions, are just two examples of solutions we have developed in this space. As markets continue to evolve and new products emerge, we will ensure we remain well positioned to meet our clients’ needs. TP ICAP GROUP PLC Annual Report and Accounts 202234 ## TREND 5: ## CENTRAL BANKS TIGHTENED ## MONETARY POLICIES GIVEN ## THE HIGH INFLATIONARY ## ENVIRONMENT Strategic report Financial markets have experienced a prolonged period of abundant liquidity. This was a consequence of central banks around the world implementing stimulus measures since the Global Financial Crisis, and more recently to mitigate shocks caused by the COVID-19 pandemic. However, as the world emerges from the pandemic, things have changed. Many economies are facing high inflation induced by disruptions in global supply chains and geopolitical tensions. To restrict inflation within a reasonable threshold and preserve price stability, central banks have been prompt to tighten monetary policies. Amongst others, the Federal Reserve, European Central Bank and Bank of England have all markedly increased interest rates. The era of quantitative easing and ‘easy money’ seems to have ended. What does it mean for TP ICAP? A market with higher interest rates, a healthy degree of volatility and market participants holding differing views helps to create a more shapely yield curve than previously observed. This positions TP ICAP well for greater trading volume across our interest rate derivative desks. In addition, as the world’s largest inter-dealer broker, with one of the largest aggregated high- quality liquidity pools, TP ICAP is well placed to facilitate more activity as central banks seek to withdraw liquidity from the financial markets. The current inflationary environment causes upward cost pressure for any business. At TP ICAP, our cost base benefits from the multi-year nature of certain non-staff costs. We will also continue our efforts to manage our cost and capital closely and efficiently, including, but not limited to, an ongoing optimisation of our real estate footprint. 1 The Trade. 2 International Monetary Fund. 3 Financial Conduct Authority. 4 ECB Banking Supervision. 5 Burton Taylor’s Market Data Boon Nov 2022 Report. 6 PwC. TP ICAP GROUP PLC Annual Report and Accounts 202235 ## Our strategy and KPIs ## OUR STRATEGY ## Our vision is to be the world’s most trusted, ## and innovative, liquidity and data solutions ## specialist. To achieve this, we are focused ## on the delivery of three strategic priorities: ## transforming our business, diversification, ## and dynamic capital management. Focus on Fusion FX ## Case study Fusion FX is the platform that gives clients access, via a single Transforming our business sign on, to the aggregated global liquidity of the entire range of Fusion is TP ICAP’s award-winning electronic platform. It is a key TP ICAP’s FX products. initiative through which we are transforming our business and future proofing our core broking proposition. Fusion FX provides clients the optionality to automate their workflow by connecting directly via API, or use the Fusion FX screen Fusion with its ‘drag and drop’ functionality. With the Fusion FX screen, Fusion gives clients access to the aggregated liquidity of TP ICAP’s clients can view and execute trades in multiple venues operated global brands. This deep, high quality, liquidity pool enables clients by TP ICAP across Americas, Asia Pacific and EMEA regions. to discover prices effectively and be confident in their capability to transact. Greater liquidity also drives trade volumes and can FX Options were launched on Fusion FX in 2020. In 2022, c.40% of minimise pricing and spread risk, which in turn generates better TP ICAP’s revenue in FX Options was generated through Fusion FX. value for clients. With encouraging initial client engagement, TP ICAP is ready to launch two venues for Asian one-month Non-Deliverable Forwards A key feature of the platform is the seamless user experience of a (‘NDF’). Looking ahead, we plan to also launch Crypto NDF and single sign on that connects the client to multiple products, across other FX products onto Fusion as we continue to execute our multiple asset classes. The platform offers a consistent look and strategic roadmap to transform our business. feel, that still allows for a customisable front-end screen. Our brokers sit at the heart of Fusion, drawing on its range of capabilities to construct the most relevant liquidity solutions to best service clients’ needs. By developing a proprietary electronic platform that enhances and complements our traditional voice broking franchise, we are diversifying our revenue profile by offering clients alternative hybrid and low-touch service offerings. Revenues generated through Fusion are also more sustainable as client adoption grows and clients and brokers become more familiar with the Fusion technology and its value. Trades executed on Fusion also generate a richer data source for our data and analytics division, Parameta Solutions, enabling them to develop new, innovative data solutions. CONNECTED CONTENT Strategic execution A progress update on the delivery of our three strategic priorities can be found in the CEO review. Page 12 TP ICAP GROUP PLC Annual Report and Accounts 202236 ## KEY PERFORMANCE INDICATORS ## Our KPIs are Alternative Performance ## Measures as defined by European ## Securities and Markets Authority ## (‘ESMA’). We provide these to offer ## additional insights into the Group’s Strategic report ## financial results. Revenue growth Contribution Reported (%) Reported (£m) 4% 702 -2% 680 4% 694 KPI definition KPI definition Revenue growth is defined as the annual growth of total reported Contribution is calculated as revenue less broker compensation and revenues. Group revenues are shown on page 18. other front office costs. It also includes the revenue of Parameta Solutions less direct costs. See contribution section on page 26. Comment Our core revenue growth is driven by transactional volumes that Comment reflect wider market conditions. The Group delivered a strong Contribution is another measure of business profitability, captured financial performance through an uneven macroeconomic at the divisional level. It provides an indication of business division environment, and against a backdrop of increased market volatility financials before management support costs. Including Liquidnet, and secondary trading volumes. Group revenues increased +13% Group contribution improved by 8% increasing from £703m in 2021 year-on-year on a reported basis (+7% on a constant currency to £763m in 2022. basis), reflecting the first full year performance of acquired Liquidnet platform. Adjusted operating profit (EBIT) margin Adjusted earnings per share (EPS) Reported (%) Reported (p) 12.5% 19.5 15.2% 29.3 15.2% 30.2 KPI definition KPI definition Adjusted operating profit margin is calculated by dividing adjusted Adjusted earnings per share is calculated by dividing the adjusted operating profit by revenue for the period. A reconciliation of profit after tax by the basic weighted average number of shares adjusted operating profit to statutory operating profit is shown in issue. See adjusted EPS section on page 219. on page 167. Comment Comment Over the long term, growth in shareholder value and returns are Adjusted operating profit margin is a measure of business linked to growth in adjusted EPS, which measures the adjusted profitability and is principally driven by revenue, broker and profitability of the Group after tax and interest costs. support staff compensation and other administrative expenses. The adjusted operating profit margin for 2022 increased by 0.5% relative to 2021. 2022 13% 2022 13.0% 2022 763 2022 24.9 TP ICAP GROUP PLC Annual Report and Accounts 202237 | 2021 2021 2021 2021 | | --- | | 2020 2020 2020 2020 | | 2019 2019 2019 2019 | ## Our business model ## OUR BUSINESS MODEL GENERATES ## VALUE IN TWO WAYS: ## 01 ## We generate commission revenue by ## providing broking and agency ## execution services ## Our Purpose To provide clients with access to global financial and commodities markets, improving price discovery, liquidity ## Name Passing/ and distribution of data, through ## responsible and innovative solutions. £1,938m Name Give-Up (92% of Group revenue) ## What we do ## £1,302m Through our people and technology, We carry out our broking (approximately 67% of broking we connect clients to superior liquidity activities according to three and agency execution revenue) and data solutions. main models: Where the Group identifies and introduces buyers and sellers ## Our strengths – who then complete the ## how we drive value transaction between themselves at mutually acceptable terms. ## creation: • Deep liquidity pools • Provider of scarce market data • Global network ## • Full range of broking protocols Buyers of financial products 02 • Broker-led market insight ## We generate subscription-based • Award-winning technology ## • Trusted client relationships revenue by constructing and selling • Strong conduct and client-first culture ## data-led solutions • Premium brands ## £177m (8% of Group revenue) TP ICAP GROUP PLC Annual Report and Accounts 202238 Strategic report ## We create value for… ## Matched Executing Clients Superior liquidity and data solutions. ## Principal Broker Shareholders Sustainable returns and value creation. ## £400m £236m (approximately 21% of broking (approximately 12% of broking Employees and agency execution revenue) and agency execution revenue) Nurturing and retaining talent. Where the Group is the Where the Group executes Regulators counterparty to both the buyer transactions on certain Strong governance and oversight. and seller of a matching trade regulated exchanges in respect (we hedge every client trade of client buy or sell orders, and Suppliers with an equal transaction), and then ‘gives-up’ the trade to the Sustained partnerships. maintain client anonymity. relevant client. Community Making a positive impact through colleague fundraising and volunteering. ## Sellers of financial products Environment Reducing our carbon emissions and supporting our clients on their transition journeys to a low-carbon economy. TP ICAP GROUP PLC Annual Report and Accounts 202239 Stakeholder engagement **The Board is committed to actively engaging with its stakeholders to ensure their interests are considered in Board discussions and decisions, promoting the success of the Company for the benefit of its members as a whole.** Details of how the Board has engaged with its key stakeholders and considered their interests in Board discussions and decision-making, can be found on this page. **Our stakeholders** The Nominations & Governance Committee reviewed and considered TP ICAP's stakeholders during the year and determined that the Company's key stakeholder groups remain: employees, shareholders, clients, regulators and suppliers. The Board told its engagement approach for each key stakeholder group to foster effective and mutually beneficial relationships and maintain a reputation for high standards of business conduct. Further details on these and the main methods we use to engage with them are set out on pages 42 to 49. In addition, community and climate-related matters are considered key areas of importance by the Board. Tracy Clarke, the ESG Engagement Non-executive Director, helps ensure that the Board is having the right conversations and considers the environmental and societal impact of its decisions alongside other key stakeholders. You can read more on this and our wider approach to sustainability in the Sustainability chapter on page 50. **Consequences of decisions in the long term** The Board recognises the importance of considering the likely consequences of its decisions in the long term, and has demonstrated this as part of its deliberation of the Group's strategy and business model as set out on pages 38 to 39. The Board held regular strategic sessions during 2022, including a full day session in May, to consider the long-term strategic direction of the Group. As a part of these strategic discussions, the Board considered the market and industry trends and the potential impacts on stakeholders. The Board's key strategic priorities and areas are summarised on pages 89 and 96 and detailed throughout this stakeholder engagement section. **Impact on our communities** The Board recognises the Group's responsibility to be a good corporate citizen, which contributes positively to the communities in which we operate and the wider environment. We have multiple initiatives in place to support these aims. You can read more on our communities in the Sustainability chapter on page 50. ![img-1.jpeg](img-1.jpeg) **Section 172(1) statement (including principal decisions and engagement with stakeholders)** TP ICAP Group plc is a Jersey registered company and therefore its Directors are not subject to UK Companies Act 2006 requirements. This includes section 172(1) and sections 414CA and 414CB of the UK Companies Act 2006. On this basis we have not included a Non-Financial Information Statement in this Annual Report and Accounts. Nevertheless, the Board of Directors confirms that during the year ended 31 December 2022 it has acted in a way that it believes promotes the long-term success of the Company for the benefit of its members as a whole, recognising that a broad range of stakeholders are material to the long-term success of the business, whilst having due regard to the matters set out in section 172(1) of the UK Companies Act 2006. Details of how this has been achieved and the ways in which the Board has engaged with our identified stakeholders, the outcomes of this engagement and the consideration of stakeholder interests in strategic decisions promoting the long-term sustainable success of the Company are set out on pages 42 to 49 and integrated throughout the Governance report. A similar statement will be reported in the statutory accounts for each of our active UK subsidiaries subject to UK Companies Act 2006 requirements for the year ended 31 December 2022. 40 TP ICAP GROUP PLC Annual Report and Accounts 2022 Fostering business relationships How the Board fulfils its section 172(1) duties Clients are fundamental to our business and represent our most significant business relationships. The Executive Directors and Our culture, values and strategy management undertake frequent client engagement. This feedback is considered as part of the Group’s strategy setting and The Board ensures that our employees live the values and long-term decision-making. The Board also works to foster strong creates a culture that reflects these, through a shared business relationships with the businesses and our suppliers, mindset to focus all employees’ efforts to achieve our purpose who provide business critical infrastructure services and certain and be open and inclusive to the fullest diversity of opinion outsourced operations across a wide spectrum of sectors including and experience. IT, telecommunications, market data and clearing and settlements. Strategic report The Group’s impact on its supply chain is considered by the Board as part of its annual approval of the Modern Slavery and Human Diverse set of skills, knowledge and experience Trafficking Statement. The Directors collectively have a diverse set of skills, The interests of employees knowledge, and experience, as shown on page 89, which The Board recognises that our people are critical to the success of assists the Board in making decisions. This contributes to their the business. Engagement with employees is vital to nurturing the ability to make well informed decisions which promote the Group’s culture and in helping us understand employees’ needs, long-term sustainable success of the Company. As part of a which in turn ensures that we retain and develop the best talent Director’s induction, they receive a detailed briefing on their across the organisation. We rely on our employees at all levels duties as a Director. to ensure the Company’s culture, based on its core values of Accountability, Adaptability and Authenticity, is well embedded in the business and aligned to the Company’s purpose and strategy. Board information High standards of business conduct The Board receives detailed papers and updates from Given our purpose is to provide clients with access to global management. To support the Board’s endeavours to better financial and commodities markets, improving price discovery, engage with and consider the interests of our stakeholders, liquidity, and distribution of data, through responsible and Board paper templates invite appropriate focus on the likely innovative solutions, it is vital that our workforce acts with a high long-term impact of a decision and how stakeholders have degree of integrity. The Board is responsible for determining the been considered in the development of the proposal, Company’s values and leading by example to instil a positive including any relevant engagement. culture throughout the Group, which reflects a reputation of adhering to high standards of conduct. The Board receives updates regarding corporate culture at each Board meeting as part of the Board discussion and decision CEO Report. In addition, focused updates on conduct are regularly presented to the Risk Committee. In connection with the work The Board provides thorough evaluation, challenge and undertaken to redefine the Group’s corporate values, cultural risk consideration through its discussion to ensure a decision acceleration initiatives were an area of high focus during 2022 for promotes long-term sustainable success. The Board uses the Board and its Committees. During the year the Board and the stakeholder engagement mechanisms summarised on Nominations & Governance Committee received updates on pages 42 to 49 to inform their decision-making process. employee engagement, the output of the 2021 Global Employee Key Board decisions during 2022 included matters relating Engagement survey and 2022 Pulse Global Employee Engagement to the Directors’ Remuneration Policy, the audit tender survey, and feedback following engagement with the designated process, climate-related matters, and the Group’s immediate Workforce Engagement Directors. and longer term strategies and response to the global macro uncertainty. Need to act fairly between shareholders The support of our shareholders underpins the Group achieving long-term success and attaining our goals and objectives. We Monitoring are therefore committed to proactive engagement with our The Board receives regular updates on key decisions, and the shareholders. The Board is mindful that it is important to act fairly actions taken in respect of them, through regular reports between shareholders and consider a variety of needs, and that submitted by management to each Board meeting and shareholders are increasingly interested in the mechanics of verbal updates as necessary. The Board monitors the decision-making not just the decision itself. TP ICAP is therefore effectiveness of its engagement mechanisms as part of committed to providing shareholders with reliable, timely and the Board evaluation process. transparent information. TP ICAP GROUP PLC Annual Report and Accounts 202241 Stakeholder engagement continued Our stakeholder groups How we engage to create value Board and management engagement highlights in 2022, including key Board decisions Priorities for 2023 Employees > The Board started the year with a clearer understanding of the longer-term impacts resulting from > We continued to work hard in 2022 to boost employee engagement, ensure employees feel > We will be focusing on the key While the Company is required the COVID-19 pandemic and continued to reflect on the ways we engage and communicate with heard and that their feedback creates action in the Group. priorities of making TP ICAP a to put in place a mechanism for our employees, utilising technology to enhance engagement as appropriate. > Managers engaged in focus group activities to understand more deeply the feedback given by place where all employees can engaging with UK employees, > We engage with our employees and gather feedback through our Workforce Engagement employees as part of the employee survey. Based on the information collected, the Board and build careers, belong and succeed, given the geographic spread of Programme, town halls, employee surveys, appraisals, and exit surveys, Group-wide emails, and management addressed the key topics and issues raised on a department and divisional basis. and to make TP ICAP a place the business, the Board decided in the TP ICAP Accord initiative with five employee networks across the Group: the Multicultural, > Employee feedback and the subsequent actions from the 2022 Global Employee Engagement where people are engaged and 2018 to include employees across LGBTQ+, Sports & Wellbeing, Veterans and Women’s Networks. survey was reviewed by the Nominations & Governance Committee and the action plans noted. would recommend as a place all our regions in our Workforce > During 2022, we enhanced how we engage with employees on the financial performance of the The Workforce Engagement Directors then followed up later in the year to check on progress to work. Engagement Programme. Company, introducing video interviews with the CEO and better utilising all-employee town halls and report back to the committee, as a part of monitoring the implementation and progress > Regarding engagement we will be and emails following the release of the Company’s full-year and half-year results. of the agreed initiatives. focusing on four main areas: Input to TP ICAP: > Three members of the Board, Mark Hemsley, Michael Heaney and Edmund Ng, are appointed as > The Board initiated a review of the Group’s existing corporate purpose, resulting in a set of new continuing to improve Talent, skills, values and output. Workforce Engagement Directors for the EMEA, Americas and Asia Pacific Regions respectively. purpose, vision and mission statements being approved and communicated. You can read more communication; reviewing and They work with management to gain insight into employee’s views, including through the about this on the inside front cover and page 54. improving systems and processes Value we create: Workforce Engagement Programme. Their responsibilities include championing the employee > We launched the Group’s new ‘Triple A’ corporate values of Accountability, Adaptability and that touch our employees; working Inclusive, positive, fulfilling and voice in the boardroom, providing insight into region-specific issues for employees, and Authenticity. These values are integral to the long-term success of the business and the Directors on how we collaborate; and high-performing workplace, strengthening the link between the Board and employees. are committed to promoting a culture which embodies the highest possible standards. Cultural working with employees on where employees feel valued > Direct engagement with employees during the year included meeting colleagues from the business acceleration initiatives were a key focus for the Board and Group Management Committee developing career paths. and respected. through office visits and as a part of Board presentations. (‘GMC’) in their considerations and decision-making as the Group redefined its values. > This will include introducing a > The Board regularly received people updates as part of the CEO and Group Head of Human > We revamped our internal communication strategy, incorporating employee feedback, more formalised career framework Resources updates to the Board and Nominations & Governance Committee. upgrading our channels including our intranet, strengthening the quality of content and and expanding our learning > We are focused on developing our employees and offering everyone access to learning improving employees’ user experience of our communications. opportunities for employees opportunities. Throughout 2022, we continued to run virtual training events globally covering > During the year our senior management held 17 town halls across the Group and regions, by introducing an in-house a wide range of business skills, hosted by expert training partners. Moving to virtual delivery of which seven were attended by the CEO and one was an all-colleague town hall via leadership and management has broadened the reach and connected colleagues to initiatives with which they may not videoconference. In addition, several of our business CEOs hold regular town halls with training programme. normally interact. their divisions. > The Board will continue to monitor > By delivering policies based on employee feedback, TP ICAP offers an attractive working > The Workforce Engagement Directors met with colleagues in their respective regions six times. the effectiveness of the Workforce environment for its employees. This helps TP ICAP remain competitive in attracting and Feedback and insights from the Workforce Engagement Programme and other engagement Engagement Programme, and other retaining talent. mechanisms were regularly discussed in Board and Board Committee meetings and considered informal and structured employee > We operate share plans offering eligible employees the opportunity to become shareholders, as a part of broader decision-making. engagement across the Group, to either by taking part in tax efficient saving schemes (country dependent) or as part of our > The easing of COVID-19 related restrictions enabled the CEO and Board Chair to recommence review our progress, improve remuneration strategy to increase share ownership and wider interest in the Group and its site visits, visiting our offices across the world including New York, Singapore, Madrid and Paris. oversight and ensure employees’ performance as a part of our broader initiatives. > The TP ICAP Accord networks stepped up activities once in person events became viable and views are integrated into the work > Further details on how we continually work to attract, develop and retain a talented, engaged cumulatively held over 45 events, with Non-executive Director attendance at a minimum of two of the Board and the strategy of group of colleagues and develop an inclusive and positive culture with meaningful opportunities events per region, raising awareness of the networks and providing direct engagement and the business, while supporting our for our employees to flourish can be found in our Sustainability chapter on page 50. educational opportunities. employees’ wellbeing. > Additionally, in July Kath Cates and Tracy Clarke led a ‘Talk with our NEDs’ event open to the Group’s Women’s Network, including London, Belfast, Paris and the Americas, attended by over 50 employees. > We reviewed our benefits offering to employees across the Group, taking into account employee feedback, to provide a consistent offering and introduced our Board approved electric car scheme in March for UK employees. > We increased our focus on early careers to attract the next generation into TP ICAP and ran a successful intern programme globally in the summer of 2022. In our Belfast office the Early Careers Programme continued to give a focused programme to support the first five years of an employee’s career, creating opportunities for progression, promotion and pay awards. > Other matters considered by the Board and its Committees in their decision-making included progress on conduct and culture initiatives, progress against diversity and inclusion targets, and other employee compensation considerations. TP ICAP GROUP PLC Annual Report and Accounts 202242 Our stakeholder groups How we engage to create value Board and management engagement highlights in 2022, including key Board decisions Priorities for 2023 Employees > The Board started the year with a clearer understanding of the longer-term impacts resulting from > We continued to work hard in 2022 to boost employee engagement, ensure employees feel > We will be focusing on the key While the Company is required the COVID-19 pandemic and continued to reflect on the ways we engage and communicate with heard and that their feedback creates action in the Group. priorities of making TP ICAP a to put in place a mechanism for our employees, utilising technology to enhance engagement as appropriate. > Managers engaged in focus group activities to understand more deeply the feedback given by place where all employees can engaging with UK employees, > We engage with our employees and gather feedback through our Workforce Engagement employees as part of the employee survey. Based on the information collected, the Board and build careers, belong and succeed, given the geographic spread of Programme, town halls, employee surveys, appraisals, and exit surveys, Group-wide emails, and management addressed the key topics and issues raised on a department and divisional basis. and to make TP ICAP a place the business, the Board decided in the TP ICAP Accord initiative with five employee networks across the Group: the Multicultural, > Employee feedback and the subsequent actions from the 2022 Global Employee Engagement where people are engaged and 2018 to include employees across LGBTQ+, Sports & Wellbeing, Veterans and Women’s Networks. survey was reviewed by the Nominations & Governance Committee and the action plans noted. would recommend as a place Strategic report all our regions in our Workforce > During 2022, we enhanced how we engage with employees on the financial performance of the The Workforce Engagement Directors then followed up later in the year to check on progress to work. Engagement Programme. Company, introducing video interviews with the CEO and better utilising all-employee town halls and report back to the committee, as a part of monitoring the implementation and progress > Regarding engagement we will be and emails following the release of the Company’s full-year and half-year results. of the agreed initiatives. focusing on four main areas: Input to TP ICAP: > Three members of the Board, Mark Hemsley, Michael Heaney and Edmund Ng, are appointed as > The Board initiated a review of the Group’s existing corporate purpose, resulting in a set of new continuing to improve Talent, skills, values and output. Workforce Engagement Directors for the EMEA, Americas and Asia Pacific Regions respectively. purpose, vision and mission statements being approved and communicated. You can read more communication; reviewing and They work with management to gain insight into employee’s views, including through the about this on the inside front cover and page 54. improving systems and processes Value we create: Workforce Engagement Programme. Their responsibilities include championing the employee > We launched the Group’s new ‘Triple A’ corporate values of Accountability, Adaptability and that touch our employees; working Inclusive, positive, fulfilling and voice in the boardroom, providing insight into region-specific issues for employees, and Authenticity. These values are integral to the long-term success of the business and the Directors on how we collaborate; and high-performing workplace, strengthening the link between the Board and employees. are committed to promoting a culture which embodies the highest possible standards. Cultural working with employees on where employees feel valued > Direct engagement with employees during the year included meeting colleagues from the business acceleration initiatives were a key focus for the Board and Group Management Committee developing career paths. and respected. through office visits and as a part of Board presentations. (‘GMC’) in their considerations and decision-making as the Group redefined its values. > This will include introducing a > The Board regularly received people updates as part of the CEO and Group Head of Human > We revamped our internal communication strategy, incorporating employee feedback, more formalised career framework Resources updates to the Board and Nominations & Governance Committee. upgrading our channels including our intranet, strengthening the quality of content and and expanding our learning > We are focused on developing our employees and offering everyone access to learning improving employees’ user experience of our communications. opportunities for employees opportunities. Throughout 2022, we continued to run virtual training events globally covering > During the year our senior management held 17 town halls across the Group and regions, by introducing an in-house a wide range of business skills, hosted by expert training partners. Moving to virtual delivery of which seven were attended by the CEO and one was an all-colleague town hall via leadership and management has broadened the reach and connected colleagues to initiatives with which they may not videoconference. In addition, several of our business CEOs hold regular town halls with training programme. normally interact. their divisions. > The Board will continue to monitor > By delivering policies based on employee feedback, TP ICAP offers an attractive working > The Workforce Engagement Directors met with colleagues in their respective regions six times. the effectiveness of the Workforce environment for its employees. This helps TP ICAP remain competitive in attracting and Feedback and insights from the Workforce Engagement Programme and other engagement Engagement Programme, and other retaining talent. mechanisms were regularly discussed in Board and Board Committee meetings and considered informal and structured employee > We operate share plans offering eligible employees the opportunity to become shareholders, as a part of broader decision-making. engagement across the Group, to either by taking part in tax efficient saving schemes (country dependent) or as part of our > The easing of COVID-19 related restrictions enabled the CEO and Board Chair to recommence review our progress, improve remuneration strategy to increase share ownership and wider interest in the Group and its site visits, visiting our offices across the world including New York, Singapore, Madrid and Paris. oversight and ensure employees’ performance as a part of our broader initiatives. > The TP ICAP Accord networks stepped up activities once in person events became viable and views are integrated into the work > Further details on how we continually work to attract, develop and retain a talented, engaged cumulatively held over 45 events, with Non-executive Director attendance at a minimum of two of the Board and the strategy of group of colleagues and develop an inclusive and positive culture with meaningful opportunities events per region, raising awareness of the networks and providing direct engagement and the business, while supporting our for our employees to flourish can be found in our Sustainability chapter on page 50. educational opportunities. employees’ wellbeing. > Additionally, in July Kath Cates and Tracy Clarke led a ‘Talk with our NEDs’ event open to the Group’s Women’s Network, including London, Belfast, Paris and the Americas, attended by over 50 employees. > We reviewed our benefits offering to employees across the Group, taking into account employee feedback, to provide a consistent offering and introduced our Board approved electric car scheme in March for UK employees. > We increased our focus on early careers to attract the next generation into TP ICAP and ran a successful intern programme globally in the summer of 2022. In our Belfast office the Early Careers Programme continued to give a focused programme to support the first five years of an employee’s career, creating opportunities for progression, promotion and pay awards. > Other matters considered by the Board and its Committees in their decision-making included progress on conduct and culture initiatives, progress against diversity and inclusion targets, and other employee compensation considerations. TP ICAP GROUP PLC Annual Report and Accounts 202243 Stakeholder engagement continued | Our stakeholder groups | How we engage to create value | | --- | --- | | **Shareholders** Details of our substantial shareholders can be found on page 158. **Input to TP ICAP:** Provision of strategic direction and stewardship. **Value we create:** Sustainable return on investment. | - We engage with our shareholders through our regulatory reporting including the Annual Report and Accounts, our full-year results, half-year results, trading updates and our Annual General Meeting ('AGM'). - We also ensure that shareholders are kept updated through results presentations, engagement meetings, road shows, conferences, telephone and video calls, electronic communications (including the website), as well as written correspondence where necessary. - When possible, we also participate in benchmarks and disclosure initiatives. - The Board recognises that the AGM is the primary form of formal interaction with its shareholders. All shareholders are invited to attend the AGM, typically held in May each year. All the Directors normally attend and are available to answer any questions from shareholders. - The Chief Executive Officer, Chief Financial Officer and Board Chair hold frequent meetings with investors. Additionally, all Non-executive Directors are available to meet shareholders, if requested, and the Board is regularly updated on shareholder feedback. - The Board regularly receives feedback on investor meetings and reporting of investor and financial market sentiment, along with copies of analysts' and brokers' briefings, to ensure that matters of importance are communicated to investors. - The Annual Report and interim results, together with information on the Group's activities, trading performance, products and recent developments are available on the Company's website www.tpicap.com. | 44 TP ICAP GROUP PLC Annual Report and Accounts 2022 Board and management engagement highlights in 2022, including key Board decisions Priorities for 2023 > The Directors' Remuneration Policy proposal continued to be a main consultation focus with shareholders in H1 2022, following the extensive shareholder engagement process commenced in 2021. > All proposals recommended by the Board for approval at the 2022 AGM, including a new Directors' Remuneration Policy, were approved with 80% or more of votes cast for each proposal. > During 2022 the Audit Committee Chair led a consultation with shareholders discussing TP ICAP's competitive external audit tender process launched in April 2022, to ensure that shareholders were given the opportunity to provide feedback on our proposals. The proposed new external auditor recommended by the Audit Committee and Board was announced on 28 July 2022 and will be presented to our shareholders for approval at the 2024 AGM. Further details on the process completed and the factors considered by the Audit Committee and Board in their decision-making can be found in the case study on page 95. > The Board has also accelerated its focus on ESG matters and TP ICAP's sustainability (including climate change) strategy, taking into account several communications from investors on the topic in determining the Group's action plan. > The Board Chair and CEO collectively met with shareholders representing at least 67% of the Company's issued share capital during the year, including four of the Company's substantial shareholders as reported on page 158. > We also engaged with institutional investors in several other ways, including presentations of Fusion and Liquidnet (including platform demos) and virtual group conference calls to accommodate overseas investors and discuss matters of concern to investors. > During 2022 we provided shareholders with the opportunity to generate attractive returns on their investment, through capital and share price gains. Additionally the Board approved a 2022 interim dividend of 4.5p per share and a final dividend for 2021 of 5.5p per share. > We will continue to engage with our shareholders regularly, utilising technology as appropriate to maximise the engagement. The Board considers that engagement with, and participation from, our shareholders is of key importance to the success of the business and in achieving our aim of creating long term and sustainable shareholder value. > Our primary performance focus is to seek to manage our business responsibly to remain well placed to deliver long-term value creation for our shareholders. 65 TP ICAP GROUP PLC Annual Report and Accounts 2022 Stakeholder engagement continued Our stakeholder groups How we engage to create value Board and management engagement highlights in 2022, including key Board decisions Priorities for 2023 Clients > Our relationships and engagement with our clients are fundamental to the success of the business. > Over 200 senior and strategic client meetings took place during 2022, with as many as possible > We will strive to continue Our clients include banks, hedge Regular and effective dialogue with our clients enables the Board to understand their needs and happening in-person. We are continuing this momentum for 2023 with client’s senior key providing a market-leading funds, asset managers, corporates, how satisfied they are with us as a supplier and business partner. decision makers. offering to our clients, adapting trading houses and market > The Board is updated regularly on client engagement by the Chief Executive Officer as part of his > The Board’s considerations of the output from client engagement and dialogue throughout the to their evolving priorities. makers. We serve these clients Board presentation, and through cyclical presentations from the businesses, functions and regions. year has helped the Board to stay informed about clients’ concerns, understand significant > To be the provider of choice, through our stable of market- > During the year, the Chief Executive Officer attended meetings with major clients engaging on the changes in their businesses, predict future trends and re-align the Group’s longer-term strategy delivering on our product, service leading brands. We cover every most important drivers of our clients’ businesses and provided feedback to the Board on these accordingly. This has been valuable insight for the Board’s broader decision-making process. and performance goals. major asset class and offer a meetings. Regular discussions with our largest clients ensure we stay aligned with their evolving > The launch of ClearConsensus in August 2022 by Parameta Solutions (in partnership with > We will continue to support our range of trade protocols, from priorities and needs. PeerNova) is an example of such client engagement leading to diversification and the clients in achieving their voice, to hybrid, to pure electronic. > The Client Relationship Management (‘CRM’) team provide holistic coverage of the Group’s most development of a new offering to address some of the pressures faced by clients with regards sustainability aims and improving important clients, both at strategic and tactical levels, to broaden and institutionalise relationships to transparency and governance. their processes, such as surveillance. Input to TP ICAP: and identify opportunities for TP ICAP to serve our clients more comprehensively. Client reports > We have supported several of our largest clients in improving their surveillance processes, Client priorities and expectations. and accounts receivable analyses are periodically included in the Board agenda. including providing trader access, controls, governance, and the status of legal documents. > The Group also takes a proactive approach when communicating with our clients on important We anticipate that these requests will continue through 2023. Value we create: matters such as our Continental Europe transition plans, key business change and market > This year a particular focus was paid to accounts receivable and the development of Fusion Reliable and inclusive provision structure updates. Strategy across our Global Broking and Energy & Commodities divisions to drive of market-leading products > We keep our website updated with relevant information and support our clients’ sustainability aims electronification and aggregation. and services. through our own programme of activities. > Having an understanding of the impact of external economic factors on our clients was also > Our continuous engagement with clients ensures we keep providing market-leading products and a key consideration for the Board in their decision-making, which enabled the Board to readjust services, evolving the Group’s businesses and strategy according to market demands. its immediate strategy and provide effective oversight of operational performance. This was particularly important as the Group monitored and responded to the continuing effects of COVID-19, the post-Brexit landscape, and the development of the Russia and Ukraine situation and the associated risks through 2022. > We introduced an initiative leveraging existing client relationships and a combined approach from our businesses and CRM, pricing and accounts receivable teams to provide improved senior level commercial engagement with our largest clients. > During 2022 TP ICAP continued to demonstrate that our offering to clients was market-leading across the Group. As detailed on the front cover fold out, industry recognition during the year included TP ICAP being awarded overall Global Inter-dealer Broker of the Year, along with success in 12 other categories spread across our client-facing brands Tullett Prebon, ICAP and Parameta Solutions. Regulators > We are committed to compliance with our regulatory obligations and maintaining open and > The Board and its Committees regularly take the views of our lead regulators into > To continue to meet our regulatory Our products and services are collaborative communication with our regulators to ensure we implement best practices. consideration during deliberations on the Group’s risk and internal control framework, culture obligations across the Group. regulated by various global > The Board is kept apprised of discussions with the JFSC and other regulators in jurisdictions and conduct initiatives, as well as in the future design of pay and compensation structures, > To strengthen our relationship and regulators including the AMF, in which we operate through Board presentations and regular legal and compliance updates including share plans. maintain open and active CFTC, CME, DNB, ESMA, FCA, presented by the Group General Counsel at Board meetings and Global Head of Compliance > Feedback from regulators during the year was a key consideration in Board discussions and dialogue with our regulators and HKMA, JFSC (the Group’s lead at Risk Committee meetings. decision-making around the continuing response to the COVID-19 pandemic and how TP ICAP other key government agencies. regulator), MAS and NFA. > Throughout the year the Board was briefed on the views being expressed by regulators on how continues to provide a comprehensive suite of services and products to European clients the markets would operate post-Brexit and TP ICAP’s plans in this regard. post-Brexit. Input to TP ICAP: > We also engage with regulators and other key government agencies, including the FCA and AMF, > During the year the Remuneration Committee also considered the engagement with the FCA Regulatory frameworks. through sector consultation and round table exercises to better understand their priorities and and revised governance arrangements in relation to the Group’s ongoing compliance with the needs and to ensure we embody good governance and oversight across the Group. Investment Firms Prudential Regime, as it applies to MiFID investment firms capturing certain Value we create: > The Board and its Committees are kept informed of upcoming relevant regulatory changes through TP ICAP subsidiaries. Delivery of regulatory aims. updates presented by the Group General Counsel and Group Company Secretary. > The Group’s regulatory priorities are regularly discussed at Board and Risk Committee meetings > In addition to engagement with regulators, we share our experience and expertise through and considered as a part of broader decision-making. engagement with various trade bodies to help raise standards and approaches across the sector > We continuously build on engagement within the Group on regulatory matters, for example and respond to relevant government consultations. through compulsory annual training on the Senior Managers and Certification Regime. TP ICAP GROUP PLC Annual Report and Accounts 202246 Our stakeholder groups How we engage to create value Board and management engagement highlights in 2022, including key Board decisions Priorities for 2023 Clients > Our relationships and engagement with our clients are fundamental to the success of the business. > Over 200 senior and strategic client meetings took place during 2022, with as many as possible > We will strive to continue Our clients include banks, hedge Regular and effective dialogue with our clients enables the Board to understand their needs and happening in-person. We are continuing this momentum for 2023 with client’s senior key providing a market-leading funds, asset managers, corporates, how satisfied they are with us as a supplier and business partner. decision makers. offering to our clients, adapting trading houses and market > The Board is updated regularly on client engagement by the Chief Executive Officer as part of his > The Board’s considerations of the output from client engagement and dialogue throughout the to their evolving priorities. makers. We serve these clients Board presentation, and through cyclical presentations from the businesses, functions and regions. year has helped the Board to stay informed about clients’ concerns, understand significant > To be the provider of choice, through our stable of market- > During the year, the Chief Executive Officer attended meetings with major clients engaging on the changes in their businesses, predict future trends and re-align the Group’s longer-term strategy delivering on our product, service leading brands. We cover every most important drivers of our clients’ businesses and provided feedback to the Board on these accordingly. This has been valuable insight for the Board’s broader decision-making process. and performance goals. Strategic report major asset class and offer a meetings. Regular discussions with our largest clients ensure we stay aligned with their evolving > The launch of ClearConsensus in August 2022 by Parameta Solutions (in partnership with > We will continue to support our range of trade protocols, from priorities and needs. PeerNova) is an example of such client engagement leading to diversification and the clients in achieving their voice, to hybrid, to pure electronic. > The Client Relationship Management (‘CRM’) team provide holistic coverage of the Group’s most development of a new offering to address some of the pressures faced by clients with regards sustainability aims and improving important clients, both at strategic and tactical levels, to broaden and institutionalise relationships to transparency and governance. their processes, such as surveillance. Input to TP ICAP: and identify opportunities for TP ICAP to serve our clients more comprehensively. Client reports > We have supported several of our largest clients in improving their surveillance processes, Client priorities and expectations. and accounts receivable analyses are periodically included in the Board agenda. including providing trader access, controls, governance, and the status of legal documents. > The Group also takes a proactive approach when communicating with our clients on important We anticipate that these requests will continue through 2023. Value we create: matters such as our Continental Europe transition plans, key business change and market > This year a particular focus was paid to accounts receivable and the development of Fusion Reliable and inclusive provision structure updates. Strategy across our Global Broking and Energy & Commodities divisions to drive of market-leading products > We keep our website updated with relevant information and support our clients’ sustainability aims electronification and aggregation. and services. through our own programme of activities. > Having an understanding of the impact of external economic factors on our clients was also > Our continuous engagement with clients ensures we keep providing market-leading products and a key consideration for the Board in their decision-making, which enabled the Board to readjust services, evolving the Group’s businesses and strategy according to market demands. its immediate strategy and provide effective oversight of operational performance. This was particularly important as the Group monitored and responded to the continuing effects of COVID-19, the post-Brexit landscape, and the development of the Russia and Ukraine situation and the associated risks through 2022. > We introduced an initiative leveraging existing client relationships and a combined approach from our businesses and CRM, pricing and accounts receivable teams to provide improved senior level commercial engagement with our largest clients. > During 2022 TP ICAP continued to demonstrate that our offering to clients was market-leading across the Group. As detailed on the front cover fold out, industry recognition during the year included TP ICAP being awarded overall Global Inter-dealer Broker of the Year, along with success in 12 other categories spread across our client-facing brands Tullett Prebon, ICAP and Parameta Solutions. Regulators > We are committed to compliance with our regulatory obligations and maintaining open and > The Board and its Committees regularly take the views of our lead regulators into > To continue to meet our regulatory Our products and services are collaborative communication with our regulators to ensure we implement best practices. consideration during deliberations on the Group’s risk and internal control framework, culture obligations across the Group. regulated by various global > The Board is kept apprised of discussions with the JFSC and other regulators in jurisdictions and conduct initiatives, as well as in the future design of pay and compensation structures, > To strengthen our relationship and regulators including the AMF, in which we operate through Board presentations and regular legal and compliance updates including share plans. maintain open and active CFTC, CME, DNB, ESMA, FCA, presented by the Group General Counsel at Board meetings and Global Head of Compliance > Feedback from regulators during the year was a key consideration in Board discussions and dialogue with our regulators and HKMA, JFSC (the Group’s lead at Risk Committee meetings. decision-making around the continuing response to the COVID-19 pandemic and how TP ICAP other key government agencies. regulator), MAS and NFA. > Throughout the year the Board was briefed on the views being expressed by regulators on how continues to provide a comprehensive suite of services and products to European clients the markets would operate post-Brexit and TP ICAP’s plans in this regard. post-Brexit. Input to TP ICAP: > We also engage with regulators and other key government agencies, including the FCA and AMF, > During the year the Remuneration Committee also considered the engagement with the FCA Regulatory frameworks. through sector consultation and round table exercises to better understand their priorities and and revised governance arrangements in relation to the Group’s ongoing compliance with the needs and to ensure we embody good governance and oversight across the Group. Investment Firms Prudential Regime, as it applies to MiFID investment firms capturing certain Value we create: > The Board and its Committees are kept informed of upcoming relevant regulatory changes through TP ICAP subsidiaries. Delivery of regulatory aims. updates presented by the Group General Counsel and Group Company Secretary. > The Group’s regulatory priorities are regularly discussed at Board and Risk Committee meetings > In addition to engagement with regulators, we share our experience and expertise through and considered as a part of broader decision-making. engagement with various trade bodies to help raise standards and approaches across the sector > We continuously build on engagement within the Group on regulatory matters, for example and respond to relevant government consultations. through compulsory annual training on the Senior Managers and Certification Regime. TP ICAP GROUP PLC Annual Report and Accounts 202247 Stakeholder engagement continued Our stakeholder groups How we engage to create value **Suppliers** The Board acknowledges that our suppliers are critical to our business success. **Input to TP/ICAP:** Quality goods and services. **Value we create:** Sustainable relationships, value creation, and partnership expertise. - We aim to create sustained partnerships with all our suppliers. In particular those which provide business critical infrastructure services for TP/ICAP. - The Board considers that engagement with our key infrastructure suppliers is important for monitoring the Group's performance, managing risk and driving value. - To ensure oversight, the Board receives periodic updates from the Head of Procurement on the status of supplier engagement and, at times, on specific large value contract negotiations or renewals. - This includes a status update on supply chain, sustainability and ESG (including climate-related), expenditure information, issues and risks, and any strategic initiatives in progress. - The Board has considered the risk of modern slavery in our supply chain, annually reviewing and approving the Modern Slavery and Human Trafficking Statement. - The Board also periodically receives updates on UK Payment Practices reporting. **Our communities** (and other stakeholder interests) The Board is cognisant of the Group's responsibility to make a positive contribution to local communities and understand how ESG issues, including climate change, are relevant to the business. It is committed to striving to operate in a sustainable and responsible way, while delivering value for stakeholders. **Input to TP/ICAP:** Distinctive social and environmental (including climate-related) perspectives. **Value we create:** Robust social contract through which value is shared. - We live in a world where not everyone has an equal chance to succeed in life. We want to help change this by harnessing the passion of our people and supporting stakeholders in local communities. - We seek to make a positive impact through colleague fundraising (such as ICAP Charity Day), employee volunteering, and Group-wide social mobility partnerships. - The Board actively encourages, supports and monitors progress on these initiatives that it believes will have a positive impact on local communities. - During 2022, the Board increased its focus on the Group's overarching sustainability strategy. - The Group has made commitments that contribute to moving towards an environmentally sustainable future. The Board has deliberated on how to meet best practice among the FTSE 350 companies on sustainability issues. The Group sustainability strategy is outlined on page 51. - We believe that a strong ESG performance is a critical factor in helping us achieve sustainable growth. We are committed to operating responsibly and integrating ESG considerations into our day-to-day decision making to mitigate risks and create shared value for all our partners including our employees, shareholders, clients, suppliers, and communities. - The Board holds oversight responsibility, drives progress and is regularly updated on sustainability and ESG (including climate-related) matters throughout the year. - As a part of the updates, the Board discusses and monitors progress made against the actions and targets set and challenges the Executive team accordingly. 48 TP/ICAP GROUP PLC Annual Report and Accounts 2022 Board and management engagement highlights in 2023, including key Board decisions Priorities for 2023 - We have continued to engage with our suppliers, particularly in light of the ongoing global macro uncertainty, to help them identify risks and create a plan to ensure that they can meet our demand. - This engagement has assisted us and our suppliers in maintaining business as usual as much as possible during the COVID-19 pandemic and through the development of the Russia and Ukraine situation. - During the year the Board and its Committees received metrics on suppliers through presentations from the Head of Procurement and on sustainability and ESG reporting, which were considered as a part of the Board's broader decision-making. - In October 2022 the Risk Committee received a deep dive on supply chain risk and considered the impacts resulting from the COVID-19 pandemic and the Russia and Ukraine situation. - We adopted and communicated a revised Supplier Code of Conduct, including reference to our carbon-neutral commitment for Scope 1 and 2 emissions, to better promote a sustainable business strategy and high standards of business conduct and engage our vendors on key ESG issues and disclosures, including their emissions reporting. - We have also continued to focus on consolidating and engaging with our supplier base to better monitor performance, manage risk, influence sustainability and ESG matters and drive value. - To continue to build and sustain long-lasting mutually beneficial relationships throughout our supply chain. - To expand our engagement to pursue a better quality ESG-related reporting with the entirety of our supply chain. - During the year, the Board received regular updates on initiatives relating to our local communities through the CEO report and broader Sustainability and ESG reporting. In addition, the Board, and its associated sub-committees, reviewed climate change-related issues three times in total and approved the Group's climate change framework. - We partnered with the National Numeracy charity for the fifth consecutive year, aiming to empower people from all backgrounds to build their numeracy skills and confidence. The initiative is championed by our Group General Counsel, and aims to increase awareness and engagement from the financial services industry. - Management championed and participated in the 30th ICAP Charity Day, which raised £4.4m. - Sustainability and ESG matters were discussed at the majority of scheduled Board and Audit Committee meetings during 2022. More detail on our approach can be found in our Sustainability chapter on page 50. - The Board and Remuneration Committee agreed that the Executive Directors' 2022 objectives would each include an ESG-related objective as an additional way to demonstrate the Group's commitment to ESG and alignment with our clients' responsible investing priorities. More detail can be found in the Directors' Remuneration report on pages 121 to 135. - Our reporting on the Task Force on Climate-related Financial Disclosures and greenhouse gas ('GHG') emissions can be found on pages 62 to 70 respectively. - Enhance our ESG reporting and performance management. - Continue to support our clients on their transition journeys to a low carbon economy. - Continue to make a positive social impact on the communities in which we operate around the world. 48 TP ICAP GROUP PLC Annual Report and Accounts 2022 ## Sustainability ## OUR OVERALL APPROACH TO SUSTAINABILITY ## INTRODUCTION ## TP ICAP’s purpose is to provide clients with ## access to global financial and commodities ## markets, improving price discovery, liquidity, ## and distribution of data, through responsible ## and innovative solutions. We deliver on our purpose through the products and services that This chapter will cover: (a) our overall strategic approach to we offer. As a world-leading provider of market infrastructure, Environmental, Social, and Governance (‘ESG’) factors and liquidity, and over-the-counter (‘OTC’) market data, we play a delivery against this strategy, and (b) our detailed Task Force central role in enabling the efficient functioning of capital markets, for Climate-related Financial Disclosures (‘TCFD’) reporting. which are essential to economic stability and growth. Our strategy We seek to manage our business responsibly so that we remain In July 2021, the Group Board approved the firm’s overarching well placed to deliver long-term value creation for our shareholders. sustainability strategy. The work to inform this strategy included This includes building a strong culture that reflects and promotes a high-level analysis of our business and the environment in which employee diversity and inclusion, fosters good conduct, and we operate to better understand the sustainability challenges and enhances risk management. opportunities relevant to the Group. This included reviewing our ESG ratings and performance indicators, our commercial offering, Our purpose, vision and mission statements connect to inform our and our communications. The outcome was a sustainability strategy Group strategy. In 2022, we reviewed and updated these statements that is formed of three priorities: ‘ESG Reporting and Performance to ensure that they remain relevant given that our business, our Management’; ‘Supporting our clients’; and ‘Community impact’. stakeholders, and the environment in which we operate have changed in recent years. TP ICAP GROUP PLC Annual Report and Accounts 202250 ## OUR STRATEGIC PRIORITIES | | | | t | 1 . | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | c | | E | | | | | | | a | | P | S | | | | | | | p | | e | G | | | | | | | m | | r | f | | | | | | I | | | | o | R | | | | | y | | | | r | e | | | | | t | | | | m | p | | | | | i | | | | | a | o | | | n | | | | | | n | r | | | u | | | | | | c | t | | | | | | | | | e | i n | | | m | | | | | | | | Strategic report | | | | | | | | | M g | | m | o | a | a | | --- | --- | --- | | C | n | n | | . | a | d | | 3 | g | | e m e n t 2 . S u p p o s r t i n t n g o u r c l i e | 1. ESG Reporting and Performance | 2. Supporting our clients | 3. Community impact | | --- | --- | --- | | Management | As the world turns from carbon-intensive | We are committed to making a positive | | Effective measurement, and reporting, | practices to more sustainable alternatives, | economic and social impact on the | | of TP ICAP’s ESG performance enables | we believe the best way we can support this | communities in which we operate around | | us to identify, assess, and actively | shift is through delivering on our purpose | the world. By communities, we refer to | | manage the organisation’s economic, | and accompanying our clients on their | both our employees and people or causes | | environmental and social impacts that | transition journeys. | external to our Company that are | | influence the assessments and decisions | | disadvantaged or in need. | | of our stakeholders. | Objectives: | | | | Innovative solutions | Objectives | | Measurement helps to set informed | Leverage TP ICAP’s core strengths to develop | Making a positive impact | | targets for improvement and to track | and deliver the liquidity and data solutions | Continue to make a positive economic | | progress. Reporting helps to share | necessary to equip market participants to | contribution through the provision of | | progress with stakeholders and increase | advance their sustainability goals. | our services, and social impact through | | information availability and accessibility | | colleague fundraising, volunteering and | | for informed decision-making. | Responsible solutions | corporate philanthropy. | Advance sustainable and trusted liquidity Objectives: and data solutions through implementing Diversity and inclusion Data and disclosure a strong governance framework and Continually develop an environment that Continually review and improve our conduct culture. is inclusive and positive, where we create ESG-related measurement capabilities. meaningful opportunities for our This is to ensure that they remain fit for employees to flourish. purpose and enable the business to manage and communicate its ESG performance effectively. Carbon neutrality of operational Scope 1 and 2 emissions Meet our target to be carbon neutral across both Scope 1 and Scope 2 emissions by the end of 2026. TP ICAP GROUP PLC Annual Report and Accounts 202251 Sustainability continued Managing our emissions ## ENVIRONMENT The Group’s strategy focuses on: a) reducing the emissions of our own operations; and ## We recognise our responsibility to help b) ensuring the resilience of our business against the backdrop of climate change. ## protect the environment and support ## the transition towards a low-carbon Reducing our carbon emissions In 2022, we reduced our total emissions for the Group globally, ## economy. We seek to do so in two covering Scopes 1, 2 and 3, by 4% to 58,177 tonnes CO e. 2 ## main ways: We made progress towards achieving our objective of being carbon neutral across both Scope 1 and Scope 2 emissions by the 1. Managing our emissions end of 2026. Emissions in these categories decreased by 21% to Minimise the negative environmental impact of our operations, 7,585 tonnes CO 2 e. The primary reason for the reduction was with a particular focus on reducing greenhouse gas emissions. a decrease in the number of office locations and data centres, Our target is to be carbon neutral across both Scope 1 and Scope 2 principally because of our ongoing property rationalisation emissions by the end of 2026. programme, including the Liquidnet integration. 2022 was a peak year for the property rationalisation programme; we do 2. Accompanying our clients not anticipate maintaining the same pace of consolidation. Apply our unique capabilities and strengths – our capacity to connect clients to liquidity and data solutions – to help Please refer to the Metrics and Targets section of the TCFD them advance their transition journeys and meet their statement on page 62 for the detail of our emissions reporting. sustainability objectives. CDP Disclosure For the first time in 2022, we completed the CDP Climate Change Questionnaire to secure authoritative external benchmarking. A CDP score provides a snapshot of a company’s disclosure and environmental performance. In December, CDP assigned TP ICAP a ‘C’ score (www.cdp.net/en). As per the CDP scoring guidance: “A ‘C’ score indicates awareness-level engagement. The awareness score measures the comprehensiveness of a company’s evaluation of how environmental issues intersect with its business, and how its operations affect people and ecosystems.” TP ICAP GROUP PLC Annual Report and Accounts 202252 Accompanying our clients TP ICAP – notably through our Energy & Commodities and Parameta Solutions divisions – is well placed to provide the market infrastructure, liquidity and data to help our clients advance their transition journeys. Sustainable solutions Emissions credits trading will play a key role during the energy transition. This is an area we are focused on growing. In 2022, our Energy & Commodities division brokered 1.8bn CO metric tonne Strategic report 2 equivalents of emissions credits, and 77m metric tonnes of voluntary emissions credits, up 271% on 2021. We are building an environmental hub and developing new products (see CEO Review page 16). In February 2022, Tullett Prebon announced the launch of its energy broking business in Brazil. More than 80% of this energy is renewable: Brazil has the second- largest hydropower capacity in the world. Tullett Prebon is the first international brokerage company to transact an energy deal in the Brazilian market using OTC broking. We also launched a client-facing Fusion screen covering Green Certificates in Norway. Client reaction is positive; trades have been completed through the platform. Throughout the year, TP ICAP Solutions – our France-based team that designs and executes bespoke investment strategies – hosted several sustainability events at our Paris offices. These events connected investors, brokers, operators, and regulators to discuss the most prominent issues in sustainable finance. In Parameta Solutions, we developed our Green Bond Evaluated Pricing proposition, part of the division’s overall Environmental Package. Incorporating ESG factors in brokerage activities In our 2021 Annual Report and Accounts, we made a commitment to incorporate mandatory ESG scoring into the evaluation, and approval process, for new business initiatives by the end of 2022. This has been completed and is operational. To determine a score, we added a mandatory ESG questionnaire to the Change Management Framework (‘CMF’) process through which all new business initiatives are reviewed. The questions focus on emissions, gender representation, and type of asset class. They seek to identify risks and opportunities associated with any new business initiative. The outcome is an ESG score that forms part of the information for approval that the Change Subcommittee reviews. Finally, we will also advance our plans to reduce energy consumption through our property rationalisation programme and more efficient energy usage. We will work with our vendors to develop our understanding of Scope 3 emissions. TP ICAP GROUP PLC Annual Report and Accounts 202253 Sustainability continued The purpose, vision and mission statements are also particularly ## SOCIAL relevant to our colleagues (hence their inclusion in this section of the report.) The statements work together, alongside our new Our people corporate values, to help colleagues focus on doing the right Attracting, developing, and retaining a talented, engaged group things, in the right way. Our purpose, vision and mission help of colleagues is central to our success. to attract and retain the best talent and the best clients in the market, as they speak to who are and what is important to us. Our objective is to continually work to develop an inclusive and positive culture, where we create meaningful opportunities for our Reviewing our corporate values employees to flourish. Our organisation, stakeholders, and the environment in which we operate, have evolved a great deal in recent years. Consequently, Employee engagement in 2022 we reviewed our corporate values to better align them It is the role of the Group CEO to lead the work to build a strong with the business we are today and the business we want to build culture across the Group. This culture is informed by the Company’s in the future. values and corporate purpose, both of which were reviewed and advanced in 2022 (see below). The process to review our values included workshop sessions with the Global Management Committee and feedback sessions In 2022, one of the Group CEO’s objectives was to drive with colleagues. The outcome was a new set of corporate values. improvement in employee engagement. An employee opinion Entitled the ‘Triple A Values’, they are Accountability, Authenticity survey conducted in November 2022 generated a global and Adaptability. Working together with our updated corporate participation rate of 76%, significantly up from the previous year. purpose, vision and mission, the Triple A Values will form the Employee engagement increased seven percentage points to bedrock of a high-performance culture that is aligned to the 67% in 12 months. Colleagues indicated the biggest areas of execution of our strategy. improvement were internal communications, our commitment to building a strong conduct culture, and that the Company is Employee networks listening more effectively. Areas for improvement included career Work was carried out during the year to expand the Group’s development opportunities, recognition for good work, and more employee networks. The Americas, APAC and EMEA have all information on how employees can contribute to the execution established networks to best align with local needs. Together, of our strategy in their individual role. they operate under the name TP ICAP Accord. Run by colleagues for colleagues, the networks connect and support employees on Reviewing our corporate purpose a variety of issues including gender, health and wellbeing, and Recognising the importance that a compelling corporate purpose multiculturalism. A notable achievement in 2022 was the work has in helping to drive long-term value, the Board initiated a undertaken by our Veteran’s Network in the UK. This led to review of the Group’s existing corporate purpose, which had been TP ICAP receiving the Gold Award from the UK’s Armed Forces in place for several years. Covenant Employer Recognition programme. The review sought to answer the question ‘Why does TP ICAP Diversity and inclusion exist?’. The review process involved extensive desk-based research In our 2021 Annual Report, we set out three diversity and inclusion and gathering colleagues’ input through a series of workshops related targets: held globally. In addition, engagement sessions were held with the Executive Directors, Non-executive Directors, and clients. 1. By the end of 2025, increase the female representation of our non-broking employee base from 34% to 38%. On commencing the review, it became clear that a firm’s vision 2. By the end of 2022, build better baseline data in five focus and mission are inextricably linked to its purpose. We therefore areas: female representation, race/ethnicity, multi- also reviewed TP ICAP’s Vision and Mission statements to ensure generational, LGBTQ+, and socio-economic. consistency. The outcome of the review is a set of new purpose, 3. By the end of 2022, build better data sets to measure the pace vision and mission statements for the Group. These are referenced of advancement of diverse talent in the organisation. throughout this report (for example, in the Chair’s Statement on page 10), reflecting their influence on every part of our Group and Regarding diversity metrics, the brokerage industry as a whole their importance to all our stakeholders. faces significant headwinds as its profile is older, and more male-dominated. Compared to other financial institutions, which often have regular recruitment campaigns, there is limited employee turnover in front office brokerage teams. For this reason, we are primarily focused on addressing diversity in our non- broking workforce, where we have scope to make progress. Our initial focus is on improving gender diversity. Over time, we will broaden this scope to include other categories of diversity. TP ICAP GROUP PLC Annual Report and Accounts 202254 Against this backdrop, in 2022 female representation in non-broking roles increased from 34% to 35%, reflecting new recruiting and retention efforts. They included working closely with our recruitment vendors to ensure a more diverse set of candidates, and launching a dedicated Women’s Development Programme. As signatories of the Women in Finance charter (www.womeninfinance.org.uk), we made a public commitment to increase the representation of women in senior leadership and management roles. We have already met our target to Strategic report have women comprise 25% of our senior management roles by the end of 2025. Turning to baseline data, the HR function has established new dashboard reports that provide insight on gender representation at the point of hire, promotion, and termination. HR is also tracking multi-generational data – see the table below. Work continues to build ethnicity, LGBTQ+, and socio-economic data sets. We are mindful of legal restrictions in certain jurisdictions, and the need to secure colleague permission to share personal data. The United States is the only relevant jurisdiction where we hold additional data solely related to ethnicity. We will continue to review our options about disclosing socio-economic and LGBTQ+ data for other jurisdictions. We will also continue to build trust and a culture where colleagues see the value in sharing their data with us, along with the systems necessary for them to do this efficiently. Making progress against these targets forms part of the remit of the Head of Inclusion, Diversity and Engagement, a new Group-wide role. Claire Harvey MBE started in post in January 2023. A GB Paralympian, Claire brings a wealth of expertise and experience built at organisations that include Vodafone, KPMG, the FCA, and the Ministry of Justice in the UK. Employee training hours The average number of training hours per employee in 2022 was 4.8 compared with 4.59 in 2021. Human rights and modern slavery We continue to support the UN Guiding Principles for Human Rights. We are committed to taking steps to combat the risk of any form of modern slavery from occurring in our business or supply chain. More online The Modern Slavery statement can be found at: https://tpicap.com/tpicap/responsibility/our-commitments/ modern-slavery-and-human-trafficking-statement TP ICAP GROUP PLC Annual Report and Accounts 202255 Sustainability Social continued Employee turnover Current reporting year Comparison reporting year 1 January 2022 – 31 December 2022 1 January 2021 – 31 December 2021 Turnover by gender¹ Female Male Female Male 318 (29%) 750 (68%) 228 (22%) 601 (59%) Turnover by age group² <30 30-50 50+ <30 30-50 50+ 286 (26%) 573 (52%) 207 (19%) 197 (19%) 439 (43%) 191 (19%) Turnover by region APAC EMEA Americas APAC EMEA Americas 269 (24%) 548 (49%) 293 (26%) 194 (19%) 485 (47%) 344 (34%) Employee new hires New hires by gender³ Female Male Female Male 329 (33%) 637 (64%) 297 (30%) 630 (64%) New hires by age group⁴ <30 30-50 50+ <30 30-50 50+ 410 (41%) 450 (45%) 98 (10%) 321 (32%) 500 (51%) 98 (10%) New hires by region APAC EMEA Americas APAC EMEA Americas 247 (25%) 523 (53%) 225 (23%) 256 (26%) 498 (50%) 236 (24%) Breakdown of employee contract type Employee contract by gender Female Male Female Male Permanent 1,293 (25%) 3,954 (75%) 1,293 (24%) 4,088 (76%) Temporary⁵ 45 (7%) 102 (15%) 47 (6%) 87 (12%) Employment type by gender Female Male Female Male Full-time 1,242 (24%) 3,921 (76%) 1,245 (23%) 4,060 (76%) Part-time⁶ 51 (61%) 33 (39%) 48 (62%) 28 (36%) Employee contract by region APAC EMEA Americas APAC EMEA Americas Permanent 1,122 (21%) 2,533 (48%) 1,607 (31%) 1,163 (22%) 2,563 (47%) 1,677 (31%) Temporary 52 (8%) 484 (71%) 145 (21%) 29 (4%) 515 (70%) 187 (26%) Employee diversity and inclusion Percentage of gender representation by category⁷ Current reporting year Comparison reporting year 1 January 2022 – 31 December 2022 1 January 2021 – 31 December 2021 Category Female Male Female Male Executive Management 20% 80% 20% 80% Non-executive Management 25% 75% 27% 73% Professionals 21% 78% 21% 79% All other employees 25% 74 % 25% 75% US-only percentage racial/ethnic group Current reporting year 1 January 2022 – 31 December 2022 Black or African Hispanic or Category Asian American Latino White Other Executive Management 33% 0% 0% 67% 0% Non-executive Management 11% 0% 3% 86% 0% Professionals 11% 4% 4% 78% 3% All other employees 11% 3% 8% 71% 6% Comparison reporting year 1 January 2021 – 31 December 2021 Black or African Category Asian American Hispanic or Latino White Other Executive Management 50% 0% 0% 50% 0% Non-executive Management 7% 0% 7% 86% 0% Professionals 8% 3% 4% 82% 4% All other employees 11% 4% 8% 72% 6% TP ICAP GROUP PLC Annual Report and Accounts 202256 # Our external communities # Economic impact TP ICAP operates in 28 countries from more than 60 offices. The Group generated £2.3bn revenue in 2022 and paid £542m to tax authorities (2021: £533m). This comprised corporation tax, premises taxes, employer's social security payments, income taxes and social security paid on behalf of employees in the UK and the US (the main jurisdictions in which it operates), and VAT/sales taxes borne and collected. The Group also makes tax payments to the tax authorities in other tax jurisdictions in which it operates. Reflecting that people are our chief resource, we paid £1.3bn in compensation and benefits. General and administrative expenses paid to our supply chain amounted to £491m. Combined, the direct and indirect economic impact generated by TP ICAP is significant. We also play a critical role in helping the global capital markets function effectively. This enables our clients to serve their retail and corporate customers effectively, whether that is to help start or build a business, buy a property, or invest in a pension. # Social impact Through ICAP Charity Day (see pages 58-59), employee volunteer initiatives and Group-wide social mobility partnerships, we work to make a positive social impact. # Championing social mobility with National Numeracy Numeracy is one of life's crucial building blocks and an important driver of social mobility. Since 2018, we have had a significant partnership with the UK charity National Numeracy, which focuses on building the nation's number confidence and skills. We have funded the development of tools and resources to help people check and develop their numeracy skills, creating adaptive online learning environments that build confidence as well as skills. In 2022, we supported the fifth annual National Numeracy Day and second annual Number Confidence Week, of which TP ICAP is a founding partner. # Number Confidence Week Since it began in 2020, Number Confidence Week has inspired 152,577 actions to improve confidence with numbers. In 2022, the campaign inspired 89,975 actions, more than four times as many as in 2020. # National Numeracy Day In 2022, National Numeracy Day inspired nearly half a million actions towards improving numeracy – more than five times as many as 2021. The Big Number Natter sparked a nationwide conversation about numbers and the media campaign reached millions. The number of champion organisations promoting the day rose 71% on last year to 4,813. Overall, the campaign helped empower adults and children in the UK to build their confidence with numbers and feel in control at home, work and school. # National Numeracy Leadership Council TP ICAP is a founding member of the National Numeracy Leadership Council and is represented by Executive Director and Group General Counsel, Philip Price. The Leadership Council works with businesses and organisations across the UK to address numeracy challenges and work in partnership to implement solutions. ![img-2.jpeg](img-2.jpeg) # More online Read the Number Confidence Week impact report here: https://www.nationalnumeracy.org.uk/news/number-confidence-week-impact-report 1 In 2022 96% of leavers had a gender recorded in our people data management system. In 2021 81% of leavers had a gender recorded. 2 97% of leavers during 2022 had an age recorded in our system. 3 In 2022 97% of new lives had gender recorded in our system at year end. In 2021, it is updated to 94% of new lives in that period. 4 In 2022 96% of new lives have an age recorded in our system at year end. 5 In 2022 22% of temporary workers had a gender recorded in our system. In 2021, 18% of temporary workers had a gender recorded. 6 In 2021 98% of part-time workers had a gender recorded in our system. 7 Totals may not equate to 100% due to rounding. 57 TP ICAP GROUP PLC Annual Report and Accounts 2022 Sustainability continued ## OUR JOURNEY TO 30 ### ICAP Charity Day On Wednesday 7 December 2022, ICAP held its 50th annual global Charity Day. Since 1993, ICAP Charity Day has raised money for charities across the globe, with 100% of ICAP's company revenues and 100% of its brokers' commissions generated on the day donated to a variety of causes. In 2022, the day was opened by a video message from The Prince of Wales, in his role as Patron of The Passage, a UK-based homelessness charity we support. Many well-known charity ambassadors joined our brokers to close deals with clients, including Simon Cowell, Ant and Dec, and Floyd Mayweather Jr. On the day, £4.4m was raised, which will benefit more than 100 different charitable organisations worldwide. This brings the total amount raised to more than £160 million since the first ICAP Charity Day in 1993. ### Our Journey to 30 As 2022 was a landmark year for ICAP Charity Day, we commissioned independent research on the positive social impact it has made over the last three decades. The report's findings are - More than 2,800 donations have been made in support of more than 1,700 charities worldwide. - Charity Day has directly supported 7.7 million people since 1993. - Three in four of our supported charities are small to medium in size, focusing on local or national causes. - Donations have been made in 25 countries, with medicine, education, and relief from poverty being the most supported causes; and - Children and young people have been the most supported group, followed by people with ill health or social disadvantage. ### More online Read the ICAP Charity Day social impact report in full here: https://tpicap.com/tpicap/sites/g/files/escbpb106/files/2022-12/ICAP%20Charity%20Day_Impacts-Report.pdf 10 December 1993, London, The first ICAP Charity Day ![img-3.jpeg](img-3.jpeg) Our brokers donate 100% of their commissions, ICAP donates 100% of its revenues ## 30 YEARS OF FAMOUS FACES ![img-4.jpeg](img-4.jpeg) ![img-5.jpeg](img-5.jpeg) ![img-6.jpeg](img-6.jpeg) ![img-7.jpeg](img-7.jpeg) ![img-8.jpeg](img-8.jpeg) 58 TP/ICAP GROUP PLC Annual Report and Accounts 2022 ## 3 IN 4 ## SUPPORTED ## CHARITIES ## ARE SMALL TO ## MEDIUM IN SIZE Strategic report GLOBAL PRESENCE, LOCAL DELIVERY ## SUPPORTED ## 7.7 MILLION FOLLOW- THE-SUN ## FUNDRAISING PEOPLE IN NEED ## 1,700+ ## CHARITIES ## SUPPORTED, ## 2,800+ ## DONATIONS ## MADE ## TOTAL RAISED SINCE 1993: 30 YEARS OF ## CLIENTS’ SUPPORT £ 1 6 0 M ## 1 IN 4 ## CHARITIES PRO VIDE ## RELIEF FROM POVERTY TH ## 30 ICAP CHARITY DAY, ## 7 DECEMBER 2022: £4.4M ## RAISED ON THE DAY ANT & DEC WERE SUPPORTING THE PRINCE’S TRUST TP ICAP GROUP PLC Annual Report and Accounts 202259 Sustainability continued Business ethics ## ESG GOVERNANCE Trusted, long-term relationships are central to TP ICAP’s approach to doing business. We are committed to the highest standards of Board-level oversight and engagement integrity from all colleagues, in all that we do. The standards of At TP ICAP Group plc Board level, Tracy Clarke continues in her role behaviour are set out in our Code of Conduct. This is complemented as the Non-executive Director responsible for ESG engagement. by a range of policies and resources, including the TP ICAP Employee Tracy works closely with the Group’s management team to ensure Handbook, Regional Compliance manuals, Malus and Clawback that the Board continues to have oversight on business strategy Policy, and Whistleblowing Policy. from an ESG perspective. For more detail on the Group’s overall approach to governance, see the Governance Report on page 82. Our Whistleblowing Policy and procedures are in place to ensure Our governance arrangements under the TCFD framework are set that any concerns about activity are handled fairly and effectively. out on pages 62–64. They encourage and expect employees to speak out if they have legitimate concerns about wrongdoings. The policy clearly sets out Executive management the standards of expected behaviour, and how to raise a concern. Oversight and governance of ESG performance sits at the highest It outlines how reports are investigated and provides assurances level of management. In 2022, each of the three Executive relating to confidentiality. Directors – the Group CEO, Group General Counsel and Group CFO, who together form the Executive Committee – were set an Throughout the year, all colleagues complete a programme of ESG-related objective as part of their 2022 Strategic Objectives, mandatory training to enhance professional integrity and as agreed by the Remuneration Committee. These were assessed safeguard against breaches. Modules include Preventing Market as part of their annual performance and remuneration. See the Abuse, Anti-Bribery & Corruption, and Anti-Money Laundering. scorecard in the remuneration section of this report on pages Training is tailored dependent on role and region. Colleagues are 126-128 for details. also required to attest that they have read and understood their relevant region’s Compliance Manual and the Group Code of The Group General Counsel has responsibility for leading the Conduct. Completion is tracked and completion contributes to delivery of the Group’s overall ESG programme and updating the colleagues’ annual performance review process. Board on ESG matters. The Group CFO has responsibility for delivering the Group’s TCFD reporting, supported on a day-to-day To help maintain a strong conduct culture, leaders throughout basis by the Group Director for Corporate Affairs. the business communicate regularly on the importance of good behaviours. In addition, the firm’s new Triple A Values emphasise the importance of Accountability in the workplace. This focuses on building trust by being accountable to ourselves, our colleagues, and our clients. Systemic risk management TP ICAP conducts robust assessments of the principal risks facing the Group, including those that could undermine the business model, future performance, solvency or liquidity, and reputation. The Group undertakes stress testing and scenario analyses to enhance its understanding of its risk profile. We manage our risk profile through our Enterprise Risk Management Framework (‘ERMF’) and deliver the risk management strategy through a range of actions. They include clear communication of risk-related expectations and responsibilities from senior leadership, and remuneration structures that drive the right behaviours. For more detail please see pages 67-68 of the TCFD section and page 113 of the Risk Committee report. TP ICAP GROUP PLC Annual Report and Accounts 202260 Promoting transparent and efficient capital markets TP ICAP sits at the centre of the world’s financial, energy and commodity markets. We play a central role in connecting clients to liquidity and data solutions. This enables wholesale markets to function effectively and efficiently, notably in times of market stress. In terms of contributing to the efficient operation of capital markets through the provision of trusted market infrastructure, in 2022 we recorded no halts due to a public release of information and no pauses related to volatility. Strategic report Managing business continuity and technology risks TP ICAP’s Business Continuity Management practices focus on ensuring the safety of our staff and systems, minimising business disruption, and managing crises effectively. Our crisis management teams are organised on a global and regional level. All events are escalated in accordance with the Group’s Event Rating and Escalation Scale, as stated in the Group’s Enterprise Risk Management Framework. Global and Regional Change Advisory Boards have oversight of all technology updates. IT incidents are tracked and managed based upon severity of incident against an application and IT Services tiering scale. In 2022, TP ICAP experienced no IT, Business Continuity, data or cyber security breaches that caused significant market disruption or had a material adverse effect on our business. Tax and other social payments The Group has published a Group Tax Strategy, available on our website. This strategy explains that we are committed to complying with tax laws in a responsible manner and to having open and constructive relationships with tax authorities wherever we operate. The Group’s tax risk appetite is low. Political contributions Nil. It is the Company’s policy not to make cash contribution to any political party. However, within the normal activities of the Group, there may be occasions when an activity might fall with the broader definition of ‘political expenditure’. Therefore, the Company has sought to obtain shareholder authority to make limited donations at each AGM. More online Read our Group Tax Strategy published on our website: https://tpicap.com/tpicap/responsibility/our-commitments/ group-tax-strategy TP ICAP GROUP PLC Annual Report and Accounts 202261 Sustainability continued ## TASK FORCE ON CLIMATE-RELATED Statement of Compliance TP ICAP is committed to continued adoption and alignment ## FINANCIAL DISCLOSURES with the recommendations of the Task Force on Climate-related Financial Disclosures. In compliance with the FCA Listing Rule LR ## TP ICAP is committed to continued 9.8.6R(8) on climate-related disclosure, we believe the information contained within this report to be consistent with the TCFD ## adoption and alignment with the recommendations and recommended disclosures. We recognise ## recommendations of the Task Force on that we are on a journey of continual improvement – with more to do – to move iteratively towards the most comprehensive response ## Climate-related Financial Disclosures to TCFD. 2022 saw the Company commission a high-level qualitative climate change scenario assessment and focus on governance and risk. Reflecting our journey of improvement, this report sets out what we did in 2022, and what we will be doing in 2023. Our 2023 work programme includes a detailed quantitative and qualitative scenarios analysis, encompassing risks and opportunities. Completion of this detailed scenario analysis puts the Company on a pathway to full TCFD compliance by the end of 2023. All relevant information is included in this Annual Report on pages 62-70. INDEX Recommendation Disclosure location Governance a) Board oversight 63 b) Management’s role 63-64 Strategy a) Climate-related risks and opportunities 65-66 b) The impact of climate-related risks and opportunities 66 c) The resilience of the organisation’s strategy 66 Risk Management a) Identifying and assessing climate-related risks 67 b) Managing climate-related risks 67 c) Integration into overall risk management 68 Metrics & Targets a) Climate metrics 68 b) Greenhouse gas (‘GHG’) emissions 69-70 c) Climate targets 69 TP ICAP GROUP PLC Annual Report and Accounts 202262 # Governance The Board's oversight of climate-related risks and opportunities # 2022 # Board responsibilities The Board has overall responsibility for climate-related risks and opportunities. During 2022, issues it considered relating to climate change were the regulatory backdrop and our associated action plans for 2022 and 2023. # Board oversight The Group Board, and its Committees (Risk, Audit, and Remuneration), reviewed climate change-related issues three times in total during the year. These specific papers focused on reviewing progress against the Group's mandatory climate-related reporting requirements and the actions to advance our progress further. For example, at its December meeting, the Group Board reviewed and agreed a paper that set out the main elements of the climate change strategic framework for TP ICAP. The Board and Senior Management also attended a presentation by ET on Climate Change and TCFD Reporting. This focused particularly on the changing regulatory frameworks in the UK, and developments in Europe. The Audit Committee had several engagements throughout 2022 about the firm's TCFD work programme. They received reports on TCFD progress, and reporting requirements, including recent Financial Reporting Council guidance. The Group strengthened its ESG-related capabilities in 2022 by appointing Shane O'Riordain, Group Director, Corporate Affairs, reporting directly to the Chief Executive Officer. At TP ICAP, as part of his overall executive remit, Shane leads the Group's dedicated Sustainability function. This includes a Director of Sustainability & Community Investment and dedicated Investor Relations resource. Prior to TP ICAP, amongst his other responsibilities, Shane held sustainability leadership roles at Hollifax, HBOS, Lloyds Banking Group and Royal Mail. The Duties and Responsibility Sections of the Terms of Reference for the Remuneration Committee, Nominations & Governance Committee, Audit Committee, Risk Committee, Group Risk, Conduct and Governance Committee and Executive Committee were amended to include responsibilities on climate change. These changes make clear the particular responsibility of each committee in ensuring that the organisation fully responds to the requirement of the listing rule. The Corporate Transactions Policy was updated to take account of Climate Change. Climate change-related risks and opportunities that any material acquisition or divestiture might generate for the Group in the short and medium term will be considered by proposers and decision-makers. Climate change considerations were included in the annual budget process. For the 2023 budget period, we do not expect any material climate change-related financial impact on our business. As noted above, all Board members receive information throughout the year and participate in climate-related workshops. Tracy Clarke is the overall lead on ESG. Tracy's experience includes being responsible for Corporate Affairs and Sustainability at Standard Chartered. She is also a current member of Chapter Zero. In addition, Edmund Ng is a member of Eastfort Asset Management's ESG Committee, which focuses on steering the fund portfolio towards sustainable investments by working closely with stakeholders that include regulators and service providers. Philip Price, Group General Counsel, retains overall responsibility for ESG matters. During the year, Robin Stewart, CFO, took responsibility for leading on TCFD. # 2023 Under the climate change strategic planning framework, the Board review two substantive updates on climate change each year, including at the annual Strategy Day. Both the Board, and the Executive Committee, will review and agree a report on the findings of this detailed scenario analysis. The Audit Committee will also review climate change. It will focus on TP ICAP's adherence to the UK regulations, emerging regulatory requirements in other jurisdictions, and the quality of TP ICAP's climate change data. The Risk Committee reviewed a paper on Climate Change Risk Framework in January 2023. The Committee is committed to reviewing climate-related risks and TP ICAP's risk management framework on a regular basis. These reviews will focus on the climate-related risks and opportunities that have been identified, including the potential financial and strategic impact to the Group, following our in-depth scenario analysis work. # Management's role in assessing and managing climate-related risks and opportunities The management team has a significant role in assessing and managing climate-related risks and opportunities. The level of activity increased in 2022 and is expected to increase further in 2023. In 2022, the Terms of Reference of several management committees and working groups were amended to clearly articulate the role of each in delivering TP ICAP's climate response. The Executive Committee's responsibilities are clearly set out in its Terms of Reference. The Committee's primary duty is to oversee, monitor and review the Group's climate change strategy and execution, including the embedding of the TCFD deliverables under the four pillars (Governance, Risk, Strategy and Metrics) across the Company. 63 TP ICAP GROUP PLC Annual Report and Accounts 2022 Sustainability Task Force on Climate-related Financial Disclosures continued The Executive Committee’s Terms of Reference include reviewing In summary, these management arrangements feed into the on a regular basis the Group’s progress, including the climate relevant board committees and to the Board itself. Clear terms of change scenario analysis required under UK regulation and an reference are in place for each. All parts of the organisation are assessment of the potential impact of climate change on the aligned to the Company’s response to Climate Change and Company’s business model: revenue, costs, etc. Finally, a review of complying with the UK regulatory requirements. the Company’s own carbon emission targets and progress is also a specific part of the Committee’s remit. This year, the Executive ESG Governance Structure Committee reviewed the proposed climate change strategic planning framework, and received a detailed update on progress around TCFD and Scopes 1, 2 and 3. TP ICAP Group plc Board Has oversight on business strategy from Senior managers, including our Executive Director with an ESG perspective. responsibility for ESG and members of the Group Management Committee (‘GMC’), play an active part in the working groups that oversee climate-related activity and performance. Philip Price (Executive Director) and Martin Ryan (GMC member), David Goodchild (GMC member) and Sue Maple (GMC member) all Executive Committee attend the ESG Forum. Leads the delivery of the Group’s overall ESG programme and updates the Board on ESG matters. The Group ESG Forum reports into the Executive Committee. It has Group-wide responsibility for TP ICAP’s environment, social and governance impact. Regarding climate change, this includes overseeing climate-related risks and opportunities to support Group ESG Forum strategic decision-making; implementing policies, delivery, Provides oversight and advice in relation to ESG strategy, communications, and disclosures; tracking the emerging climate policies, documentation, implementation, communications, change physical and transitional risks and monitoring regulatory and disclosures. developments. The Forum is chaired by the Group Director of Corporate Affairs. The other members are the Group General Counsel, Group Head of HR, Group Chief Operating Officer, Group Head of Risk, Group Head of Marketing and Communications and the Chief Procurement Officer. The ESG Forum met three times in TCFD Working Group* Climate Change the year. Philip Price, the Group General Counsel, updates the Drives the actions needed to Working Group Executive Committee on climate change matters arising from the embed the TCFD framework Supports the ESG Forum and Group ESG Forum. within our business. drives delivery of our various climate change-related During the year, a Climate Change Working Group was set up. commitments and disclosures. It meets regularly and is chaired by the Group Director, Corporate Affairs. Its purpose is to ensure that all climate change commitments and actions are being quickly and effectively indicated. It draws * TCFD Working Group will be operational in 2023. membership from Finance, Procurement, Facilities, Change Management and Corporate Affairs. Robin Stewart, Executive Director and Chief Financial Officer, is the chair of a dedicated TCFD Working Group, which we have established. Its membership includes Finance, Risk, representation from the four Business Divisions and Corporate Affairs. In 2023, the group will meet regularly and focus on the actions needed to complete the implementation of the TCFD pillars across our business. The Group Director, Corporate Affairs has day-to-day responsibility for embedding TCFD across the business. In addition, the CEOs of our four business divisions all participated in workshops in 2022 to help identify, agree and prioritise the climate-related risks and opportunities facing our business as part of the high-level climate change scenario analysis conducted in 2022. TP ICAP GROUP PLC Annual Report and Accounts 202264 Strategy The Group does not adopt a long-term planning process. Over the The climate-related risks and opportunities TP ICAP has immediate 2023 budget period, we do not expect any material identified over the short, medium, and long term climate change-related financial impact on our business. Our approach, including materiality We are at the early stages of an ongoing process to assess the The outcome of the high-level climate change analysis informed our impact of climate change on our business, and its associated risk assessment process as laid out in our Enterprise Risk Management materiality. We acknowledge that we have more to do to fully meet Framework (see pages 72-74 for detail). Together, the analysis and the TCFD requirements, notably regarding creating potential risk assessment identified the following risks and opportunities. impact pathways to link climate-related risks and opportunities to financial performance. Risks Strategic report From a Group-wide perspective, we identified the short-term policy Our approach to materiality is centred around qualitative and and legal risk of potentially failing to comply with climate-related quantitative factors. As a first step, in 2022 we undertook a regulatory requirements. Additionally, potentially being unable to high-level climate change impact analysis of the physical and meet expectations in relation to climate strategy and performance transition risks and opportunities facing our business. could lead to reputational risk and key stakeholders – for example, investors, clients and suppliers – being unwilling to engage with the Process we adopted Group and its four business divisions. From a physical risk perspective, the analysis assessed 40 sites globally according to seven potential hazards: wildfires, inland In the medium term, the high-level analysis identified that of the floods, heatwaves, drought, sea level rise, water stress and cyclones. Group’s four business divisions, Energy & Commodities would most Risk exposure was assessed on a low, medium and high scale based likely be affected by climate change. For example, market and on SustGlobal thresholds. technology shifts could lead to the risk of the business not responding effectively to changes in client demand, or to the The qualitative element of the assessment included desk-based emergence of new competitors focused on providing sustainable research, staff interviews, and workshops involving senior executives solutions (for example, specialist voluntary carbon trading from across the Group and the CEOs of our four business divisions. platforms). This could adversely affect Energy & Commodities This qualitative approach sought to identify transition risks and revenues over time. More broadly across the Group, the direct, opportunities according to three types: (1) Market and Technology or indirect, impact of physical or transition climate risk on Shifts, (2) Policy and Legal, and (3) Reputation. We then worked counterparties could result in an increased probability of to assign the risks and opportunities identified to a specific counterparty defaults. geography, business or function, and sub-sector within a business or function. We also worked to assign a short or medium-term In both the short and medium term, the potential impact of physical timeframe to the risks and opportunities, and prioritise them or transition climate risk on the Group, third-party infrastructure in order of importance. providers or other key suppliers could lead to a loss of our critical infrastructure and compromise our ability to do business. Whilst the More broadly, our governance processes are also a material overall results of the high-level physical risk analysis show that our aspect of how we consider the impact of climate change. In 2022, sites have a low exposure to physical climate hazards under a high we strengthened our approach in this area. Examples include emissions future, some exposures do exist that should be monitored establishing a climate change framework for the Group’s key Board moving forward. 21 assets face high exposure, most commonly to and executive committees. This underpins the regular review of cyclones (Southeast Asia), heatwaves (Middle East and Southeast climate change and its potential impacts on our business. In Asia), drought and water stress (across regions). Across larger sites, addition, we incorporated the TCFD risk drivers into our overall Singapore and New York face water stress and some cyclone Enterprise Risk Management Framework. Potential climate-related exposure. 14 of the 21 high exposures begin occurring in the short risk impact on all our risk types is now actively assessed. term, most located in the Middle East. Time frame Opportunities TP ICAP operates according to a short-term time frame of 0–3 In the short term, market and technology shifts mean our Energy & years, the main element being a detailed one-year budget planning Commodities division can play a strategic role globally in helping cycle. This reflects our role as a broker whose activities are market to enable the transition from ‘traditional’ fuels by developing its driven. The Group does not have a defined time frame for the offering in renewable broking, so unlocking new, sustainable medium term. However, for the purpose of evaluating climate- revenues streams. The by-product of these new broking solutions related risks and opportunities, we have defined medium term as would be new sources of data that Parameta Solutions, our data 3–5 years as part of our high-level climate change analysis. We will and analytics division, could monetise. return to the medium-term time frame as part of our detailed scenario analysis in 2023. Over the medium term, by building a reputation as a progressive intermediary and pivoting growth towards sustainability, TP ICAP can attract and retain talent, new investors, and new clients. TP ICAP GROUP PLC Annual Report and Accounts 202265 Sustainability Task Force on Climate-related Financial Disclosures continued In 2023, we will undertake a more detailed climate scenarios analysis, including climate-related risks and opportunities. From this the Group will calculate the potential future financial impact, where methodologies allow. The 2023 work, as noted above, will be accompanied by intensive engagement with the Board. #### **The impact of climate-related risks and opportunities on TP ICAP's businesses, strategy, and financial planning impact on the Group** During 2022, TP ICAP's strategy and planning have been informed by high-level scenario work using variants of the IPCC's SSP2 and SSP5 scenarios for physical risks and NGFS Scenarios Net Zero 2050, Divergent Net Zero and Delayed Transition scenarios for transition risks and opportunities. We will continue to use these 'scenario sets'. They provide a consistent scenario storyline for assessment whilst recognising that there are a growing number of scenario sources, where several may be applied as part of the climate scenario analysis. The scenario sets used by TP ICAP include an aggressive policy scenario where transition risks are high, a low mitigation scenario where physical risks are high and a middle of the road/disorderly transition scenario to reference the in-between. #### **Impact on financial performance and strategy** For the 2023 budget period, we do not expect any material climate change-related financial impact on our business. We are in the process of considering how material climate-related issues affect our business strategy. In 2022, this has been carried forward by engagement with senior management across the business. The Climate Change Impact assessment has highlighted areas of exposure across our key sites and business operations. We have also strengthened our understanding of the exposure of our largest suppliers to climate change and the level of their own emissions. Our understanding of the impact of climate change grew as a result of our engagement in 2022. By the end of 2023, owing to the further work noted above, we expect to have mapped out how climate-related issues affect financial performance (eg, revenues, costs) and financial position (eg, assets, liabilities) and to have that understanding inform our business plans. #### **Prioritisation and transitioning plans** TP ICAP prioritises its climate-related risks and opportunities through the system of working groups described in the Management's role in assessing and managing climate-related risks and opportunities section of this report. Initial high-level scenario work has been completed. More detailed work is commissioned for 2023 to map out how climate-related issues could impact our financial performance. Following on from that we will develop a Transition Plan that takes into account the UK's 2050 Net Zero Carbon commitment. We have set a 2026 Scope 1 and 2 absolute emissions reduction target, which will make a direct contribution moving towards a low-carbon economy. For more detail, see the Metrics and Targets section on pages 68-70. #### **The resilience of TP ICAP's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario** The climate-related scenarios we considered during 2022 included consideration of time horizons up to 2100. The analysis of physical risk considered 40 sites, including data centres. We applied two climate scenarios, which followed the Intergovernmental Panel on Climate Change ('IPCC') guidelines: the worst-case 'Fossil-fuelled development' scenario, and the 'Middle of the Road' scenario. The hazards considered were cyclones, drought, heatwave, inland flooding, sea level rise, water stress and wildfire. The analysis showed that most TP ICAP sites, including data centres, have low overall exposure to physical climate hazards even under a high emissions future. Facilities faced low long-term exposure, most prevalently to cyclones (Southeast Asia), drought (across regions), water stress, sea level rise and heatwaves (Middle East and Southeast Asia). 14 of the 21 high exposures identified begin occurring in the short term. Most high exposures were in Middle East, APAC, with one in the US and one in the Nordics. This does not pose an immediate threat to the resilience of our operations but nonetheless is being fully integrated into our planning. TP ICAP is not immune from physical risks stemming from climate change. TP ICAP generates its income through broking. It is key therefore that the Group correctly recognises which elements of the business will grow or decline as clients, the economy and governments adapt to the transition to a low-carbon economy. We keep this under review and will return to it as part of our detailed climate-change analysis work that will be completed in 2023. We are developing our resilience to climate change through a continuous journey of improvement to better understand the potential impacts of climate change. As noted, we commissioned an external consultancy to undertake high-level scenario work in 2022. We will build on that during 2023 with much more detailed scenario work. To help complete this detailed work we have commissioned a third-party specialist agency, Corporate Citizenship. This will better equip the organisation to make informed assessments on the potential impact of climate-related issues on the Group's financial performance (eg, revenues, costs) and position (eg, assets, liabilities) implications. This work includes a 2°C or lower scenario, and other scenarios with higher levels of warming and increased physical risk. The high-level scenario analysis done to date on climate-related physical and transitional risk and opportunities, combined with the feedback from Business and Functional heads as part of the 2023 budget process, does not show any financially material risk that will affect the Group in 2023. We will keep this under review pending the detailed climate change analysis work that we will do in 2023. 66 TP ICAP GROUP PLC Annual Report and Accounts 2022 Risk Management Applying climate-related risk considerations to our existing risks TP ICAP’s processes for identifying and assessing climate- has not materially changed the assessment of their risk profile in related risks the short term. This is because we do not foresee any probable Climate-related risks are identified, assessed and managed within climate change-related risk consideration crystallising in the next the overall scope of our Group-wide Enterprise Risk Management 12 months that will materially affect our business. However, the Framework (‘ERMF’). Group has identified several climate-related risks that could lead to a change in risk profile over the medium term. These include In 2022, the Risk function used the output of the high-level climate potential transition and physical impacts on the Energy & change impact analysis to inform the risk assessment process as Commodities business, potential physical impacts on the Group’s laid out in the ERMF. The high-level scenario analysis process operational resilience in certain locations in Asia Pacific and the Strategic report involved desk-based research, interviews with a broad range of Middle East, and the likelihood of increased regulatory focus on stakeholders, and several workshops with senior managers from climate risks. We will keep these risks under close review. across the Group. It was facilitated by an external consultant. The analysis focused on the physical and transition risks and In 2023, we will continue to identify, assess and manage our climate opportunities arising from climate change over the short and risk profile through our ERMF. To enhance this process, we will build medium term. We followed the TCFD typology to categorise the on the high-level climate change analysis undertaken in 2022 and risks and opportunities: namely, Physical, Market and Technology conduct a significantly more detailed qualitative and quantitative Shifts, Reputation, and Policy and Legal. review in 2023, the output of which will inform our approach. This will include existing and emerging regulatory requirements. The ERMF risk assessment process includes: As detailed in the Governance section (page 82), the Group will also embed the climate change strategic planning framework to > A review of the risks recorded in the Group’s Risk Register; integrate climate considerations into BAU management processes > A review of the risk appetite framework and risk management and systems. requirements, as these relate to climate risks; and > An assessment of the Group’s current climate risk profile relative TP ICAP’s process for managing climate-related risks to risk appetite. We manage climate-related risks by incorporating them into our ERMF. This process includes: TP ICAP has identified and assessed the potential size and scope of climate-related risks by building upon the definition of the risk > Logging how the risk has been recorded in the Group’s Risk Climate change – transition to net zero set out in the Emerging Risks Register – ie, by amending an existing risk type or defining section of the Annual Report and Accounts 2021. Following the a new risk; 2022 risk assessment, climate-related risk has been elevated from > Detailing how the risk has been incorporated within the Group’s the Group’s Emerging Risk Register to the Risk Taxonomy, which Risk Appetite Framework; contains the Group’s actively managed risks. This ensures the requisite > Outlining key mitigants or controls adopted to manage the risk; level of visibility for management and governance, as well as and external stakeholders. > Making a high-level assessment of the risk profile for each relevant risk. The Board articulates the overall level of risk the Group is willing to accept for the various risks it faces within its Risk Appetite Statement, In 2022, we amended the definitions of the following risks to include including climate-related risks. This includes defining the Group’s climate-relate risk considerations: overall loss tolerance and its targeted level of prudential adequacy. The Risk Appetite Statements are cascaded and operationalised > Business Continuity and Crisis Management Risk now includes throughout the Group via a framework of risk appetite the risk that the Group fails to address appropriately physical or implementation metrics. transition climate risk impacts on the Group, or third-party infrastructure and business continuity providers. The Group principally assesses its risk profile, through the above > Credit Risk now includes the risk that a counterparty defaults processes, over a time frame of the next 12 months. It also seeks to due to the direct or indirect impact of physical or transition identify any potential changes to its risk profile over the short and climate risk. medium term. Given that TP ICAP’s core business is broking and therefore markets-led, the Group does not undertake long-term planning or risk assessment. TP ICAP GROUP PLC Annual Report and Accounts 202267 Sustainability Task Force on Climate-related Financial Disclosures continued > Strategy Design and Implementation Risk now includes the risk Purchased Goods & Services emissions and global train travel that the Group: emissions were calculated using the environmentally extended > Fails to respond effectively to the impact of physical or input-output (EEI/O) table method based on emissions per transition climate risk on client demand; GBP spend. > Fails to address any long-term loss of operability, due to the impact of physical or transition climate risk impacts on the TP ICAP measures and reports its emissions for Scope 1, 2 and five Group, its employees, third-party infrastructure providers or of the 15 Scope 3 GHG emission categories. These are outlined in other key suppliers which fundamentally undermines the the table below. The target and carbon reduction strategy relates Group’s ability to operate its business models; or to this scope. > Incurs reputational damage caused by a failure to meet stakeholder expectations in relation to ESG strategy and Scope Subscope performance (including climate change), leading to key Scope 1 Fuel Combustion stakeholders being unwilling to deal with the Group (including investors, clients, suppliers and employees). Company Vehicles Fugitive Emissions In addition, a new risk was introduced entitled Climate Risk Regulatory Compliance. This is defined as the risk that the Group Scope 2 Purchased Electricity, Heat or Steam fails to comply with climate-related regulatory requirements in any of the jurisdictions in which TP ICAP operates, with potential Scope 3 Purchased Goods & Services sanctions for non-compliance including fines, public censure and Capital Goods associated damage to the Group’s reputation. Fuel & Energy As part of the ERMF, the Group operates a formal issue Upstream Transportation and Distribution management process across the three lines of defence to manage Waste Disposal any issues which could materially impact the Group’s risk profile. Business Travel The risk identification process involves identifying a designated Commuting senior manager as ‘risk lead’ for all material risks who has overall Upstream Leased Assets responsibility for overseeing the management of that risk across the Downstream Transportation and Distribution Group. In determining the appropriate response, the Group will Processing of Sold Products prioritise its remediation activity according to the potential impact of each relevant risk. Use of Sold Products End-of-life treatment of Sold Products See pages 76-81 in the Risk section of this report for a review of the Downstream Leased Assets Group’s principal risks, how climate change relates to these Franchises principal risks, and associated key mitigants. Investments How TP ICAP identifies, assesses and manages climate-related In parameter. risks are integrated into the organisation’s overall risk Out of parameter. management We manage climate-related risks within the scope of our overall We do not disclose 10 out of the 15 Scope 3 GHG categories existing ERMF. Please see pages 72-74 for more details. because we do not have any emissions, or any significant emissions, in these areas. Metrics and Targets The metrics used by TP ICAP to assess climate-related risks Specifically, Capital Goods are captured in Purchased Goods & and opportunities in line with our strategy and risk Services. We are not a manufacturer that requires mass delivery of management process raw materials. We don’t lease any assets, aside from our buildings, The key metrics used to measure and manage climate-related risks the emissions of which are covered in Scopes 1 and 2. We sell and opportunities are TP ICAP’s Scope 1, 2 and 3 emissions. a service and do not distribute physical products for others to use or process and sell on. The services we sell – for example, trade We follow the Greenhouse Gas Protocol in calculating and, where execution and advisory – do not generate their own emission necessary, extrapolating our emissions. We report our corporate streams. We have no franchises, and, as a broker, we do not lend emissions under the operational control method. We therefore money or make investments. account for 100% of the greenhouse gas (GHG) emissions where we have operational control. This includes TP ICAP and its subsidiaries. Building emissions and business travel data was collected as part of SECR compliance covering 1 January 2022 – 31 December 2022. This data covered building energy use, refrigerant use, business travel and waste. TP ICAP GROUP PLC Annual Report and Accounts 202268 #### Other metrics Given the nature of our business, we judge climate-related risks associated with water, land use and waste management to be immaterial. In addition to TP ICAP's Scope 1, 2 and 3 emissions, performance-related metrics are included in the Company's remuneration approach for Executive Directors for the execution of key deliverables, regulatory or otherwise, in relation to climate change. Their bonus is determined 70% based on financial performance and 50% based on performance against a scorecard of non-financial objectives. Five per cent in total is based on attainment of certain ESG targets, which focus on net zero, gender diversity and the new business approval process. We have not yet evaluated our sensitivity to carbon pricing being used by governments to regulate emissions as we judge both the likelihood of occurrence and the likelihood of impact upon us to be low. Nonetheless, we will include modelling of this in our work scheduled for 2023. #### Scope 1, Scope 2 and Scope 3 GHG emissions, and the related risks ##### 2021 baseline and 2022 performance Recognising that TP ICAP is an a journey of continual improvement, in 2022 we strengthened our emissions data collection and management. ##### Scope 1 and 2 emissions Specifically for Scope 1 and 2 emissions, work was done to, a) build a fuller picture of our real estate footprint and, b) broaden the coverage of sites from which we collect data. This increased from c.70% of our total footprint in 2021 to c.85% in 2022 and includes all our major sites and data centres. This improvement in data capture, quality and analysis meant that we have updated our 2021 baseline. We will continue to review our baseline and potentially make further adjustments in future given our focus on continually improving our data management process. ##### Scope 3 Turning to Scope 3 Purchased Goods & Services, enhanced data collection and analysis has also been carried out. Emissions calculations are now based on actual emissions for top suppliers, where this data is available, as well as extrapolation. The outcome is an indicative Scope 3 2021 baseline. We will continue to review and potentially adjust this Scope 3 baseline as we develop our approach. The 2022 emissions for Purchased Goods & Services have been calculated using the 2022 total spend for 1/1/22 – 31/10/22. This data was then extrapolated to cover the remaining two months of the year. #### Emissions performance In 2021, TP ICAP's restated total emissions was 60,535.6 tonnes of carbon dioxide equivalent (tCO2e). TCO2e is the standard unit for emissions reporting accounting for all greenhouses gases, including carbon dioxide. In 2022, TP ICAP's total emissions equalled 58,177.1 tCO2e. This equates to a 3.9% reduction in 2022 compared to 2021. Notably, we reduced our Scope 1 and Scope 2 emissions by 20.8% year on year. 66% of our emissions stem from Scope 3 Purchased Good & Services. #### Targets used to manage climate-related risks and opportunities, and performance against these targets ##### Scope 1 and 2 – Target and roadmap To help meet the Net Zero ambition set by the UK government, our absolute emissions target is to be carbon neutral across both Scope 1 and Scope 2 emissions by the end of 2026. On Scope 1 and 2, we continue to make progress with emissions reducing 21% in the year. As previously noted, it is unlikely that we will be able to replicate the energy savings benefits delivered by our property consolidation programme in 2022. Turning to the roadmap between now and the end of 2026, the main elements are expected to be, a) continued property rationalisation where possible, b) energy efficiency, including working with our landlords and, c) the purchase and retirement of renewable energy certificates ('RECs') and purchase of carbon offsets. We will again update on our progress next year. ##### Scope 3 In 2022, we worked to establish an indicative Scope 3 emission 2021 baseline for Purchased Goods & Services. This was based on an assessment of our top c.30 suppliers, which account for c.45% of our total annual spend. The balance of our annual spend is spread across a long tail of smaller suppliers. We have engaged these core suppliers by issuing questionnaires to gather their relevant data and action plans for addressing Scope 3 emissions. 41% of all suppliers responded. This response rate increased to 70% when focusing on our top 10 suppliers. Our independent advisors, Antheist, used this to calculate an indicative Scope 3 emissions 2021 baseline. The Scope 3 emissions 2021 baseline is indicative only. Our core suppliers are at different stages of their reporting journeys, and we have not engaged the entirety of our supply chain. We will continue to engage with them to, a) pursue a better-quality Scope 3 emissions baseline and, b) develop a deeper understanding of their plans to address their emissions. We note, however, that seven of our top ten suppliers (accounting for c.24% of all our estimated Scope 3 emissions) have published commitments to be net zero on their Scope 3 emissions by 2050. Against this backdrop, we have no plans to set a Scope 3 emissions reduction target at this time, and will continue to engage with our key suppliers about their net zero plans. 69 TP ICAP GROUP PLC Annual Report and Accounts 2022 Sustainability Task Force on Climate-related Financial Disclosures continued Carbon emissions Total Global AMER APAC EMEA 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Scope 1 t/CO 2 e 2,030.6 2,592.4 Of which from Fuel Consumption 1,538.9 1,308.3 1,306.0 1,194.6 – – 232.9 113.8 Of which from Fugitive Emissions 491.7 1,284.0 – – – 400.4 491.7 883.6 Scope 2 t/CO 2 e – Purchased Electricity, Heat or Steam 7,585.2 9,544.5 3,873.1 4,685.9 1,921.3 2,514.4 1,790.8 2,344.3 Scope 3 t/CO 2 e 48,561.3 48,398.7 Of which Purchased Goods & Services (incl Capital Goods) 38,548.9 37,482.8 38,548.9 37,482.8 – – – – – – Of which Fuel & Energy 2,818.6 4,459.0 1,675.9 1,93 4.1 471.6 774.2 671.1 1,750.8 Of which Waste Disposal 88.8 111.2 34 .1 22.6 15.8 54.8 39.0 33.8 Of which Business Travel 2,146.4 2,326.4 639.3 1,466.4 556.7 240.4 950.4 619.7 Of which Employee Commuting 4,958.5 4,019.3 2,647.7 1,951.3 1,188.0 901.9 1,122.8 1,16 6.1 Total t/CO 2 e 5 8,177.1 60,535.6 38,548.9 37,482.8 10,176.2 11,254.8 4,153.3 4886.0 5,298.6 6,912.0 An independent third party has calculated the above greenhouse gas emissions estimates to cover all material sources of emissions for which the Group is responsible. The methodology used was that of the ‘Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (revised edition, 2015)’. Responsibility for emissions sources was determined using the operational approach. All emission sources required under the ‘Companies, Partnerships and Groups (Accounts and non-financial reporting) Regulations 2016‘ are included. Energy consumption The below table and supporting narrative on page 52 summarise the Streamlined Energy and Carbon Reporting (SECR) disclosure in line with the requirements for a quoted company, as per The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018. The disclosure also extends beyond the scope of a quoted company and includes emissions and energy consumption from business travel via air and taxi (Scope 3). | | Current reporting year | | | | Comparison reporting year | | | | --- | --- | --- | --- | --- | --- | --- | --- | | 1 January 2022–31 December 2022 | | | | | 1 January 2021–31 December 2021 | | | | | | | | Global | | Global (excluding | | | | | UK | (excluding UK) UK | | | | UK) | Energy consumption used to calculate Scope 1 emissions (kWh) 1,005,363 7,425,125 523,842 6,619,294 Energy consumption used to calculate Scope 2 emissions (kWh) 7,035,901 16,295,855 8,903,850 17,683,819 Energy consumption used to calculate Scope 3 emissions (kWh) 2,614,954 5,969,685 1,113,048 4,353,142 Total energy consumption based on the above (kWh) 10,656,217 29,690,665 10,540,740 26,656,254 Intensity ratio: tCO 2 e (gross Scope 1,2,+3) per employee 2.26 2.43 TP ICAP GROUP PLC Annual Report and Accounts 202270 Viability statement and going concern Viability statement The Board of Directors has assessed the prospects for, and viability of, the Group over a three-year period to the end of December 2025. We believe that a three-year time horizon remains the most appropriate timeframe over which the Directors should assess the long-term viability of the Group. This is on the basis that it has a sufficient degree of certainty in the context of the current position of the Group and the assessment of its principal risks, and it matches the business planning cycle. This time horizon is broadly in-line with the weighted average maturity of our debt facilities comprised of revolving credit facilities and corporate bond portfolios. The assessment has been made taking into account the following: - The Assessment of the Group's Principal Risks, including those that would threaten the Group's business model, future performance, solvency and liquidity. These risks are also discussed in the risk management report on pages 72 to 85; - The Group Internal Audit Opinion that contains an assessment of the effectiveness of the Group's risk management and internal control systems; - The Going Concern Review that assesses whether the Group has access to sufficient liquidity to meet all of its external obligations and operate its business, for a period of at least 12 months from the date of the Annual Report; - The Group Review of Capital and Liquidity Adequacy ('GRCLA') that assesses the capital and liquidity position of the Group on a consolidated basis, in both base and stressed conditions; - The Review of Internal Capital Adequacy and Risk Assessment ('ICARA') process undertaken by the EMEA Sub-Consolidation Group and the UK regulated entities; and - The assessment of the Group's external credit rating by Fitch Ratings. The Directors consider that they have undertaken a robust assessment of the prospects of the Group and its principal risks over a three-year period, and, on the basis of that assessment, have a reasonable expectations that the Group will be able to continue in operation and meet its liabilities as they fall due over at least the period of assessment. In arriving at this conclusion, the Directors have made the following assumptions: - The Group maintains access to liquidity through the Group's £350m Bank revolving credit facility and ¥10bn (c.£65m) Toton revolving credit facility (see Note 25 on page 183); - The Group does not experience any material change in its capital or liquidity requirements, including as a result of the Supervisory Review and Evaluation Process for the EMEA Sub-Consolidation Group currently being undertaken by the FCA for the first time under the IFPRI regime which came into effect in 2022; - The Group takes appropriate actions to maintain continuity of operations in the EU following the UK's departure from the EU and to mitigate the potential adverse effects arising from Brexit, including the potential fragmentation of liquidity and consequential reduction in trading volumes; and - The Group is not materially impacted from litigation and regulatory investigations in a negative way; - The 5.25% £247m Sterling Notes maturing in January 2024 will be repaid from a combination of existing cash resources generated from earnings, cash released from the £100m capital release project, announced as part of the Group's half-year results in 2022, with the remainder refinanced through the credit facilities and/or through new bond issuance. Going concern The Group has sufficient financial resources both in the regions and at the corporate centre to meet the Group's ongoing obligations. The Directors have assessed the outlook of the Group for at least 12 months from date of approval of the financial statements by considering medium-term projections as well as stress tests and mitigation plans. The stress tests include material revenue reductions, significant one-off losses, losing the Group's investment grade status resulting in increased finance costs and slow-down in collection of trade debtors. The stress case also assumes that the Group does not refinance the £247m 2024 Sterling Notes maturing in January 2024 during the period of the assessment. Under these tests we continue to have sufficient liquidity and are compliant with all covenants after taking mitigating actions such as reducing costs, suspending dividends and delaying investments. 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 Annual Report and Accounts continue to be prepared on the going concern basis. 71 TP ICAR GROUP PLC Annual Report and Accounts 2022 ## Principal risks and uncertainties Risk Management First line of defence Effective risk management is essential to the financial strength Risk management within the business and resilience of the Group and for delivering its business strategy. The first line of defence comprises the management of the business This section provides a summary of how risk is managed by the units and support functions. Group through its Enterprise Risk Management Framework (‘ERMF’) and describes the Group’s principal risks. The first line of defence has primary responsibility for ensuring that the business operates within risk appetite on a day-to-day basis. Enterprise Risk Management Framework The purpose of the ERMF is to enable the Group to understand the Second line of defence risks to which it is exposed and to manage these risks in line with Risk oversight and challenge its stated risk appetite. The ERMF achieves this objective through The second line of defence comprises the Compliance and Risk a number of mutually reinforcing components, which include the functions, which are separate from operational management. operation of a robust risk management and governance structure The Compliance function is responsible for overseeing the Group’s based on the three lines-of-defence model, the fostering of an compliance with regulatory requirements in all of the jurisdictions appropriate risk management culture and a range of risk in which the Group operates. management processes to enable the Group to identify, assess and manage its risks effectively. The Risk function is responsible for overseeing and challenging the business, support and control functions in their identification, Organisational Structure assessment and management of the risks to which they are exposed, The ERMF is operated through a three lines of defence (‘3LOD’) and for assisting the Board (and its various Committees) in model whereby risk management, risk oversight and risk assurance discharging its overall risk oversight responsibilities. roles are undertaken by separate and independent functions, with all 3LOD overseen by the Group’s governance committee structure Third line of defence (including Risk, Audit and Remuneration Committees). Independent assurance Internal Audit provides independent assurance on the design and The Board has overall responsibility for the management of risk operational effectiveness of the Group’s risk management framework. within the Group which includes: > Defining the nature and extent of the risks it is willing to take in achieving its business objectives through formal risk appetite statements; > Ensuring that the Group has an appropriate and effective risk management and internal control framework; and > Monitoring the Group’s risk profile against the Group’s defined risk appetite. The Group’s risk governance structure oversees the implementation and operation of the ERMF across the Group and primarily comprises the following committees: > Board Risk Committee; > Group Risk, Conduct and Governance Committee; and > Regional Risk, Conduct and Governance Committees in EMEA, Americas and Asia Pacific. TP ICAP GROUP PLC Annual Report and Accounts 202272 A. Risk Culture D. Risk Identification The Group recognises that in order for the ERMF to be operated The Group reviews its risk profile on an ongoing basis to ensure that effectively, it must be underpinned by an appropriate risk culture. it identifies all material risks arising from the day-to-day operation of its business and the implementation of its business strategy, as The Group seeks to foster the desired risk management values well as any emerging risks facing the Group. These risks are recorded and behaviours through a number of components including the in the Group’s Risk Register, with each risk allocated to a designated setting of an appropriate ‘tone-from-the-top’, ensuring clear risk senior manager Risk Lead who has overall responsibility for management accountabilities for all employees, the provision ensuring it is managed effectively. of risk training, consideration of risk-related behaviours in the performance management process, and by ensuring that staff A formal review of the Group’s risk profile is undertaken on a Strategic report are able to raise risk management concerns through the Group’s quarterly basis as part of the Group’s Risk Committee review cycle. Whistleblowing framework. In addition, the Group seeks to identify changes to the risk profile on a dynamic basis through the various risk management processes and structures operated under the ERMF. This includes assessing the risk profile of new business initiatives and analysing risk events. Business Risk and risk governance E. Risk Appetite strategy The Board articulate the overall level of risk the Group is willing to accept for the various risks it faces within its Risk Appetite Statements. Capital and Risk liquidity identification assessment The Risk Appetite Statements set the parameters within which the Group must manage its risk profile, and so provides the context for all of the Group’s risk management activity. This includes defining the Group’s overall loss tolerance and its targeted level of Stress and prudential adequacy. Risk Risk scenario culture appetite analysis The Risk Appetite Statements are cascaded and operationalised throughout the Group through a framework of risk appetite implementation metrics which provide the operational parameters the business must operate within on a day-to-day basis. Risk Risk assessment response and F. Systems and Controls evaluation Definition of Requirements Monitoring The Group maintains Risk Management Standards (‘RMS’) which Policies and articulate the key systems and controls which must be implemented and controls reporting to manage each of its material risks within risk appetite. This includes the minimum requirements in relation to policies, controls and training. B. Organisational Structure Implementation The ERMF is operated through a three lines of defence (‘3LOD’) The Group assesses adherence to these requirements through an model whereby risk management, risk oversight and risk assurance annual control and policy attestation process that provides its roles are undertaken by separate and independent functions, with management and governance forums with a comprehensive all 3LOD overseen by the Group’s governance committee structure assessment of the status of the Group’s risk management environment. (including Risk, Audit and Remuneration Committees). C. Risk Strategy The Board adopts an annual Risk Strategy which identifies the core risk management objectives and focus areas that must be addressed for the Group to deliver its Business Strategy. The Risk Strategy constitutes the guiding principles by which all of the Group’s risk management activity is undertaken. TP ICAP GROUP PLC Annual Report and Accounts 202273 Principal risks and uncertainties continued G. Issue Management Process K. Prudential Assessments The Group operates a formal issue management process across The Group periodically assesses its capital and liquidity adequacy the 3LOD to address any issues which could materially impact the by reference to the targeted confidence level adopted in the Risk Group’s risk profile. The issue management process includes a Appetite Statements (and applicable regulatory requirements). formal risk acceptance process where it is not practical or desirable to address an issue at the point identified. The Group assesses its stressed risk profile through a formal stress testing programme which covers all material risk types. This All actions and deferrals are subject to a formal approval process programme includes reverse stress testing which aims to assist the which is calibrated to reflect the severity of the issue. Group to identify and mitigate potential causes of business failure. H. Risk Event Management Process Risk Strategy The Group has a defined process for the escalation, notification The Board is responsible for setting the Group’s Risk Strategy which and logging of all risk events to ensure that they can be addressed identifies the core risk management objectives that must be met for and analysed appropriately. This includes the conducting of the Group to deliver its Business Strategy and, as such, provides the detailed root-cause analysis for significant events. overarching context for all of the Group’s risk management activity. The Group has defined the following risk objectives within its I. Risk Assessment and Monitoring current Risk Strategy: The Group assesses and monitors its risk profile on an ongoing basis Category Risk objective to ensure that it is operating within risk appetite and to identify any remedial action required to maintain or return the Group to within Financial position To maintain a robust financial position risk appetite. in both normal and stressed conditions, to be achieved by maintaining profitability, This monitoring is undertaken through: ensuring capital and liquidity resources are sustained at levels that reflect the Group’s | > An annual Risk Self-Assessment process; | | risk profile, and maintaining access to | | --- | --- | --- | | > The quarterly Risk Committee review process; and | | capital markets. | | > Ongoing operational monitoring by the 1LOD and 2LOD. | Operational | To ensure that operational processes and | | | effectiveness | infrastructure operate effectively and with | | Any breach of risk appetite parameters or other significant issue | and resilience | an appropriate degree of resilience. | | identified through the monitoring activity must be escalated to the | Regulatory standing To maintain good standing with all its | | | appropriate level of management and governance. | | regulators and to ensure reasonable and | proportionate compliance with all J. Risk Assurance applicable laws and regulations to which Internal Audit, Risk and Compliance undertake independent and the Group is subject. targeted reviews of selected areas of the Group’s business and Reputation To maintain the Group’s reputation as operations to provide Management and Governance Committees an unbiased intermediary in the financial with additional insights and assurance in relation to specific aspects markets, with market integrity being at of the Group’s risk profile, and highlight areas requiring remediation. the heart of its business. Business strategy To adopt and execute a well-defined The scope of the assurance activity is approved by the Group’s Risk business plan which ensures the continued and Audit Committees. viability and growth of the Group’s business, and to ensure that the Group does not undertake any activity which could undermine its ability to meet its strategic goals. TP ICAP GROUP PLC Annual Report and Accounts 202274 Principal risks The Board has considered the findings of all of the above The Board has conducted a robust assessment of the principal risks assessment types in identifying its principal risks which are set facing the Group, defined for the purposes of this Annual Report as out in the table overleaf. The table includes an assessment of the those risks that could have a material impact on its business model, impact of each risk by reference to the potential impact that each future performance, solvency, liquidity or reputation. risk could have on the Group’s business model, future performance, solvency, liquidity or reputation. It should be noted that the stated The Board has considered a wide range of information as part impact for each risk is: (a) the potential impact in stressed conditions, of this assessment, including reports provided by the Group Risk net of any risk mitigation adopted by the Group, as opposed to the function and senior management, as well as the key findings from ‘expected’ impact at higher levels of probability; and (b) is assessed the Group’s various risk identification and assessment processes over the medium term (defined as a 3-year period). Strategic report described below. Rating Risk Impact The Group records all its identified risks within its Risk Register and 1 A risk that could fundamentally threaten the Group’s periodically assesses the risk profile of each risk against the target business model, future performance, solvency, liquidity residual risk profile defined in the Group’s risk appetite framework. or reputation 2 A risk that could significantly impact the Group’s business The Group formally reviews and assesses its risk profile on a model, future performance, solvency, liquidity or reputation quarterly basis as part of the Group’s Risk Committee governance 3 A risk that could materially impact the Group’s business cycle. In addition to the formal reviews noted above, the Group model, future performance, solvency, liquidity or reputation monitors its risk profile against risk appetite on an ongoing basis as part of its day-to-day business management and will update its risk framework outside of the formal review and assessment cycle where required to reflect any material changes to risk profile. This includes any changes to risk profile identified through the Group’s change management framework. The Group also undertakes stress testing and scenario analyses to model its potential risk exposure at the more extreme ‘stressed loss’ levels of severity. The Group also conducts reverse stress tests to identify those risk scenarios that could threaten the viability of the Group and to evaluate its ability to withstand or recover from such scenarios. Finally, the Group also reviews its emerging risk profile as part of the risk identification and assessment process. An emerging risk, for these purposes, is defined as any new type of risk that may pose a material threat to the Group in the future, and which the Group should monitor so that it is in a position to actively manage the risk if, and when, it becomes a more immediate threat to the Group. Each emerging risk is recorded in the Group’s Emerging Risk Register, along with an assessment of its potential impact and an estimate of the timeframe within which it is likely to materialise. TP ICAP GROUP PLC Annual Report and Accounts 202275 Principal risks and uncertainties continued Change in Impact risk exposure Risk Description rating Impact Description since 2021 Mitigation Key risk indicator Link to our Strategy 1 ## STRATEGIC AND BUSINESS RISK | Adverse change | The risk of a fundamental change to the regulatory | 1 > Reduction in broking | | No change | > Horizon scanning for regulatory developments. | > Status of regulatory change | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | to regulatory | framework which has a material adverse impact on the | | activity | | > Involvement in consultation and rule setting processes. | initiatives | > Aggregation | | framework | Group’s business model and/or undermines the Group’s | | > Reduced earnings and | | | | > Diversification | | | ability to deliver its strategy. | | profitability | | | | | > Increases in regulatory capital requirements | Deterioration in | The risk that due to adverse macroeconomic conditions | 1 > Reduction in broking | | No change | > Defined business strategy that seeks to maintain client, | > Trade volumes | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | the commercial | or geopolitical developments, market activity is | | activity | | geographical and product diversification. | > Revenues by region | > Aggregation | | environment | suppressed leading to reduced trading volumes. | | > Pressure on brokerage | | > Stress test process (which includes reverse stress tests) to | > Operating profit | > Diversification | | | | | rates | | assess the Group’s ability to absorb significant reductions | > Stress test results | | | | | | > Reduced earnings and | | in business performance and any changes to business | | | | | | | profitability | | model or risk mitigations required. | | | > Goodwill write-off | Failure to | The risk that the Group fails to respond to evolving | 2 > Loss of market share | | No change | > Defined business strategy that seeks to maintain client, | > Performance against strategy | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | respond to client | customer requirements, including the demand for | | > Pressure on brokerage | | geographical and product diversification, and that seeks to | implementation plans | > Aggregation | | demand or | enhanced electronic broking solutions for certain | | rates | | anticipate and respond to its clients’ evolving requirements. | > Market share percentage | > Diversification | | competitor | asset classes. | | > Reduced earnings and | | > Proactive engagement with clients through customer | > Results of client engagement | | | activity | | | profitability | | relationship management process. | surveys | | | | This includes the failure to implement the Group’s | | > Goodwill write-off | | > Periodic horizon-scanning and competitor analysis to | | | | | strategy in relation to Fusion, Parameta Solutions | | | | identify any required change to strategic objectives or | | | | | and Liquidnet. | | | | implementation plan. | | | | Global health | The risk that the Group experiences a significant | 2 > Reduction in broking | | No change > Incident and Crisis Management Framework. | | > Trade volumes | > Diversification | | pandemic | deterioration in business performance due to a global | | activity | | > Enhanced remote working capability and protocols | > Revenues by region | | | | pandemic. | | > Reduced earnings and | | developed in response to COVID-19. | > Operating profit | | | | | | profitability | | | > Risk events due to remote working | | | Failure to address | The risk that the operating model implemented by the | 3 > Loss of market share | | No change > Operation of EU trading subsidiary which acts as the | | > Brexit revenue-at-risk | > Aggregation | | impact of Brexit | Group to comply with the loss of EU passporting rights | | > Reduction in broking | | trading hub for EU-based business. | > Performance against Brexit | > Diversification | | | results in a fragmentation of liquidity between UK and | | activity | | > Changes to operating model to maintain UK-EU liquidity | response plans | | | | EU liquidity pools. | | > Reduced earnings and | | > Proactive engagement with European regulators and clients. | | | profitability | Failure to address | The risk that the Group: | 3 > Loss of market share | | Transferred | > Consideration of climate risk drivers in financial planning | > Trade volumes | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | climate risk | | | > Damage to reputation | from | and risk assessments. | > Revenues | > Aggregation | | | > Fails to respond to structural changes to the market | | > Increased volatility in | Emerging | | > Operating profit | > Diversification | | | arising from physical or transition risk drivers; | | share price | Risks | | > Performance against financial | | | | > Fails to address any long-term impact on the Group’s | | > Reduced ability to access | | | targets | | | | infrastructure, third-party infrastructure or key | | capital markets | | | | | vendors arising from physical or transition risk impacts; and > Incurs reputational damage due to a failure to meet stakeholder expectations in relation to climate risk management, leading to key stakeholders (such as investors, clients or suppliers) being unwilling to deal with the Group. TP ICAP GROUP PLC Annual Report and Accounts 202276 Change in Impact risk exposure Risk Description rating Impact Description since 2021 Mitigation Key risk indicator Link to our Strategy 1 ## STRATEGIC AND BUSINESS RISK Adverse change The risk of a fundamental change to the regulatory 1 > Reduction in broking No change > Horizon scanning for regulatory developments. > Status of regulatory change > Electronification to regulatory framework which has a material adverse impact on the activity > Involvement in consultation and rule setting processes. initiatives > Aggregation Strategic report framework Group’s business model and/or undermines the Group’s > Reduced earnings and > Diversification ability to deliver its strategy. profitability > Increases in regulatory capital requirements | Deterioration in | The risk that due to adverse macroeconomic conditions | 1 > Reduction in broking | | No change | > Defined business strategy that seeks to maintain client, | > Trade volumes | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | the commercial | or geopolitical developments, market activity is | | activity | | geographical and product diversification. | > Revenues by region | > Aggregation | | environment | suppressed leading to reduced trading volumes. | | > Pressure on brokerage | | > Stress test process (which includes reverse stress tests) to | > Operating profit | > Diversification | | | | | rates | | assess the Group’s ability to absorb significant reductions | > Stress test results | | | | | | > Reduced earnings and | | in business performance and any changes to business | | | | | | | profitability | | model or risk mitigations required. | | | > Goodwill write-off | Failure to | The risk that the Group fails to respond to evolving | 2 > Loss of market share | | No change | > Defined business strategy that seeks to maintain client, | > Performance against strategy | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | respond to client | customer requirements, including the demand for | | > Pressure on brokerage | | geographical and product diversification, and that seeks to | implementation plans | > Aggregation | | demand or | enhanced electronic broking solutions for certain | | rates | | anticipate and respond to its clients’ evolving requirements. | > Market share percentage | > Diversification | | competitor | asset classes. | | > Reduced earnings and | | > Proactive engagement with clients through customer | > Results of client engagement | | | activity | | | profitability | | relationship management process. | surveys | | | | This includes the failure to implement the Group’s | | > Goodwill write-off | | > Periodic horizon-scanning and competitor analysis to | | | | | strategy in relation to Fusion, Parameta Solutions | | | | identify any required change to strategic objectives or | | | | | and Liquidnet. | | | | implementation plan. | | | | Global health | The risk that the Group experiences a significant | 2 > Reduction in broking | | No change > Incident and Crisis Management Framework. | | > Trade volumes | > Diversification | | pandemic | deterioration in business performance due to a global | | activity | | > Enhanced remote working capability and protocols | > Revenues by region | | | | pandemic. | | > Reduced earnings and | | developed in response to COVID-19. | > Operating profit | | | | | | profitability | | | > Risk events due to remote working | | | Failure to address | The risk that the operating model implemented by the | 3 > Loss of market share | | No change > Operation of EU trading subsidiary which acts as the | | > Brexit revenue-at-risk | > Aggregation | | impact of Brexit | Group to comply with the loss of EU passporting rights | | > Reduction in broking | | trading hub for EU-based business. | > Performance against Brexit | > Diversification | | | results in a fragmentation of liquidity between UK and | | activity | | > Changes to operating model to maintain UK-EU liquidity | response plans | | | | EU liquidity pools. | | > Reduced earnings and | | > Proactive engagement with European regulators and clients. | | | profitability | Failure to address | The risk that the Group: | 3 > Loss of market share | | Transferred | > Consideration of climate risk drivers in financial planning | > Trade volumes | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | climate risk | | | > Damage to reputation | from | and risk assessments. | > Revenues | > Aggregation | | | > Fails to respond to structural changes to the market | | > Increased volatility in | Emerging | | > Operating profit | > Diversification | | | arising from physical or transition risk drivers; | | share price | Risks | | > Performance against financial | | | | > Fails to address any long-term impact on the Group’s | | > Reduced ability to access | | | targets | | | | infrastructure, third-party infrastructure or key | | capital markets | | | | | vendors arising from physical or transition risk impacts; and > Incurs reputational damage due to a failure to meet stakeholder expectations in relation to climate risk management, leading to key stakeholders (such as investors, clients or suppliers) being unwilling to deal with the Group. TP ICAP GROUP PLC Annual Report and Accounts 202277 Principal risks and uncertainties continued Change in Impact risk exposure Risk Description rating Impact Description since 2021 Mitigation Key risk indicator Link to our Strategy 2 ## OPERATIONAL RISK | Cyber-security | The risk that the Group fails to adequately protect itself | 1 > Loss of revenue | | No change | > Ongoing monitoring and assessment of the cyber-threat | > Cyber-security events/losses | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | and data | against cyber-attack or to adequately secure the data | | > Theft of assets | | landscape. | > Results of vulnerability testing | | | protection | it holds, resulting in potential financial loss (including | | > Payment of damages/ | | > Appropriate framework of systems and controls to prevent, | > Actual or attempted security | | | | through cyber-enabled fraud), a loss of operability, | | compensation | | identify and contain cyber threats. | breaches | | | | or the potential loss of critical business or client data. | | > Remediation costs | | > Regular testing of the Group’s cyber security utilising | > Data loss events | | | | | | > Regulatory sanctions | | specialist third parties. | | | > Damage to reputation | Infrastructure The Group is heavily reliant on the effective and | | 2 > Financial loss | | Increase | > Framework of systems and controls to minimise the risk | > System outages | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | | resilient operation of a range of infrastructure | | > Damage to the Group’s | | of operational failure. | > Stress test results | | | | components, including: | | reputation as a reliable | | > Incident and Crisis Management Framework. | | | | | | | market intermediary | | > Business continuity plans and capability. | | | > A complex IT architecture; > A range of office locations; and > Key third-party suppliers and market infrastructure providers. A failure of the Group’s infrastructure could result in a material loss of business. This includes the potential impact of physical and transition climate risk drivers on the Group’s key infrastructure. | Legal, | The Group operates in a highly regulated environment | 2 > Regulatory and legal | | No change | > Independent Compliance function to oversee compliance | > Internal Compliance policy | > People, conduct and | | --- | --- | --- | --- | --- | --- | --- | --- | | Compliance and | and is subject to the legal and regulatory frameworks | | enforcement action | | with regulatory obligations. | breaches | compliance | | Conduct risk | of numerous jurisdictions. | | including censure, fines or | | > Compliance monitoring and surveillance activity. | > Employee conduct metrics | | | | | | loss of operating licence | | > Compliance training programme to ensure that staff are | > Regulatory breaches | | | | Failure to comply with applicable legal and regulatory | | > Severe damage to | | aware of the regulatory requirements. | | | | | requirements could result in enforcement action being | | reputation | | > Adoption of compliance culture to engender high standards | | | | | taken against the Group, including the incurring of | | | | of employee conduct. | | | | | significant fines. | | | | > Conduct Management and Governance Framework | | | to address employee misconduct. | Broking process The Group is exposed to operational risk at every | | 3 > Financial loss | | No change | > On-desk supervision of broking activity. | > Risk events | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | | stage of the broking process, from the execution and | | > Damage to the Group’s | | > Issuing of trade recaps and confirmations. | > Settlement issues | > People, conduct and | | | arrangement of transactions (with the associated risk | | reputation as a reliable | | > Order and position limits on electronic order books. | > Margin calls | compliance | | | of loss arising through closing out error positions or | | market intermediary | | > Ongoing monitoring to identify potential error trades, | | | | | compensating clients) through to the clearing, | | | | and any clearing or settlement issues. | | | settlement and invoicing of transactions. | Human capital The Group operates in a highly competitive recruitment | | 3 > Increased staff turnover | | No change > Fixed term front office contracts with staggered | | > Staff turnover rates | > People, conduct and | | --- | --- | --- | --- | --- | --- | --- | --- | | | market and is exposed to the risk of losing key front | | impacting the Group’s | | renewal dates. | > Loss of key personnel | compliance | | | office, support or control staff who are essential to the | | ability to operate a | | > Performance management process linked to remuneration. | | | | | effective operation of the business. | | profitable and resilient | | > Introduction of new flexible working arrangement. | | | business TP ICAP GROUP PLC Annual Report and Accounts 202278 Change in Impact risk exposure Risk Description rating Impact Description since 2021 Mitigation Key risk indicator Link to our Strategy 2 ## OPERATIONAL RISK Cyber-security The risk that the Group fails to adequately protect itself 1 > Loss of revenue No change > Ongoing monitoring and assessment of the cyber-threat > Cyber-security events/losses > Electronification and data against cyber-attack or to adequately secure the data > Theft of assets landscape. > Results of vulnerability testing Strategic report protection it holds, resulting in potential financial loss (including > Payment of damages/ > Appropriate framework of systems and controls to prevent, > Actual or attempted security through cyber-enabled fraud), a loss of operability, compensation identify and contain cyber threats. breaches or the potential loss of critical business or client data. > Remediation costs > Regular testing of the Group’s cyber security utilising > Data loss events > Regulatory sanctions specialist third parties. > Damage to reputation | Infrastructure The Group is heavily reliant on the effective and | | 2 > Financial loss | | Increase | > Framework of systems and controls to minimise the risk | > System outages | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | | resilient operation of a range of infrastructure | | > Damage to the Group’s | | of operational failure. | > Stress test results | | | | components, including: | | reputation as a reliable | | > Incident and Crisis Management Framework. | | | | | | | market intermediary | | > Business continuity plans and capability. | | | > A complex IT architecture; > A range of office locations; and > Key third-party suppliers and market infrastructure providers. A failure of the Group’s infrastructure could result in a material loss of business. This includes the potential impact of physical and transition climate risk drivers on the Group’s key infrastructure. | Legal, | The Group operates in a highly regulated environment | 2 > Regulatory and legal | | No change | > Independent Compliance function to oversee compliance | > Internal Compliance policy | > People, conduct and | | --- | --- | --- | --- | --- | --- | --- | --- | | Compliance and | and is subject to the legal and regulatory frameworks | | enforcement action | | with regulatory obligations. | breaches | compliance | | Conduct risk | of numerous jurisdictions. | | including censure, fines or | | > Compliance monitoring and surveillance activity. | > Employee conduct metrics | | | | | | loss of operating licence | | > Compliance training programme to ensure that staff are | > Regulatory breaches | | | | Failure to comply with applicable legal and regulatory | | > Severe damage to | | aware of the regulatory requirements. | | | | | requirements could result in enforcement action being | | reputation | | > Adoption of compliance culture to engender high standards | | | | | taken against the Group, including the incurring of | | | | of employee conduct. | | | | | significant fines. | | | | > Conduct Management and Governance Framework | | | to address employee misconduct. | Broking process The Group is exposed to operational risk at every | | 3 > Financial loss | | No change | > On-desk supervision of broking activity. | > Risk events | > Electronification | | --- | --- | --- | --- | --- | --- | --- | --- | | | stage of the broking process, from the execution and | | > Damage to the Group’s | | > Issuing of trade recaps and confirmations. | > Settlement issues | > People, conduct and | | | arrangement of transactions (with the associated risk | | reputation as a reliable | | > Order and position limits on electronic order books. | > Margin calls | compliance | | | of loss arising through closing out error positions or | | market intermediary | | > Ongoing monitoring to identify potential error trades, | | | | | compensating clients) through to the clearing, | | | | and any clearing or settlement issues. | | | settlement and invoicing of transactions. | Human capital The Group operates in a highly competitive recruitment | | 3 > Increased staff turnover | | No change > Fixed term front office contracts with staggered | | > Staff turnover rates | > People, conduct and | | --- | --- | --- | --- | --- | --- | --- | --- | | | market and is exposed to the risk of losing key front | | impacting the Group’s | | renewal dates. | > Loss of key personnel | compliance | | | office, support or control staff who are essential to the | | ability to operate a | | > Performance management process linked to remuneration. | | | | | effective operation of the business. | | profitable and resilient | | > Introduction of new flexible working arrangement. | | | business TP ICAP GROUP PLC Annual Report and Accounts 202279 Principal risks and uncertainties continued Change in Impact risk exposure Risk Description rating Impact Description since 2021 Mitigation Key risk indicator Link to our Strategy 3 ## FINANCIAL RISK | Liquidity risk The Group is exposed to potential margin calls from | | 2 > Reduction in the Group’s | | No change > Margin call and trade funding profile monitored against | | > Margin call profile | > Diversification | | --- | --- | --- | --- | --- | --- | --- | --- | | | clearing houses and correspondent clearers. The Group | | liquidity resources which | | defined limits. | > Settlement fail – funding | | | | also faces liquidity risk through its requirement to fund | | could, in extreme cases, | | > Group maintains liquidity resources in each operating | requirements | | | | matched principal trades which fail to settle on | | impact the Group’s | | centre to provide immediate access to funds. | > Unplanned intra-Group funding | | | | settlement date. | | cash-flow | | > Committed £350m revolving credit facility (‘RCF’). | calls | | | | | | | | > Diversification of funding sources. | > RCF draw-down | | > Overdraft facilities provided by primary settlement institutions. | Counterparty | The risk that the Group incurs loss as a result of a | 2 > Financial loss which could, | | Increase | > Counterparty exposures managed against credit thresholds | > Portfolio exposure | > Diversification | | --- | --- | --- | --- | --- | --- | --- | --- | | credit risk | counterparty default, whether due to insolvency, | | in extreme cases, impact | | that are calibrated to reflect counterparty creditworthiness. | > Client exposure | | | | sanctions or for any other reason. | | the Group’s solvency and | | > Exposure monitoring and reporting by independent credit | > Aged debt | | | | | | liquidity | | risk function. | | | Counterparty exposure principally arises in relation to outstanding brokerage receivables, cash balances or any unsettled matched principal trades (with the associated replacement cost exposure) held against a counterparty. FX exposure The risk that the Group suffers loss as a result of a 3 > Financial loss which could, No change > Ongoing monitoring of Group’s FX positions. > FX translation exposure > Diversification movement in FX rates, whether through transaction risk in extreme cases, impact > FX transaction exposure or translation risk. the Group’s solvency and liquidity Change in Impact risk exposure Risk Description rating Impact Description since 2021 Mitigation Time to Materialisation Link to our Strategy 4 ## EMERGING RISKS | Technology | The financial markets in which the Group operates will | 2 > Reduction in broking | | No change | > Ongoing review of the Group’s strategy in the context of | 5-10 years > Electronification | | | --- | --- | --- | --- | --- | --- | --- | --- | | expertise | become increasingly based on complex technology and | | activity | | broader market developments and assessment of the IT | | > Aggregation | | | the use of sophisticated data and analytics. | | > Reduced earnings and | | expertise and resourcing required to deliver it. | | > Diversification | profitability The Group’s ability to retain its position as a leading market infrastructure provider will be dependent on its ability to develop and implement a technology strategy which keeps pace with technological enhancements and to attract the required data scientists and technology specialists in an increasingly competitive recruitment market. Deglobalisation The risk that the global economy becomes increasingly 3 > Reduction in broking No change > Ongoing horizon scanning to identify potential changes to < 5 years > Aggregation fragmented (as per the UK’s departure from the EU) activity the geopolitical landscape and associated changes to the resulting in increasing divergence in regulatory regimes, > Reduced earnings and regulatory frameworks governing financial markets. fragmentation of liquidity in the financial markets and profitability potential supply chain disruption. TP ICAP GROUP PLC Annual Report and Accounts 202280 Change in Impact risk exposure Risk Description rating Impact Description since 2021 Mitigation Key risk indicator Link to our Strategy 3 ## FINANCIAL RISK Liquidity risk The Group is exposed to potential margin calls from 2 > Reduction in the Group’s No change > Margin call and trade funding profile monitored against > Margin call profile > Diversification clearing houses and correspondent clearers. The Group liquidity resources which defined limits. > Settlement fail – funding Strategic report | also faces liquidity risk through its requirement to fund | could, in extreme cases, | > Group maintains liquidity resources in each operating | requirements | | --- | --- | --- | --- | | matched principal trades which fail to settle on | impact the Group’s | centre to provide immediate access to funds. | > Unplanned intra-Group funding | | settlement date. | cash-flow | > Committed £350m revolving credit facility (‘RCF’). | calls | | | | > Diversification of funding sources. | > RCF draw-down | > Overdraft facilities provided by primary settlement institutions. | Counterparty | The risk that the Group incurs loss as a result of a | 2 > Financial loss which could, | | Increase | > Counterparty exposures managed against credit thresholds | > Portfolio exposure | > Diversification | | --- | --- | --- | --- | --- | --- | --- | --- | | credit risk | counterparty default, whether due to insolvency, | | in extreme cases, impact | | that are calibrated to reflect counterparty creditworthiness. | > Client exposure | | | | sanctions or for any other reason. | | the Group’s solvency and | | > Exposure monitoring and reporting by independent credit | > Aged debt | | | | | | liquidity | | risk function. | | | Counterparty exposure principally arises in relation to outstanding brokerage receivables, cash balances or any unsettled matched principal trades (with the associated replacement cost exposure) held against a counterparty. FX exposure The risk that the Group suffers loss as a result of a 3 > Financial loss which could, No change > Ongoing monitoring of Group’s FX positions. > FX translation exposure > Diversification movement in FX rates, whether through transaction risk in extreme cases, impact > FX transaction exposure or translation risk. the Group’s solvency and liquidity Change in Impact risk exposure Risk Description rating Impact Description since 2021 Mitigation Time to Materialisation Link to our Strategy 4 ## EMERGING RISKS | Technology | The financial markets in which the Group operates will | 2 > Reduction in broking | | No change | > Ongoing review of the Group’s strategy in the context of | 5-10 years > Electronification | | | --- | --- | --- | --- | --- | --- | --- | --- | | expertise | become increasingly based on complex technology and | | activity | | broader market developments and assessment of the IT | | > Aggregation | | | the use of sophisticated data and analytics. | | > Reduced earnings and | | expertise and resourcing required to deliver it. | | > Diversification | profitability The Group’s ability to retain its position as a leading market infrastructure provider will be dependent on its ability to develop and implement a technology strategy which keeps pace with technological enhancements and to attract the required data scientists and technology specialists in an increasingly competitive recruitment market. Deglobalisation The risk that the global economy becomes increasingly 3 > Reduction in broking No change > Ongoing horizon scanning to identify potential changes to < 5 years > Aggregation fragmented (as per the UK’s departure from the EU) activity the geopolitical landscape and associated changes to the resulting in increasing divergence in regulatory regimes, > Reduced earnings and regulatory frameworks governing financial markets. fragmentation of liquidity in the financial markets and profitability potential supply chain disruption. TP ICAP GROUP PLC Annual Report and Accounts 202281 ## GOVERNANCE ## REPORT CONNECTED CONTENT Leadership The Board is collectively responsible for effective oversight of the Group and the long-term sustainable success of its business. Page 94 TP ICAP GROUP PLC Annual Report and Accounts 202282 CONNECTED CONTENT Succession planning We regularly review the Board’s skills, experience and competencies and consider succession plans with reflection on diversity in the broadest sense. Page 101 Governance report ## GOVERNANCE In this section 84 Compliance with the Code 86 Board Chair’s governance letter 88 Governance at a glance 90 Board of Directors 94 Corporate governance report 100 Report of the Nominations & Governance Committee 106 Report of the Audit Committee 112 Report of the Risk Committee 116 Report of the Remuneration Committee 136 Directors’ report 139 Statement of Directors’ responsibilities ## REPORT TP ICAP GROUP PLC Annual Report and Accounts 202283 ## Compliance with the Code ## COMPLIANCE WITH THE UK Index of Code Disclosures ## CORPORATE GOVERNANCE CODE Board leadership and Company purpose ## The Board reviewed the Principles The Company should be led by an effective and entrepreneurial ## and Provisions of the UK Corporate Board that establishes the Company’s purpose, values and strategy, while ensuring that its responsibilities to its shareholders and ## Governance Code 2018 (the ‘Code’) stakeholders, including the workforce, are considered and met. ## and its compliance with the Code Provision Further information Page ## throughout 2022. Following this review, 1 Strategic report 6 Risks 72 ## the Board is pleased to confirm that Sustainability 50 Governance 83 ## the Company has applied the Code 2 Culture 87 ## Principles and complied in full with the Board activities 89 Workforce remuneration 118 and 123 ## Provisions for the financial year ended 3 Shareholder engagement 44 ## 31 December 2022. The Code can be 4 Significant votes against 117 ## found on the Financial Reporting 5 Stakeholder engagement 40 Workforce engagement 42 ## Council (‘FRC’) website, www.frc.org.uk. 6 Whistleblowing 60 and 110 ## Further information on our compliance 7 Managing conflicts of interest 104 8 Board meetings 95 ## with the Code and how the Code ## Principles have been applied by Division of responsibilities The Board, led by the Board Chair who is responsible for ## reference to each Provision is set its effectiveness, should be comprised of Non-executive and ## out in the index on these pages. Executive Directors who hold a diverse set of skills, experience and backgrounds. They each receive a comprehensive induction, have sufficient time to meet their Board responsibilities, and receive support from the Group Company Secretary, all of which enable them to carry out their duties effectively. Provision Further information Page 9 Division of responsibilities 94 The Chair biography 90 10 Independence of Directors 104 11 Board composition 101 12 Senior Independent Director 94 13 Non-executive Directors 94 14 Role of the Board 94 Division of responsibilities 94 15 Director biographies and external appointments 90 to 93 16 Group Company Secretary 94 TP ICAP GROUP PLC Annual Report and Accounts 202284 #### Composition, succession and evaluation Companies should have an effective succession plan in place for both the Board and for members of senior management. This should take into consideration the skills, experience and knowledge needed for maximum effectiveness. The Board, and the Directors individually, should be evaluated yearly. Annual evaluation of the Board should consider its composition, diversity and its effectiveness. Individual evaluations should demonstrate whether each Director continues to contribute effectively. | Provision | Further information | Page | | --- | --- | --- | | 17 | Nominations & Governance Committee – Membership and report | 100 | | 18 | Election and re-election of Directors | 104 | | 19 | Director biographies | 90 to 93 | | 20 | Board member recruitment | 101 | | 21 and 22 | Board evaluation | 97 | | 23 | Report of the Nominations & Governance Committee | 100 | #### Audit, risk and internal control The Board is responsible for determining the nature and extent of the principal risks the Company is willing to take in achieving its strategic objectives, and oversees the risk management and internal control systems in place with the support of the Audit and Risk Committees. The Board is also responsible for the establishment of policies which ensure the independence and effectiveness of both internal and external audit functions. | Provision | Further information | Page | | --- | --- | --- | | 24 | Audit Committee – Composition and report | 107 | | 25 | Key responsibilities of the Audit Committee | 108 | | 26 | Audit Committee Report | 106 | | 27 | Fair, balanced and understandable assessment | 108 | | 28 | Principal risks and uncertainties | 72 | | 29 | Risk Committee – Risk management and internal control | 112 | | 30 | Going concern | 111 | | 31 | Viability statement | 71 | #### Remuneration Executive Directors' remuneration has been designed to promote the long-term sustainable success of the Company. No Executive Director is involved in deciding his or her own remuneration. | Provision | Further information | Page | | --- | --- | --- | | 32 | Remuneration Committee – Composition and report | 116 to 119 | | 33 | Remuneration Policy | 121 | | 34 | Non-executive Director remuneration | 133 | | 35 | Advice provided to the Remuneration Committee | 135 | | 36 | Shareholding requirements – Remuneration Policy statement | 131 | | 37 and 38 | Remuneration Policy | 121 | | 39 | Executive Directors' service agreements and loss of office entitlements | 104 | | 40 and 41 | Report of the Remuneration Committee | 116 | #### Promoting the success of the Company TP ICAP Group plc is a Jersey registered company and therefore its Directors are not subject to the UK Companies Act requirements, in particular s172(1) duties. Nevertheless the Board promotes the success of the Company for the benefit of our members as a whole, recognising that a broad range of stakeholders are material to the long-term success of the business. Details of how the Board has engaged with its key stakeholders and considered their interests in Board discussions and in decision making are explained on pages 40 to 49. 83 TP ICAP GROUP PLC Annual Report and Accounts 2022 ## Board Chair’s governance letter Richard Berliand Board Chair Dear fellow shareholder, Board meetings and activity On behalf of the Board, I am pleased to present the Corporate In 2022, the Board considered several key areas covering Governance Report for the year ended 31 December 2022. strategy formulation, implementation and monitoring, technology, workforce development, operational expertise, Our commitment to good corporate governance financial performance, corporate governance, ESG and The Board continues to focus on maintaining high standards stakeholder engagement. Further detail on the key items of corporate governance, which we seek to achieve through the discussed and time spent by the Board on these and other Group’s robust governance framework. The Board recognises matters is set out later in the Corporate governance report that high standards of governance and effective Board on pages 89 and 139. oversight are vital to a successful organisation. This report explains how the Board and its Committees have dealt with Board Composition ensuring that we have effective corporate governance in place The structure, size and composition of the Board and its to help support the creation of long-term sustainable value for Committees, is kept under constant review. As part of this our shareholders and wider stakeholders. review on 7 February 2023, I was pleased to be able to announce that Kath Cates would become TP ICAP’s Senior Compliance with the Code Independent Director with effect from 1 March 2023. Kath Each year we review our governance framework with reference replaces Michael Heaney who will remain a valued member to the 2018 UK Corporate Governance Code (the ‘Code’), and a of the Board and its Committees. statement of compliance with the Code is set out on page 84. The Nomination & Governance Committee oversees the refreshment of the Board and its Committees and, in assisting and advising the Board, the Committee seeks to maintain an appropriate balance of skills, knowledge, independence, experience, time commitment and diversity of the Board, whilst taking into account the Group’s strategic priorities, its challenges and opportunities, all relevant corporate governance standards, and associated guidance on Board composition. TP ICAP GROUP PLC Annual Report and Accounts 202286 #### Board and Committee effectiveness As Chair, my principal objective is to develop and lead an effective Board for the benefit of our shareholders and wider stakeholders. The Board undertakes a review of its effectiveness each year and appoints an independent external adviser every third year, as recommended by the Code. During 2022, Clare Chalmers Ltd. an independent consultant was commissioned to undertake a review of the effectiveness of TP ICAP's Board and its Committees. I am pleased to report that the Board and its Committees were considered to be effective. Further details of the review and its outputs can be found on pages 97 to 99 of this report. #### Stakeholder engagement In fulfilling its duty to promote the success of the Company for the benefit of its shareholders and wider stakeholders, the Board continues to engage with our stakeholders whilst having regard to their interests and to the impacts and consequences of Board decisions. Further detail on stakeholder engagement can be found on pages 40 to 49 of the Strategic Report where we have provided an equivalent to a s172(1) UK Companies Act 2006 statement, albeit there is currently no such reporting requirement under the Jersey Companies Act. There has also been continued engagement in 2022 with our employees. During the year the Board received briefings from the Workforce Engagement Non-executive Directors on their findings from the workforce meetings held and the subsequent actions agreed and being implemented by the Regional CEOs. Our Non-executive Directors attended workforce engagement meetings in person and via teleconference in Japan, New York, Belfast and London. #### Purpose, culture and values The Board recognises the importance of its role in setting the tone of the Group's culture aligning it with our purpose, vision, mission and strategy, and embedding it throughout the Group. The Board aims to foster an open and collaborative culture based on our mission and purpose supporting decisions that are best for our shareholders, whilst having regard to the interests of our other stakeholders. Further details of about our purpose, vision and mission can be found in the Sustainability chapter on pages 50 to 70. In 2022 following feedback from employee engagement forums, workshops and town halls the core values of the Group were refreshed and our new Triple-A values (Accountable, Adaptable and Authentic) were launched. Work will continue into 2023 to further embed the new values into the everyday lives of our employees. #### A sustainable business Beyond corporate governance, the Board acknowledges its other key responsibilities, in particular as they relate to ESG matters. Much progress has been made on these matters over the last year. Of particular note was the appointment of Shane O'Riordan as Group Director, Corporate Affairs who leads the Group's approach to sustainability. Further information on the Group's approach to ESG matters can be found in our Sustainability chapter on pages 50 to 70. #### Annual General Meeting Our 2023 AGM will be held on 17 May 2023 at 2.15pm BST. Full details including the resolutions to be proposed to our shareholders can be found in the Notice of AGM which will be made available on our corporate website. The outcome of the resolutions put to the AGM will be published on the London Stock Exchange's and the Company's website once the AGM has concluded. #### Richard Berland Board Chair 14 March 2023 87 TP ICAP GROUP PLC Annual Report and Accounts 2022 ## Governance at a glance ## OUR GOVERNANCE FRAMEWORK ## The Board Has principal responsibility for promoting the long-term sustainable success of the Company, generating value for its shareholders and contributing to wider society. Key responsibilities Provides strategic Determines the Ensures the Ensures that Determines the Determines leadership. Group’s purpose, necessary resources controls and risk Group’s risk what matters values and strategy are in place to meet management appetite and nature are reserved and ensures these Company systems are rigorous and extent of the for the decision are aligned with objectives and and effective principal risks and of the Board. the culture. measure throughout the considers other performance organisation. matters escalated against them. from the Board’s Risk Committee. Nominations & Remuneration Risk Audit Executive Governance Responsible for developing, Reviews and makes Ensures the governance Responsible for defining Responsible for reviewing maintaining and recommendations to the and integrity of financial and refining strategic the balance of skills, recommending to Board on the Group’s risk reporting and disclosures, proposals and reviewing knowledge, experience and the Board formal and appetite, risk principles and reviews the controls the success of diversity of the Board and transparent policies on and policies so the risks in place. Oversees the implementation of Group UK Regulated Entities’ remuneration for the are reasonable and internal audit function strategy, overseeing (‘UKREs’) boards, making Company’s employees, appropriate for the Group and the relationship with performance against the recommendations for including the Directors’ and can be managed and the external auditors, strategy and budget on a Board, Committee and Remuneration Policy. controlled within the limits including monitoring business line and regional UKRE Non-executive Makes recommendations of the Group’s resources independence. Also basis, promoting cultural Director appointments to the Board on the and within appetite. This reviews the effectiveness development, and and monitoring succession remuneration packages includes oversight in of internal controls in the establishing and plans. Also has of the Executive Directors respect of climate-related Group and maintains monitoring ESG strategy responsibility for reviewing and other members of risks in accordance with oversight of the Group’s for the Group. Monitors and making senior management, in TCFD requirements. Ensures TCFD deliverables plan. the implementation and recommendations on compliance with policy. adherence to risk principles progress of risk and culture matters of corporate and thresholds. activities. Also makes governance. recommendations to the Board and Legal Entities in accordance with the authority levels delegated by the Board. For more see page 100 For more see page 116 For more see page 112 For more see page 106 Group Management Group Business Committee Group Operating Committee Group Risk, Conduct and Committee Responsible for exercising Responsible for exercising Governance Committee Responsible for periodically oversight of the Group’s oversight of the performance of Responsible for providing monitoring and reviewing commercial issues and current support functions, overseeing executive oversight of the current business performance business performance with significant Group projects and Group’s enterprise risk against budget and agreed reporting by business line. initiatives, monitoring management framework, strategy, developing and Also develops ideas on future operational risk within the monitoring conduct and influencing future strategy and strategy for consideration by support functions, reviewing, reviewing and recommending making recommendations for the Executive Committee. approving and prioritising governance proposals within variation of current strategy for potential change initiatives, the Group. Communicates with consideration by the Executive exercising oversight of budget and makes recommendations Committee. Considers and cost in support functions to the Executive Committee, the resourcing for the delivery and approving and reviewing Risk Committee and Audit of future strategy. support function policies. Committee as appropriate. TP ICAP GROUP PLC Annual Report and Accounts 202288 ## OUR BOARD IN NUMBERS KEY BOARD ACTIVITIES Gender The Board’s activities In addition to the eight scheduled meetings, numerous off-cycle Board meetings and briefings were held in 2022 at which the Board discussed, among other matters, the Group’s results and corporate strategy, ESG (including climate change) and other projects. The Board also held a strategy day in May 2022. Male 7 Over the course of the year, the Non-executive Directors conducted Female 4 unminuted discussions at the end of the scheduled Board meetings and held occasional meetings without the Executive Directors present to facilitate full and frank discussion. Ethnicity/Nationality How the Board spent its time during the year in scheduled meetings 20222021 1 1 2 9 9 8 2 White British 8 8 White French & British 1 White American 1 3 Asian Canadian 1 3 7 7 Tenure at year end 4 6 6 4 Governance report 5 5 2021 2022 1 Routine matters including unminuted discussion 6% 10% 0 to 3 years 5 2 CEO updates 16% 15% 3 to 6 years 6 3 CFO updates including dividend, tax matters 6+ years 0 and investor relations 15% 17% 4 Business/Management presentations and updates including operations and technology 12% 8% Skills, knowledge, experience 5 Risk management and audit including Brexit 7% 7% Score % 6 Legal and Compliance 8% 8% Banking 25 76% 7 Strategy including corporate transactions 20% 21% Trading/Broking 29 88% 8 Corporate governance and policies 5% 4% Accounting 19 58% 9 Employees, ESG, culture and stakeholders 11% 8% Operational 20 61% Digital & Technology 15 45% 2022 Board meeting attendance Regulatory 27 82% Meetings | Risk Management 27 82% | Director | attended¹ | | --- | --- | --- | | Audit 20 61% | Richard Berliand 8/8 | | | Strategy 25 76% | Nicolas Breteau 8/8 | | | Corporate Governance 25 76% | Kath Cates 8/8 | | | Corporate Transactions 23 70% | Tracy Clarke 8/8 | | | Remuneration Policy & Practices 22 67% | Angela Crawford-Ingle 8/8 | | | Sustainability & ESG (including climate change) 14 42% | Michael Heaney 8/8 | | Mark Hemsley 8/8 Note: The ‘Score’ of skills, knowledge, experience held by each Director is assessed Louise Murray 8/8 utilising a 0-3 rating (0: None | 1: Can Navigate | 2: Competent | 3: Expert) on an Edmund Ng 8/8 individual basis, providing a maximum score of 33 per item. Philip Price 8/8 Robin Stewart 8/8 1 Annual scheduled meetings only. TP ICAP GROUP PLC Annual Report and Accounts 202289 ## Board of Directors ## Our Directors bring Richard Berliand Kath Cates Board Chair Senior Independent Director ## diversity of skills, Risk Committee Chair ## knowledge, experience ## and outlook which we ## believe creates greater ## value, leads to better ## decision-making and ## promotes the long-term ## sustainable success of ## the Company. Appointed Appointed Appointed Appointed Appointed 19 March 2019 and Chair 1 February 2021 10 July 2018 10 July 2018 3 September 2018 with effect from 15 May 2019 | | Committee appointments | Committee appointments | | | Committee appointments | Committee appointments | Committee appointments | | --- | --- | --- | --- | --- | --- | --- | --- | | | N | A | N | Ri | None | None | None | | A Audit Committee | | | | | | | | | N Nominations & Governance Committee | Board skills and experience | Board skills and experience | | | Board skills and experience | Board skills and experience | Board skills and experience | | R Remuneration Committee | Richard combines a detailed understanding | Kath brings to the Board a wealth of | | | Nicolas’ extensive experience across the | Robin brings to the Board financial | Philip has over 30 years’ experience gained | | Ri Risk Committee | of the financial services industry and its | experience in global financial services with | | | global broking industry complements his | expertise coupled with strong leadership | in senior executive roles in the corporate | | Chair | challenges and opportunities with a diverse | over 25 years in executive roles based in | | | in-depth knowledge of the Group’s | skills developed both within TP ICAP and | and financial services sector. His knowledge | | Member | range of senior board leadership experience, | Hong Kong, London, Singapore and Zurich. | | | operations and markets and enables him to | the wider industry over more than 20 years. | and expertise enables him to bring a | | W Workforce Engagement Director | having held roles as Senior Independent | Her responsibilities spanned risk, legal and | | | lead the business and be a key contributor | His comprehensive knowledge of the | valuable perspective to the Board’s | | External appointments: all listed and regulated | Director and Deputy Chairman at other | compliance, operations, IT, brand, HR and | | | to the Board. Nicolas continues to lead the | financial position of the Group enables him | consideration of risk, governance, legal and | | external appointments are disclosed. | listed financial institutions. Through his | strategy. More recently as a Non-executive | | | implementation and development of the | to make a strong contribution to the Board | compliance issues and he is able to provide | | | broad business experience and previous | Kath has gained broad experience on the | | | Board’s strategy and identifies new | and when engaging with investors and | the Board with insight as to the dynamic | | | external roles Richard brings extensive | main boards of a number of companies, | | | opportunities for the continued future | other stakeholders. He helps to drive the | and complex regulatory environment in | | | external insight, a deep understanding of | chairing Board committees and acting | | | growth of the business. He maintains | operational performance of the business | which TP ICAP operates. Having spent his | | | relevant issues and the strong corporate | as Senior Independent Director. Kath is a | | | a productive dialogue with institutional | and provides valuable expertise in financial | career variously in London, Europe and | | | governance expertise required to lead an | current member of Chapter Zero and was | | | investors and other key stakeholders | risk management. | Asia, Philip also brings an understanding | | | effective Board and develop its strategy. | appointed our Senior Independent Director | | | of the business. | | and insight into a number of the Group’s key | | | He also brings considerable experience | in March 2023 succeeding Michael Heaney. | | | | | operating markets. | of engagement with key stakeholders of the business. | Career | Career | Career | Career | Career | | --- | --- | --- | --- | --- | | Richard had a 23-year career at J.P. Morgan | Kath was previously Global COO, | Nicolas has held senior managerial roles | Robin started his career at Arthur Andersen | Prior to joining the Group as Group General | | where he served most recently as Managing | Wholesale Banking for Standard Chartered | at MATIF (later Euronext), FIMAT (part of | and after that he spent 13 years at Dresdner | Counsel and Global Head of Compliance in | | Director leading the global cash equities | Bank plc. Prior to that Kath spent over | Société Générale Group) and most recently | Kleinwort where he was director and deputy | 2015, Philip held senior executive roles in UK | | and prime services businesses. He was | 20 years at UBS in a variety of senior roles | prior to joining TP ICAP, as Chief Executive | head of tax. He joined the Group originally | listed companies, investment banks and the | | previously a member of the board of | including Global Head of Compliance. Kath | of Newedge Group. Before his current | as Head of Tax in 2003 and has since held | alternative investment sector. Philip is | | directors of Rothesay Life plc and a member | was previously a Non-executive Director | appointment, he was CEO of TP ICAP’s | the roles of Head of Group Finance and Tax, | admitted as a Solicitor of the Senior Courts | | of Deutsche Börse AG’s Supervisory Board. | and Chair of the Risk Committee of Brewin | largest business, Global Broking. Nicolas | Group Financial Controller and Deputy CFO | of England & Wales. | | | Dolphin Holdings plc, and a Non-executive | has also held directorship roles in Europe, | and Financial Controller. | | | | Director and Remuneration Committee | Asia and the Americas at the Futures and | | | | | Chair of RSA Insurance Group plc. | Options Association (UK), Futures Industry | | | Association (USA), Citic/Newedge (China) and Altura (Spain). External appointments External appointments External appointments External appointments External appointments Senior Independent Director and member Non-executive Director, Remuneration None None None of the Remuneration, Nomination and Committee chair, and member of the Audit Audit & Risk Committees of Man Group plc. and Nomination Committees of United Chair of Saranac Partners Limited. Utilities Group plc. Non-executive Director of two regulated subsidiaries, and also Audit Committee chair of one, in the Columbia Threadneedle Group. Chair of the Board of Brown Shipley & Co Limited. TP ICAP GROUP PLC Annual Report and Accounts 202290 Nicolas Breteau Robin Stewart Philip Price Executive Director and Executive Director and Executive Director and Chief Executive Officer Chief Financial Officer Group General Counsel Appointed Appointed Appointed Appointed Appointed 19 March 2019 and Chair 1 February 2021 10 July 2018 10 July 2018 3 September 2018 with effect from 15 May 2019 Committee appointments Committee appointments Committee appointments Committee appointments Committee appointments N A N Ri None None None Board skills and experience Board skills and experience Board skills and experience Board skills and experience Board skills and experience Richard combines a detailed understanding Kath brings to the Board a wealth of Nicolas’ extensive experience across the Robin brings to the Board financial Philip has over 30 years’ experience gained Governance report | of the financial services industry and its | experience in global financial services with | global broking industry complements his | expertise coupled with strong leadership | in senior executive roles in the corporate | | --- | --- | --- | --- | --- | | challenges and opportunities with a diverse | over 25 years in executive roles based in | in-depth knowledge of the Group’s | skills developed both within TP ICAP and | and financial services sector. His knowledge | | range of senior board leadership experience, | Hong Kong, London, Singapore and Zurich. | operations and markets and enables him to | the wider industry over more than 20 years. | and expertise enables him to bring a | | having held roles as Senior Independent | Her responsibilities spanned risk, legal and | lead the business and be a key contributor | His comprehensive knowledge of the | valuable perspective to the Board’s | | Director and Deputy Chairman at other | compliance, operations, IT, brand, HR and | to the Board. Nicolas continues to lead the | financial position of the Group enables him | consideration of risk, governance, legal and | | listed financial institutions. Through his | strategy. More recently as a Non-executive | implementation and development of the | to make a strong contribution to the Board | compliance issues and he is able to provide | | broad business experience and previous | Kath has gained broad experience on the | Board’s strategy and identifies new | and when engaging with investors and | the Board with insight as to the dynamic | | external roles Richard brings extensive | main boards of a number of companies, | opportunities for the continued future | other stakeholders. He helps to drive the | and complex regulatory environment in | | external insight, a deep understanding of | chairing Board committees and acting | growth of the business. He maintains | operational performance of the business | which TP ICAP operates. Having spent his | | relevant issues and the strong corporate | as Senior Independent Director. Kath is a | a productive dialogue with institutional | and provides valuable expertise in financial | career variously in London, Europe and | | governance expertise required to lead an | current member of Chapter Zero and was | investors and other key stakeholders | risk management. | Asia, Philip also brings an understanding | | effective Board and develop its strategy. | appointed our Senior Independent Director | of the business. | | and insight into a number of the Group’s key | | He also brings considerable experience | in March 2023 succeeding Michael Heaney. | | | operating markets. | of engagement with key stakeholders of the business. | Career | Career | Career | Career | Career | | --- | --- | --- | --- | --- | | Richard had a 23-year career at J.P. Morgan | Kath was previously Global COO, | Nicolas has held senior managerial roles | Robin started his career at Arthur Andersen | Prior to joining the Group as Group General | | where he served most recently as Managing | Wholesale Banking for Standard Chartered | at MATIF (later Euronext), FIMAT (part of | and after that he spent 13 years at Dresdner | Counsel and Global Head of Compliance in | | Director leading the global cash equities | Bank plc. Prior to that Kath spent over | Société Générale Group) and most recently | Kleinwort where he was director and deputy | 2015, Philip held senior executive roles in UK | | and prime services businesses. He was | 20 years at UBS in a variety of senior roles | prior to joining TP ICAP, as Chief Executive | head of tax. He joined the Group originally | listed companies, investment banks and the | | previously a member of the board of | including Global Head of Compliance. Kath | of Newedge Group. Before his current | as Head of Tax in 2003 and has since held | alternative investment sector. Philip is | | directors of Rothesay Life plc and a member | was previously a Non-executive Director | appointment, he was CEO of TP ICAP’s | the roles of Head of Group Finance and Tax, | admitted as a Solicitor of the Senior Courts | | of Deutsche Börse AG’s Supervisory Board. | and Chair of the Risk Committee of Brewin | largest business, Global Broking. Nicolas | Group Financial Controller and Deputy CFO | of England & Wales. | | | Dolphin Holdings plc, and a Non-executive | has also held directorship roles in Europe, | and Financial Controller. | | | | Director and Remuneration Committee | Asia and the Americas at the Futures and | | | | | Chair of RSA Insurance Group plc. | Options Association (UK), Futures Industry | | | Association (USA), Citic/Newedge (China) and Altura (Spain). External appointments External appointments External appointments External appointments External appointments Senior Independent Director and member Non-executive Director, Remuneration None None None of the Remuneration, Nomination and Committee chair, and member of the Audit Audit & Risk Committees of Man Group plc. and Nomination Committees of United Chair of Saranac Partners Limited. Utilities Group plc. Non-executive Director of two regulated subsidiaries, and also Audit Committee chair of one, in the Columbia Threadneedle Group. Chair of the Board of Brown Shipley & Co Limited. TP ICAP GROUP PLC Annual Report and Accounts 202291 Board of Directors continued Tracy Clarke Angela Crawford-Ingle Michael Heaney Independent Non-executive Director Independent Non-executive Director Independent Non-executive Director Remuneration Committee Chair Audit Committee Chair Appointed Appointed Appointed Appointed Appointed Appointed 1 January 2021 16 March 2020 15 January 2018 16 March 2020 31 December 2021 1 November 2017 Committee appointments Committee appointments Committee appointments Committee appointments Committee appointments Committee appointments N R A N Ri N R Ri W N Ri W A N A N R W ESG Engagement Director | Board skills and experience | Board skills and experience | Board skills and experience | Board skills and experience | Board skills and experience | Board skills and experience | | --- | --- | --- | --- | --- | --- | | Tracy brings to the Board considerable | Angela brings substantial experience to | Michael brings to the Board significant | Mark draws on his extensive experience | Louise brings to the Board considerable and | Edmund brings to the Board a deep | | international banking and financial | the Board, both from her executive career, | knowledge of financial markets, both in | of capital markets and exchanges from | broad buy-side experience from her career | understanding of and insight into one of our | | services experience spanning 35 years, most | as well as from her other Non-executive | the USA and the UK, as well as expertise | his executive career in the industry. | within blue-chip financial institutions, as | key markets, with over 20 years’ experience | | recently serving as a Director of Standard | Director roles in financial services. She is | in international financial management | His knowledge of large-scale technology | well as expertise in financial asset classes. | of the Asian capital markets. In addition, | | Chartered Bank UK for seven years. Her | a Fellow of the Institute of Chartered | from his long career in financial services. | infrastructure, operations and oversight | Experienced in regulated industries and | his years of experience at the Hong Kong | | non-executive appointments including as | Accountants in England and Wales and | His prior experience of operations and risk | of operational transformation in several | implementing robust governance across | Monetary Authority enable Edmund to | | Remuneration Committee Chair, previously | delivers scrutiny and oversight to the Board | management at senior level was invaluable | international exchanges and trading | a global framework, Louise makes a | bring an in-depth understanding of | | for eaga plc and Sky plc and currently for | from her extensive experience of audit of | in his role as interim Chair of the Risk | platforms is invaluable to the Board. As | strong contribution as a member of the | complex financial regulatory regimes to the | | Haleon plc and Starling Bank, demonstrate | multinational and listed companies. | Committee. Michael was also our Senior | Workforce Engagement Director for EMEA, | Nominations & Governance Committee. | Board. His experience in both buy-side and | | her suitability to chair the Remuneration | | Independent Director from May 2021 to | Mark’s engagement with colleagues brings | | sell-side have provided valuable insight to | | Committee. Tracy also has relevant ESG | | March 2023. As Workforce Engagement | the perspectives of EMEA employees to | | the evolution of TP ICAP’s strategy, and his | | experience, having previously been | | Director his perspective ensures that he | Board discussions. | | fund ESG committee involvement has | | responsible for Corporate Affairs and | | understands and brings the views of | | | helped to provide the buy-side perspective | | Sustainability at Standard Chartered and | | employees in the Americas region to | | | relating to the Group’s recent TCFD focus. | | being a current member of Chapter Zero, | | Board discussions. | | | As Workforce Engagement Director, | | which is valuable in her role as ESG | | | | | Edmund also represents very effectively the | | Engagement Director. | | | | | views of employees from the APAC region | in Board discussion. | Career | Career | Career | Career | Career | Career | | --- | --- | --- | --- | --- | --- | | As well as having been Director of Standard | Angela, a chartered accountant, was a | During a distinguished career Michael served | Mark was President of Cboe Europe until his | Louise’s most recent executive position | Prior to establishing Eastfort Asset | | Chartered Bank UK from January 2013 | Partner specialising in financial services | as Global Co-Head of the Fixed Income | retirement in early 2020. Prior to that he | was as Director, Global Head of Trading | Management in mid-2015 with Brummer | | until 31 December 2020, Tracy served as | at PricewaterhouseCoopers for 20 years, | Sales and Trading Division for 28 years at | was Chief Executive Officer at Bats Global | at Aviva Investors Global, having previously | & Partners in Sweden, Edmund served | | Non-executive Director of Standard | during which time she led the Insurance and | Morgan Stanley, both in New York and | Markets in Europe, Managing Director, | spent 21 years at BlackRock Investment | as Head of the Direct Investment Division | | Chartered First Bank in Korea, Zodia | Investment Management Division. She has | London. He was also a member of Morgan | Market Solutions at LIFFE and Director | Management where she served most | of Hong Kong Monetary Authority and | | Holdings Limited and Zodia Custody Ltd. | previously served in Non-executive Director | Stanley’s Operating, Management and Risk | Global Technology at Deutsche Bank GCI. | recently as Managing Director, Head of | Managing Director of Asia Ex-Japan | | She has also chaired the boards of Standard | roles at Beazley plc, Swinton Group Limited, | Management Committees. Until recently | Mark was also a board member of EuroCCP | Fixed Income Trading EMEA. | trading within J.P.Morgan. | | Chartered Bank AG and Standard Chartered | Openwork Holdings, and River and | Michael served as a Non-executive Director of | NV and was a member of the ESMA | | | | Yatirim Bankasi Turk A.S. She was also | Mercantile Group plc. | Legal & General, Investment Management | Securities and Markets Stakeholder Group | | | | Non-executive Director of Inmarsat plc, | | Americas, and Chairman of the US Securities | and Securities and Markets Consultative | | | | China Britain Business Council and | | and Exchange Commission Fixed Income | Working Group. | | | | TheCityUK. | | Market Structure Advisory Committee. | | | | | External appointments | External appointments | External appointments | External appointments | External appointments | External appointments | | Senior Independent Director and | Council Member and Chair of the Audit | Chairman of Deutsche Bank USA and | None | None | Chief Investment Officer and co-founder | | Remuneration Committee Chair of Starling | Committee of Lloyds of London Limited. | Deutsche Bank Trust Company Americas. | | | of Eastfort Asset Management. | | Bank Limited. Non-executive Director | | | | | Director of OTC Clearing Hong Kong | | and Remuneration Committee Chair of | | | | | Limited. | Haleon plc. TP ICAP GROUP PLC Annual Report and Accounts 202292 A Audit Committee Chair N Nominations & Governance Committee Member R Remuneration Committee W Workforce Engagement Director Ri Risk Committee External appointments: all listed and regulated external appointments are disclosed. Mark Hemsley Louise Murray Edmund Ng Independent Non-executive Director Independent Non-executive Director Independent Non-executive Director Appointed Appointed Appointed Appointed Appointed Appointed 1 January 2021 16 March 2020 15 January 2018 16 March 2020 31 December 2021 1 November 2017 Committee appointments Committee appointments Committee appointments Committee appointments Committee appointments Committee appointments N R A N Ri N R Ri W N Ri W A N A N R W ESG Engagement Director Board skills and experience Board skills and experience Board skills and experience Board skills and experience Board skills and experience Board skills and experience Tracy brings to the Board considerable Angela brings substantial experience to Michael brings to the Board significant Mark draws on his extensive experience Louise brings to the Board considerable and Edmund brings to the Board a deep Governance report | international banking and financial | the Board, both from her executive career, | knowledge of financial markets, both in | of capital markets and exchanges from | broad buy-side experience from her career | understanding of and insight into one of our | | --- | --- | --- | --- | --- | --- | | services experience spanning 35 years, most | as well as from her other Non-executive | the USA and the UK, as well as expertise | his executive career in the industry. | within blue-chip financial institutions, as | key markets, with over 20 years’ experience | | recently serving as a Director of Standard | Director roles in financial services. She is | in international financial management | His knowledge of large-scale technology | well as expertise in financial asset classes. | of the Asian capital markets. In addition, | | Chartered Bank UK for seven years. Her | a Fellow of the Institute of Chartered | from his long career in financial services. | infrastructure, operations and oversight | Experienced in regulated industries and | his years of experience at the Hong Kong | | non-executive appointments including as | Accountants in England and Wales and | His prior experience of operations and risk | of operational transformation in several | implementing robust governance across | Monetary Authority enable Edmund to | | Remuneration Committee Chair, previously | delivers scrutiny and oversight to the Board | management at senior level was invaluable | international exchanges and trading | a global framework, Louise makes a | bring an in-depth understanding of | | for eaga plc and Sky plc and currently for | from her extensive experience of audit of | in his role as interim Chair of the Risk | platforms is invaluable to the Board. As | strong contribution as a member of the | complex financial regulatory regimes to the | | Haleon plc and Starling Bank, demonstrate | multinational and listed companies. | Committee. Michael was also our Senior | Workforce Engagement Director for EMEA, | Nominations & Governance Committee. | Board. His experience in both buy-side and | | her suitability to chair the Remuneration | | Independent Director from May 2021 to | Mark’s engagement with colleagues brings | | sell-side have provided valuable insight to | | Committee. Tracy also has relevant ESG | | March 2023. As Workforce Engagement | the perspectives of EMEA employees to | | the evolution of TP ICAP’s strategy, and his | | experience, having previously been | | Director his perspective ensures that he | Board discussions. | | fund ESG committee involvement has | | responsible for Corporate Affairs and | | understands and brings the views of | | | helped to provide the buy-side perspective | | Sustainability at Standard Chartered and | | employees in the Americas region to | | | relating to the Group’s recent TCFD focus. | | being a current member of Chapter Zero, | | Board discussions. | | | As Workforce Engagement Director, | | which is valuable in her role as ESG | | | | | Edmund also represents very effectively the | | Engagement Director. | | | | | views of employees from the APAC region | in Board discussion. | Career | Career | Career | Career | Career | Career | | --- | --- | --- | --- | --- | --- | | As well as having been Director of Standard | Angela, a chartered accountant, was a | During a distinguished career Michael served | Mark was President of Cboe Europe until his | Louise’s most recent executive position | Prior to establishing Eastfort Asset | | Chartered Bank UK from January 2013 | Partner specialising in financial services | as Global Co-Head of the Fixed Income | retirement in early 2020. Prior to that he | was as Director, Global Head of Trading | Management in mid-2015 with Brummer | | until 31 December 2020, Tracy served as | at PricewaterhouseCoopers for 20 years, | Sales and Trading Division for 28 years at | was Chief Executive Officer at Bats Global | at Aviva Investors Global, having previously | & Partners in Sweden, Edmund served | | Non-executive Director of Standard | during which time she led the Insurance and | Morgan Stanley, both in New York and | Markets in Europe, Managing Director, | spent 21 years at BlackRock Investment | as Head of the Direct Investment Division | | Chartered First Bank in Korea, Zodia | Investment Management Division. She has | London. He was also a member of Morgan | Market Solutions at LIFFE and Director | Management where she served most | of Hong Kong Monetary Authority and | | Holdings Limited and Zodia Custody Ltd. | previously served in Non-executive Director | Stanley’s Operating, Management and Risk | Global Technology at Deutsche Bank GCI. | recently as Managing Director, Head of | Managing Director of Asia Ex-Japan | | She has also chaired the boards of Standard | roles at Beazley plc, Swinton Group Limited, | Management Committees. Until recently | Mark was also a board member of EuroCCP | Fixed Income Trading EMEA. | trading within J.P.Morgan. | | Chartered Bank AG and Standard Chartered | Openwork Holdings, and River and | Michael served as a Non-executive Director of | NV and was a member of the ESMA | | | | Yatirim Bankasi Turk A.S. She was also | Mercantile Group plc. | Legal & General, Investment Management | Securities and Markets Stakeholder Group | | | | Non-executive Director of Inmarsat plc, | | Americas, and Chairman of the US Securities | and Securities and Markets Consultative | | | | China Britain Business Council and | | and Exchange Commission Fixed Income | Working Group. | | | | TheCityUK. | | Market Structure Advisory Committee. | | | | | External appointments | External appointments | External appointments | External appointments | External appointments | External appointments | | Senior Independent Director and | Council Member and Chair of the Audit | Chairman of Deutsche Bank USA and | None | None | Chief Investment Officer and co-founder | | Remuneration Committee Chair of Starling | Committee of Lloyds of London Limited. | Deutsche Bank Trust Company Americas. | | | of Eastfort Asset Management. | | Bank Limited. Non-executive Director | | | | | Director of OTC Clearing Hong Kong | | and Remuneration Committee Chair of | | | | | Limited. | Haleon plc. TP ICAP GROUP PLC Annual Report and Accounts 202293 ## Corporate governance report The role of the Board and its Committees The Group Governance Manual documents the operation and The Board is collectively responsible for the effective oversight of governance of the Group’s UK regulated entities within the EMEA the Company and the long-term success of its business. The formal Sub-Group, taking into consideration governance and regulatory Schedule of Matters Reserved for the Board describes the role and developments, including the Senior Managers and Certification responsibilities of the Board in full and is subject to annual review. Regime. The Group Governance Manual and appended documentation is subject to annual review and was revised in 2022 The Board delegates some of its responsibilities to the Audit, to better reflect the Group’s responsibilities in relation to the Task Nominations & Governance, Risk, and Remuneration Committees, Force on Climate-related Financial Disclosures (‘TCFD’). through agreed Terms of Reference which are subject to annual review. The responsibilities of each Committee are described in The Company has clearly defined policies, processes, procedures the governance framework on page 88 and in the relevant and controls which are subject to continuous review in order to meet Committee reports. the requirements of the business, the regulatory environment and the market. Ultimate decision-making on matters affecting a legal Responsibilities are also delegated by the Board to the Disclosure entity is reserved for that legal entity board. Committee through agreed Terms of Reference which are subject to annual review. The Disclosure Committee is responsible for Division of responsibilities considering on an ongoing basis, in accordance with legal and The roles of the Board Chair and Chief Executive Officer are regulatory obligations and the Group Disclosure Policy, whether separate and a formal statement of division of responsibilities any recent developments in the Group’s business are such that has been adopted by the Company. a disclosure obligation has, or may, arise and makes recommendations to the Board as appropriate. Board Chair: Independent on appointment and leads the Board by facilitating the effective contribution of all Directors and ensuring The Group has a matrix management structure. The Board also high standards of corporate governance. Chairs the Board meetings, delegates responsibility for the day-to-day operational management sets the Board agendas and promotes effective relationships of the Company to the Chief Executive Officer, who is supported by between the Executive Directors and Non-executive Directors. the Executive Committee (‘ExCo’), Group Management Committee (‘GMC’), Group Business Committee (‘GBC’), Group Operating Senior Independent Director: Discusses with shareholders any Committee (‘GOC’) and the Group Risk, Conduct and Governance concerns they have been unable to resolve through the normal Committee (‘GRCGC’). The Group executive level Committees are channels of Chair, Chief Executive Officer or Chief Financial Officer, chaired by the Chief Executive Officer, except the GRCGC which is or for which such contact is inappropriate. Provides a sounding chaired by the Group General Counsel and the GOC which is board for the Chair and is available to act as an intermediary chaired by the Group Chief Operating Officer. The Committee for other Directors when necessary. Responsible for reviewing responsibilities are described in the governance framework on the effectiveness of the Chair. page 88. Chief Executive Officer: Accountable to, and reports to, the Board. The Group’s Chief Operating Decision Maker (‘CODM’) is the ExCo Responsible for developing and implementing the strategy, setting which operates as a general executive management committee the cultural tone throughout the organisation and providing under the direct authority of the Board. The ExCo members coherent executive leadership in running the Group’s operations regularly review operating activity on a number of bases, including and activities. by business division and by legal ownership which is structured geographically based on the region of incorporation for TP ICAP’s Executive Directors: Support the Chief Executive Officer in legacy entities plus Liquidnet. This business division view is now developing and implementing the Group strategy and leading the considered to represent the more appropriate view for the purposes Company, which is consistent with its purpose, culture and values. of Group resource allocation and assessment of the nature and Provide specialist knowledge and experience to the Board. financial effects of the business activities in which the Group engages, and is consistent with the information reviewed by the Non-executive Directors: Independent of management, assist CODM. In order to support local regulatory compliance, each in developing and approving the strategy. Provide independent regional Sub-group has its own independent governance structure advice and constructive challenge to management, bring relevant including CEOs, board members and Sub-Group regional Risk, experience and knowledge and serve on the Board Committees. Conduct and Governance Committees with separate autonomy of Support the Chair by ensuring effective governance across the decision making and the ability to challenge the implementation of Group and reviewing the performance of the Executive Directors. Group level strategy and initiatives within its region. In the EMEA Sub-Group, in particular, there are also independent non-executive Group Company Secretary: Advises the Board on matters directors on the regional Board of directors that further strengthens of corporate governance and ensures that the correct Board the independence and judgement of the governance framework. procedures are followed. All members of the Board and Committees have access to the services and support of the Group Governance Manual and policies Group Company Secretary. The Group’s governance framework, approved by the Board, sets out the decision-making and reporting lines across the Group and authority levels delegated by the Board to certain Committees, individual Directors and senior management. This is documented in the Group Governance Manual, which sets out the governance framework in relation to the Group’s central and Sub-Group More online governance structures, as described above and shown on page 88. The Division of Responsibilities can be found at: Within the framework there is emphasis on the maintenance of https://tpicap.com/tpicap/investors/corporate-governance regulatory deconsolidation and the separation of mind and management between the Group and each Sub-Group. TP ICAP GROUP PLC Annual Report and Accounts 202294 ### Board meetings The Board has a schedule of eight meetings a year to discuss the Group's ordinary course of business in accordance with a detailed annual forward agenda developed by the Chair and the Group Company Secretary, and agreed by the Board. Every effort is made to arrange Board meetings so all Directors can attend. Additional meetings are arranged on an ad-hoc basis as required and while every effort is made to arrange that all Board members are able to attend these additional meetings, that is not always possible as they are often or relatively short notice. All Board and Board Committee meetings are minuted. These summarise the principal points discussed during an item's deliberation and record any unresolved concerns and actions arising from the discussion. In addition to the eight scheduled meetings (six full agenda meetings and two shorter CEO and CFO Report focused meetings) there were eight further ad-hoc meetings held at short notice during 2022. In most cases all eligible Board members were able to attend these additional meetings. In all cases each Non-executive Director held offline briefings with the Board Chair or Senior Independent Director in relation to the subject matter. ### Keeping the Board informed The Board and its Committees are provided with appropriate and timely information. For scheduled meetings, agendas are drafted based on the previously agreed forward agenda schedule and are then reviewed to replace or include supplemental items to reflect current business priorities as determined by the Chief Executive Officer and the other Executive Directors. Additionally, the Chair of the Board or the Chairs of each of the Committees have sessions, in person, by video-conference or exchange of email, with the Group Company Secretary and relevant function heads to review the agendas for scheduled meetings. Wherever possible, agenda items for consideration are accompanied by written reports and supporting papers. Oral updates are permitted where matters are progressing at a pace, to ensure the Directors have the most current information available. Board and Committee papers are circulated sufficiently in advance of meetings to enable Directors to review them. The Group has a comprehensive system for financial reporting on the Group's financial position and prospects, which is subject to rigorous review by both internal and external audit. Budgets, regular forecasts and monthly management accounts including KPIs, income statements, balance sheets and cash flows are prepared, and the Board reviews consolidated reports of these. The Group Company Secretary and Group General Counsel are responsible for ensuring the Board stays up to date with key changes in legislation which may affect the Company. There are also procedures in place for the Board to take independent professional advice at the Company's expense, should the need arise. The Board continually monitors the quality of the information it receives to ensure it is clear, comprehensive, and helps the Board to carry out its duties. ### Case study #### Audit tender ##### Stakeholder consideration: shareholders, regulators In 2021 the Company committed to completing a competitive tender for the audit contract in respect of the year ending 31 December 2024. Having lost completed a tender process in 2013, Deloitte have been the Company's external auditor since its predecessor company listed in 2000. In accordance with the Code and Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014 (the 'Order'), it was therefore prudent that the Company put the statutory audit services engagement out to tender during 2022, ahead of the year ending 31 December 2023 being the last year. Deloitte could be appointed as the Group's auditor. Completing the tender process within this time frame allows a four-year term for the new lead/audit partner and a costing period for the incumbent auditor in accordance with the EU mandatory firm rotation rules. #### In April 2022: - > Angela Crawford-lingle, Audit Committee Chair, issued a letter to the Company's largest shareholders representing circa 85% of the register outlining the Group's intentions in relation to the external audit tender. Feedback received from shareholders was considered and incorporated into the process as appropriate. - > The Group approached the three remaining 'Big A' audit firms and two of the challenger firms, and launched the request for proposal process inviting firms to participate in the process. - > A data room was set up and made available to participating firms, allowing them equal access to documents in order to structure a written proposal and submit questions. - > An internal steering group, chaired by the Audit Committee Chair and comprised of a sub-set of the project working group, was set up and met regularly to oversee the preparation and execution of the process on behalf of the Audit Committee. In June 2022 all participating firms were invited to present to an evaluation panel comprising of members of the Audit Committee, Board members and senior members of the project working groups. The evaluation panel compared, contrasted, and assessed the presentations, proposals received and the participating firms themselves. The evaluation was based on qualitative and quantitative criteria and considered participating firms' suitability in relation to the Group's client base, geographical reach, technical expertise and cultural fit. Subsequent to the formal presentations, all feedback was consolidated and reviewed. PricewaterhouseCoopers ('PwC') was identified by the evaluation panel as the preferred firm and the Group engaged in commercial negotiations and discussions. Following completion of due process the Audit Committee and Board recommended at their meetings in July 2022 that the proposed new external auditor, PwC, be appointed as the Group's new external auditor in respect of the year ending 31 December 2024. The recommendation was announced by the Company on 28 July 2022 and will be presented to our shareholders for approval at the AGM in early 2024. Throughout the process the Audit Committee continued to monitor legal requirements and developments in best practice with regards to audit tender arrangements, including the UK Financial Reporting Council's 'Audit Tenders - Notes on Best Practice' February 2017 and the UK adopted Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audits of public interest entities. 93 TP ICAP GROUP PLC Annual Report and Accounts 2022 Corporate governance report continued Key agenda items discussed by the Board Some of the key strategic priorities and areas discussed and reviewed by the Board in 2022 are shown below: Strategic and operational priorities Key activities and discussions Strategy formulation, > Regular Chief Executive Officer’s reports and dashboards implementation and > Reports from the Americas region monitoring > Presentations from the business including Energy & Commodities, Parameta Solutions, and Liquidnet > Post-Brexit planning and implementation > Dedicated strategy sessions > Brand strategy and architecture, including purpose statement review Build and sustain technology > Presentations on technology projects expertise > Deep dive on hub architecture Develop our people > Culture and conduct initiatives > Diversity and inclusion > Employee wellbeing and working environment, including new values > Employee share plans > Employee development and engagement > Gender pay gap review > Whistleblowing updates, in conjunction with the Audit Committee Enhance operational > Presentation on operations, including updates on business continuity planning expertise > Internal and external communications strategy Financial performance, > Regular Chief Financial Officer’s reports including financial performance including results, capital > Three-year financial plan updates and liquidity > Financial strategy > Approval of the 2022 Group Budget and discussion of the 2023 Budget setting process > Approval of the 2021 year-end results, Annual Report and Accounts, AGM circular and dividends > Review of dividend policy > Group review of capital and liquidity adequacy > Approval of interim results and review of trading statements > Viability statement and going concern > Analysis on local capital allocations and usage > EMTN Programme > Group insurance renewal Corporate governance and > Reports of the activities of the Audit, Remuneration, Risk, and Nominations & Governance risk, including regulatory Committees outcomes > Risk strategy, risk assurance plan and risk appetite statements > Regular legal and compliance reports > Presentations from the Chief Risk Officer, including on reinforcing a good risk culture > Conflicts of interest > Corporate governance matters, including approval of the Group Governance Manual, Matters Reserved for the Board, Division of Responsibilities, Schedule of Delegations and Group Expenditure Control Policy > Corporate governance updates and Code compliance > Board and Committee evaluation > Board and Committee Terms of Reference reviews > Review of Securities Dealing Code > Review of Modern Slavery Statement > External audit tender process ESG, including stakeholder > The Sustainability strategy, KPIs and reports engagement > Shareholder engagement and feedback > Investor relations reports and shareholder analysis > Review of the charitable giving policy > Climate change and environmental sustainability, including net zero commitment > Engagement with the FCA and other regulators > Supplier engagement TP ICAP GROUP PLC Annual Report and Accounts 202296 ## BOARD EVALUATION AND PERFORMANCE The Board undertakes a review of its effectiveness each year and appoints an external evaluator every third year. During 2022, Clare Chalmers Ltd, an independent consultant, was commissioned to undertake a review of TP ICAP’s Board and Committees in line with the guidance set out in the Code. Clare Chalmers Ltd undertook an external evaluation for the Board in 2019, but it was felt that Ms Chalmers remained independent and her expertise would be of value to the Board and its Committees. Evaluation process | 1. In H1 2022 Clare | 2. In advance | 3. During October | 4. Ms Chalmers | 5. The resulting | | --- | --- | --- | --- | --- | | Chalmers Ltd, an | of starting the | 2022 Ms Chalmers | prepared a draft | report with the | | independent | observation and | observed Board | report on the | findings and | | provider of Board | interview work | and Committee | findings, which | proposed actions | | effectiveness | with the Board, | meetings and | was discussed with | was presented | | reviews, was | Ms Chalmers | conducted an | the Board Chair in | on a non- | | appointed to | completed a | individual, | December 2022. | attributable basis | | conduct the | document review. | structured | | for discussion at | | external Board | This included | interview with | | the Nominations | | and Committee | reviewing Board | each member of | | & Governance | | evaluation for | and Committee | the Board, other | | Committee at the | | 2022. Following | meeting packs, | members of senior | | January 2023 | | the appointment, | Board matters | management, the | | meeting. Each | | the Chair worked | reserved, | Deloitte Audit | | Board Committee | | with Ms Chalmers | Committee Terms | Partner, and the | | then considered | | to scope the | of Reference, | remuneration | | the evaluation | | process and | Board skills | adviser. In | | outcomes relevant | | timetable for | matrix, 2021 | preparation for | | to them at | | the evaluation | Annual Report | the interviews and | | meetings in | Governance report | exercise. The | and Accounts, and | to ensure a | February and | | --- | --- | --- | --- | | process and | previous internal | consistent | March 2023. | | timetable were | evaluation | approach, each | | | endorsed by the | reports. | interviewee was | | | Nominations & | | given a short | | | Governance | | scoping | | | Committee in | | document. | | July 2022. TP ICAP GROUP PLC Annual Report and Accounts 202297 Corporate governance report continued # Progress against 2022 actions The outcome of the 2021 Board evaluation exercise, which was internally facilitated, was reported in detail in last year's Annual Report. The main action points arising from that exercise, and actions taken in respect of each, are set out in the table below. | 2021 evaluation recommendations | Progress made during the year | | --- | --- | | Continue to improve Executive Director and Senior Manager succession and talent development plans | Executive Director and senior management succession plans, talent development initiatives, and the associated risks were a focus of management through 2022, with gap analysis completed. The succession plans and talent development initiatives were reviewed by the Nominations & Governance Committee in October 2022 and further developments discussed. Continuing to develop the Executive Director and senior management succession plans and process, and implementation of new talent development initiatives is envisaged for 2023. | | Implement a continuing structured engagement programme for the Non-executive Directors | Our new Non-executive Director was integrated successfully and effectively into Board discussions, utilizing a mixture of engagement and induction methods to ensure they were brought up to speed quickly on the activities of the business. Non-executive Directors regularly held meetings with the Executive Directors and other senior managers to aid continuous development of understanding of the businesses and strategic dialogue. Non-executive Director only meetings were made a standing Board agenda item. | | Tighten the Board administrative processes | The development and oversight of Board paper composition was an area of focus, with an improved governance process implemented. Board and Committee papers were made available for scheduled meetings so that Directors had sufficient time to read and digest them ahead of the meeting. | # Board and Committee effectiveness results The conclusion of the 2022 external evaluation process was that the Board and its Committees operated effectively. The evaluation highlighted that the Board has made some significant positive contributions over the last year, noticeably lacking on culture, change, Executive succession planning and oversight of appointments and supporting the continued improvement of papers. Board members were also considered to be well aligned on the Company's purpose, values, strategy and wider responsibilities. The main recommendations arising from the Board evaluation for 2022, and areas of focus for 2023, are set out in the table below. | 2022 evaluation recommendations | Areas of focus for 2023 | | --- | --- | | Continue to improve Executive Director and Senior Manager succession and talent development plans | Succession planning to be considered by the Nominations & Governance Committee at least twice during 2022 Continue to develop Executive Director and Senior Management succession plans. Review and refresh talent development initiatives in place. | | Enhance and expand the Group's Director induction processes and annual training programme | Extend the Director induction programme to establish a continuing structured engagement programme for the Non-executive Directors and Executive Directors within the Group, with regular meetings with the Executive Directors and other senior managers to aid continuous development of understanding of the businesses and strategic dialogue. Enhance and extend the bespoke training programme for the Board and its Committee members, including executive directors across the Group. | | Continue to refine Board and Committee papers | Standard paper templates to be refreshed and extended to the Group. Presenters to the Board and its Committees to be provided with presenter training to help provide clarity and to help ensure that key issues are drawn out. Paper author training to be provided to paper authors. | 98 TP/CAF GROUP PLC Annual Report and Accounts 2022 Individual performance evaluation As a separate part of the annual evaluation process, there is a review of the effectiveness and commitment of individual Directors and the need for any training or development is assessed. This is carried out as follows: > The Chair meets with the Non-executive Directors to evaluate the performance of the Chief Executive Officer; > The Chair meets each Non-executive Director individually; and > The Senior Independent Director and the other Non-executive Directors meet to evaluate the Chair’s performance, having first obtained feedback from the Chief Executive Officer. As part of the annual evaluation an individual’s commitment of time to the Company in light of their other commitments, as noted in their biographies on pages 90 to 93, is reviewed. In addition, the Chair conducts an interview and assessment of Non-executive Directors as they approach the end of each three-year term to determine their continued effective contribution and commitment to the role. This process was completed in Q1 2023 for Angela Crawford-Ingle and Mark Hemsley in relation to their first three-year term, and both were subsequently recommended to be appointed for a second three-year term by the Chair and Nominations & Governance Committee. All Directors subject to the annual evaluation were deemed to be effective members of the Board and are recommended for re-election at the 2023 AGM. Governance report TP ICAP GROUP PLC Annual Report and Accounts 202299 ## Report of the Nominations & Governance Committee Richard Berliand Chair,Nominations&GovernanceCommittee 2022 key activities How the Committee spent its time during the year in scheduled meetings | > Board composition, recruitment, and | % | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | succession planning. | | | | | | 20222021 | | | | | | | | | | | 1 | | | | | 1 | | | | > Board and workforce diversity. | | | 8 | | | | | | | | | | | | | | | | | | 8 | | 2 | | | > Board evaluation process, outputs and actions. | | 7 | | | | | | | | | | | | | 6 | | | | | 7 | | | | 3 | | > Senior management succession planning. | | | | | 2 | | | | | | | 6 >ESGandGovernancematters,includingthe Group Governance Manual. >Stakeholderengagementactivities,including 5 3 theworkforceengagementprogramme. 5 4 4 2021 2022 1 Routinematters 16% 13% 2 ExecutiveDirectorandseniormanagement succession planning 14% 5% 3 Stakeholderengagement,ESGandculture 16% 29% 4 Boardmemberrecruitmentincludingskills, experienceanddiversityreview 21% 12% 5 Corporategovernance 15% 21% 6 Policiesandcontrols 3% 2% 7 BoardEvaluation 6% 6% 8 UKRegulatedEntitiesBoardcomposition 9% 12% TP ICAP GROUP PLC Annual Report and Accounts 2022100 Dear fellow shareholder, Aspreviouslymentioned,Iwaspleasedtobeabletoannounce IamdelightedtopresenttheNominations&Governance thatKathCates,withthesupportoftheCommitteeandBoard,has CommitteereportwhichsummariseshowtheCommitteehas agreedtobecometheGroup’sSeniorIndependentDirector.Kath dischargeditsresponsibilitiesduringtheyear.Areasoffocusthis replacesMichaelHeaneywhowillremainavaluedmemberofthe yearincluded:Boardcompositionandsuccessionplanning;Board BoardanditsCommittees. andworkforcediversity;Boardevaluationprocess,outputsand actions;seniormanagementsuccessionplanning;andGovernance TheDirectors’biographiesand‘OurBoardinnumbers’onpages matters,includingtheembeddingofTCFDintoourGroup 89to93demonstratethedepthandbreadthoftheBoard’sskills, GovernanceManualandtherefreshoftheGroup’spurpose, knowledge,experienceandcompetenciesandreflectthe vision and mission. constitutionoftheBoardasat31December2022. InaccordancewithitsTermsofReference,theCommitteealso Attheyear-endtheBoardcomprisedelevenDirectors:three reviewedandmaderecommendationsinrelationtothecomposition ExecutiveDirectorsandsevenindependentNon-executiveDirectors andremunerationoftheNon-executiveDirectorelementofthe includingaNon-executiveChairwhowasindependenton TPICAPUKRegulatedEntities’BoardsandCommittees. appointment.IncompliancewiththeCode,overhalftheBoard comprisedindependentNon-executiveDirectorsthroughout2022 Board composition, recruitment and succession planning andthisremainsthecaseasatthedateofthisreportwithatotalof AkeyroleoftheCommitteeistoregularlyreviewthestructure, eightNon-executiveDirectors. sizeandcompositionoftheBoardanditsCommittees,andwhere appropriatemakerecommendationstotheBoardfortheorderly AtregularintervalsthroughoutyeartheCommitteereviewedthe successionofExecutiveandNon-executiveDirectorappointments. Boardskills,knowledgeandexperiencematrixtoassistin ItoverseestherefreshmentoftheBoardanditsCommitteesand,in assessmentoftheBoard’scoverageofthoseskillsandexpertise, assistingandadvisingtheBoard,theCommitteeseekstomaintain butalsotoconsiderthecompetenciesrequiredinorderforthe anappropriatebalanceofskills,knowledge,independence, Boardtoachievetheorganisation’sstrategicpriorities. experience,timecommitmentanddiversityontheBoardandits Committees,takingintoaccounttheGroup’sstrategicpriorities, itschallengesandopportunities,allrelevantcorporategovernance standards, and associated guidance on Board composition. Governance report 2022 Committee attendance Meetings More online Committee members attended¹ TheCommittee’sTermsofReferenceareavailable RichardBerliand 4/4 ontheCompany’swebsite: KathCates 4/4 https://tpicap.com/tpicap/investors/corporate-governance Tracy Clarke 4/4 Angela Crawford-Ingle 4/4 MichaelHeaney 4/4 MarkHemsley 4/4 Louise Murray 4/4 EdmundNg 4/4 1 Inadditiontothescheduledmeetings,onefurthermeetingwasheldatshort noticetoconsidercorporategovernancemattersandNon-executiveDirector succession.Allmemberswereabletoattendtheadditionalmeeting. TP ICAP GROUP PLC Annual Report and Accounts 2022101 Report of the Nominations & Governance Committee continued Key responsibilities of the Committee Succession planning TheBoardhasdelegatedresponsibilitytotheCommitteefor: DuringtheyeartheCommitteereviewedandconsidered Executiveandseniormanagementsuccessionplanning,with Board and Committee membership, and succession focusgiventotheGroup’stalentbench-strength,globalsuccession outlookandtalentdiversity.TheCommitteeispleasedtoreport planning thattherewereseveralinternalpromotions,relocationsand >Reviewingthebalance,skill,knowledgeand externalhiresmadein2022,whichwillhelptheGrouptoachieve experienceoftheBoardandBoardCommittees; its strategic aims. makingrecommendationstotheBoardasto necessary and appropriate adjustments in structure, Diversity TheCommitteeregularlyconsidersthediversityofthemembership sizeandcomposition; oftheBoard,UKREsandwiderworkforcetoensureprogress >OverseeingsuccessionplanningprocessesfortheBoard againstthediversitytargetssetoutintheParkerReview,Hampton- andseniormanagement;and Alexanderguidelines(nowtheFTSEWomenLeadersguidelines) >MakingrecommendationstotheBoardonallproposed andtheWomeninFinanceCharter. new appointments, elections and re-elections of TheBoard’smembershipcontinuestomeettheFTSEWomen DirectorsatAGMs. Leadersguidelines.Withrespecttosuccessionplanning,attention isgiventotheapplicationofthechangesmadetotheUKListing Board performance Rulesinrelationtogenderandethnicdiversitytargets.Inthe >SupervisingtheBoardperformanceevaluationprocess; Committee’sconsiderationofdiversity,welookatitinitsbroadest overseeinganyremedialactionrequiredasaresultof sense,notjustinrespectofgender,butalsoage,experience, ethnicityandgeographicalexpertise. theBoardperformanceevaluationprocessconcerning thecompositionoftheBoard. WecontinuetoexceedourWomeninFinancetargetstoachieve 25%seniorwomeninthebusinessbytheyear2025:asof Director independence September2022femalerepresentationinseniormanagementwas > Assessing and making recommendations 27.8%.Furtherdetailsofourdiversityandinclusioncommitments canbefoundonourwebsiteatwww.tpicap.comandonpages totheBoardinrelationtotheindependence 54to55ofthisreport. ofNon-executiveDirectors. Induction Conflicts and related person transactions AllDirectorsreceiveacomprehensiveinductiononjoiningthe >Reviewingconflicts. Board.TheprocessforallnewlyappointedDirectorsincludesthe appointeereceivingacomprehensiveinductionprogrammeand briefingwithexternallegaladvisersonDirectors’duties,rolesand Governance liabilities,eitherpriororsoonafterappointment.Accessisprovided >Consideringvariousgovernancematters,including totheBoardandCommitteepacks(includingminutesandpapers) compliancewiththeUKCorporateGovernance from previous Board cycles and one-to-one induction meetings are Codeand/orotherrelevantregulatoryregimes;and heldwithExecutiveDirectorsandseniormanagement,including theGroupCompanySecretary.Companyconstitutional,compliance >Reviewingkeynon-payrelatedworkforcepolicies and governance documentation, as well as information relating to andstakeholderengagementmechanisms. theGroupandgovernancestructureandtheexpenditurecontrol framework,isalsoprovided.TheCommitteeseeksfeedbackonthe ESG matters inductionprocessfromnewlyappointedmembersoftheBoard >Reviewingandapprovingthecontentofany withaviewtoimprovingtheprogramme. environmental, social and governance related statements or policies. Conduct >ReviewingandapprovingtheCompany’sCodeof Conduct,sharedealingcodeandrelatedpolicies. UK regulated entities (‘UKREs’) >Agreeingproceduresfortheselectionof,andmaking recommendationsto,theUKREboardsonnew appointmentsofindependentNon-executive Directorsandconsideringthesuccessionplanning processfortheUKREboards;and >Reviewingthebalance,skills,knowledgeand experience,timecommitment,independence anddiversityoftheUKREboards,andmaking recommendationsasrequired. TP ICAP GROUP PLC Annual Report and Accounts 2022102 #### Governance During 2022 the governance framework for the Group as set out in the Group Governance Manual ('Manual') was refined to reflect TCFD requirements and the evolving ESG landscape. Further work will be undertaken in 2023 to help ensure a smooth implementation (where appropriate) of the those elements of the BEIS 'Restoring Trust in Audit and Corporate Governance' consultation on audit and corporate governance. The Committee reviewed the revised Manual and recommended its adoption to the Board. Details of the governance framework can be found on page 88. On top of regular governance review items such as the Conflicts and Relevant Situations Register, Committees' Terms of Reference, and reviews of stakeholder engagement and compliance, the Committee has also considered an internal assessment of the Company's compliance with the UK Corporate Governance Code. #### The UK Regulated Entities' governance During 2022 the Committee reviewed the composition Group's UK Regulated Entities' boards and committees. As part of the consideration, the Committee takes into account the balance of independence, skills, experience and diversity on the boards. In relation to the latter, the Committee is committed to ensuring there is appropriate female representation on the UK Regulated Entities' boards and considers appropriate diversity targets aligning with the Group's diversity and inclusion aspirations. Independence and capacity are considered by the Committee prior to an individual being recommended as an Non-executive Director to the UK Regulated Entities and is reviewed annually. The Committee also reviews the UK Regulated Entities' Conflicts and Relevant Situations Register. The Group's UK Regulated Entities' boards were established in 2020 and reviewed in 2021 as part of the TP ICAP's redomiciliation programme. A review of the Governance Structure including the effectiveness of the Board's and their committees is expected to take place in H2 2023. Further details and the outcome of the review will be reported upon in the 2023 Annual Report and Accounts. #### Stakeholder engagement The Committee has considered engagement with a number of key stakeholders during the year, including discussions of key topics raised by shareholders and employees. The Committee continues to monitor progress of the Workforce Engagement Programme including output actions and will have oversight of the implementation process of the Group's redefined Triple A values driven by the employee culture and values survey feedback. Further information on Stakeholder engagement can be found on pages 40 to 49. #### Other areas of the Committee's consideration ##### Social and environmental matters As part of the Group's commitment to strengthening its approach to Environmental, Social and Governance ('ESG') matters I was pleased to share that a Group Director of Corporate Affairs was appointed in April 2022. They have worked closely with the Executive leadership team and provided advice as to the best approach to be taken to achieve TP ICAP's ESG strategic aims. Further information about the work that has been undertaken in respect of ESG can be found in the Sustainability chapter on pages 50 to 70. ##### Conduct During 2022, the Committee reviewed the TP ICAP's Securities Code, the Group's Disclosure Policy and the Code of Conduct which emphasised the Board's expectations of high ethical standards and integrity in all aspects of the Group's operations and business. ##### Board and Committee effectiveness An independent external evaluation of the effectiveness of the Board and its Committees was conducted in Q4 2022. Further details on the evaluation process can be found on pages 97 to 99. ##### Board training and development The Chair has overall responsibility for reviewing the training needs of each Director, and for ensuring that Directors continually update their skills and knowledge of the Group. All Directors are advised of changes in relevant legislation, regulations, and evolving risks, with the assistance of the Group's advisors where appropriate. The Board and its main Committees receive briefings from relevant function heads on any relevant current developments as part of the normal Board reporting process. A schedule of formal training provided to the Board and its Committees is maintained and reviewed by the Nominations & Governance Committee annually. During 2022 the Board and Committees had over ten hours of formal training on a wide range of topics. The subjects included deep dives on Russian exposures including cyber risks, ESG and climate change including TCFD requirements, corporate strategy, and European Gas and Power Market volatility and its implications to TP ICAP. In addition to this formal training there were regular business briefing sessions as well as regular updates on the implications for TP ICAP and financial services following the UK's exit from the European Union and the Company's consequential plans. 103 TP ICAP GROUP PLC Annual Report and Accounts 2022 Report of the Nominations & Governance Committee continued Other areas of the Committee’s consideration continued Management of conflicts of interest TheBoardisalsokeptinformedofanymaterialshareholder AtthestartofeachBoardandCommitteemeeting,theDirectors correspondence,brokerreportsontheCompanyandsector, areinvitedtoadviseofanyconflictsorpotentialconflictsinrespect institutional voting agency recommendations and documents ofanyitemonthatmeeting’sagenda. reflectingcurrentshareholderthinking.Inaddition,members oftheGMCmakeregularpresentationstotheBoardonawider TheCommitteereviewsateachofitsmeetingstheCompany’s range of topics. ConflictsandRelevantSituationsRegister,whichsetsout informationonDirectors’conflictsthathavebeendeclared TheNon-executiveDirectorsareencouragedtotakeadvantage andauthorised,aswellassettingoutDirectors’otherdirectorships. ofexternalconferences,seminarsandtrainingevents,andsign AtanytimethattheCommitteeand/orBoardconsideraDirector’s uptoreceivebriefingsissuedbyprofessionaladvisersonlegislative, appointment,themembersarealsoinvitedtoconsideranextract regulatoryandbestpracticeguidanceandupdates.Theyarealso oftheConflictsandRelevantSituationsRegisterfortheindividual encouragedtomeetmembersofthemanagementteamsbothin underconsiderationandisaskedtoauthoriseconflictsasnecessary. theUKandoverseastoenhanceboththeirknowledgeand Aheadofmakinganyappointmentdecision,considerationisgiven understandingoftheGroup’scorebusinessareas.Suchdirect towhether,intheCompany’sview,theproposedDirectorwould engagementwithstaffalsohelpsembedtheNon-executive havesufficienttimetofulfilhisorherBoardresponsibilitiesgiven Directors’roleasworkforceengagementchampionsandenables theirotherappointments. themtoobservefirst-handthecontrols,cultureandconduct behavioursinoperation.AfullerbriefingontheBoard’sworkforce Related party transactions engagementisonpage137. RelatedpartytransactionswereconsideredbytheCommittee assituationsaroseandmostrecentlywerereviewedinJuly2022 Director independence, conflicts and related person andJanuary2023. transactions Independence of Directors Terms of appointment TheindependenceofeachoftheNon-executiveDirectorsis ThetermsoftheDirectors’serviceagreementsandlettersof assessedonappointmentandthencontinuallyassessedbythe appointment,whicharealignedtotheprovisionsoftheCode, BoardandCommittee.AllNon-executiveDirectorshavebeen aresummarisedintheReportoftheRemunerationCommitteeon determinedtobeindependentincharacterandjudgement. page135.EachoftheDirectorsissubjecttoelectionbyshareholders Inaddition,attheconclusionoftheirinitialandsubsequent atthefirstAGMaftertheirappointmentbytheBoardandsubject three-yearterms,theindependenceofeachoftheNon-executive toannualre-electionbyshareholdersthereafter.Theservice Directorsisformallyreviewedandconfirmed.TheChairwas agreementsandlettersofappointmentareavailableforinspection independentonappointment.NoneoftheNon-executiveDirectors duringnormalbusinesshoursatourregisteredoffice,andatthe hasreceivedanyremunerationadditionaltotheirDirectors’fees AGMfrom15minutespriortothemeetinguntilitsconclusion. andthereimbursementofreasonableexpensesincurredinthe courseofperformingtheirduties.TheBoardbelievesthatthere Election and re-election of Directors arenorelationships,conflictsofinterestorothercircumstances TheCommitteetakesintoaccounttheresultsoftheevaluationsof whicharelikelytoaffect,orcouldappeartoaffect,any individualDirectors(seepage99forfurtherinformation)toassist Director’sjudgement. indeterminingwhethertorecommendtotheBoardtheelection orre-electionofDirectorsateveryAGM,asrequiredinaccordance External appointments withtheCompany’sArticlesofAssociation.TheCommitteehas TheDirectors’otherdirectorshipsaresetoutinthebiographies consideredthemixofskills,knowledge,experience,competencies onpages90to93.TheBoardandCommitteecontinuallymonitor andbackgroundofthemembersoftheBoard.TheBoardconsiders externalappointmentstoensurethatallDirectorsareableto thatitexhibitsgenderandculturaldiversity,andtherangeofskills allocatesufficienttimetotheCompanytodischargetheir andbackgroundsencompassesfinancial,commercial,operating, responsibilitieseffectively.ExecutiveDirectorsarepermitted control, corporate governance, accounting, regulatory, audit and totakeupappointmentswithothercompaniesprovidedthetime internationalattributes. involvedisnottooonerousandwouldnotconflictwiththeirduties atTPICAP.NoneoftheExecutiveDirectorscurrentlyholdany externalappointments. TP ICAP GROUP PLC Annual Report and Accounts 2022104 AspartoftheformalreviewandrenewalofaNon-executive Director’sappointmentpriortotheendofeachthree-yearterm, theChairconductsaninterviewandassessmenttoconfirmthatthe Non-executiveDirectorcontinuestocontributeeffectivelyandto demonstratecommitmenttotherole.ShouldtheChairdetermine thatisthecase,arecommendationismadetotheCommitteeto extendtheappointmentforanotherthree-yearterm.Inlinewith bestpracticegovernance,aproposalforathirdthree-yeartermwill besubjecttomorerigorousscrutinybeforemakingarecommendation. InMarch2023,AngelaCrawford-IngleandMarkHemsley’s three-yeartermofappointmentwasduetocometoanend.Atthe Board’srequestIampleasedtosaythatbothAngelaandMark agreedtoserveasNon-executiveDirector’sforafurtherthree-year term.TheBoardandCommitteeissatisfiedthattheybothremain independentinjudgementandcharacterandcontinuetomake asignificantcontributiontotheproceedingsoftheBoardand itsCommittees. AllNon-executiveDirectorshavesubmittedthemselvesforelection atthe2023AGM.TheCommitteeispleasedtorecommendall Directorsputtingthemselvesforwardforelection.Thebiographies oftheDirectorsstandingforelectioncanbefoundonpages90to 93,intheNoticeoftheAGMandalsoontheCompany’swebsite: www.tpicap.com. Additional information Additionally,aspartofitsstandingagendatheCommitteecarried Governance report outareviewofitstermsofreference,toensurethattheCommittee continuestofulfilitsdutiesandactivitiesandthatthetermsof referenceremainrelevant.Theresultsoftheexternaleffectiveness reviewagreedthattheCommitteeremainedeffective. TheCommitteehasunrestrictedaccesstotheExecutiveandsenior management,andexternaladvisorstohelpdischargeitsduties. Itissatisfiedin2022thatitreceivedsufficient,reliableandtimely informationtoperformitsresponsibilitieseffectively. Richard Berliand Chair Nominations&GovernanceCommittee 14March2023 TP ICAP GROUP PLC Annual Report and Accounts 2022105 ## Report of the Audit Committee Angela Crawford-Ingle Chair, Audit Committee 2022 key activities How the Committee spent its time during the year in scheduled meetings | > Financial reporting including the Annual Report | % | | | | | | --- | --- | --- | --- | --- | --- | | and Accounts and half-year results, and | | | | 20222021 | | | | | 7 1 1 | | | | | associated statements and determinations. | | | 2 | | 7 | 6 > Group Tax matters. > Progress of delivery under the internal 6 audit plan. > Internal audit’s staffing levels, risk assessment 2 methodology, risk assessment, and internal audit charter. 5 3 > Updates on the external audit process. 5 3 > Effectiveness of the Group’s systems of 4 4 risk management and internal control, 2021 2022 including all material controls. 1 Routine matters¹ 6% 25% > Whistleblowing. 2 Annual/interim reporting and trading > Oversight of the Group’s TCFD statement review 29% 15% deliverables plan. 3 Tax matters 9% 7% > Completion of audit tender. 4 External auditor reporting 21% 14% 5 Internal auditor reporting 25% 19% 6 Risk management and internal controls 9% 13% 7 Corporate governance 1% 7% 1 2022: including unminuted discussion. TP ICAP GROUP PLC Annual Report and Accounts 2022106 #### Dear fellow shareholder, I am pleased to present the Committee report for the year ended 31 December 2022. This report sets out how the Committee has discharged its responsibilities during the year and highlights the Committee's assessment of significant financial reporting judgements in connection with the 2022 financial statements, and the conclusions reached. The responsibilities of the Committee are set out in its Terms of Reference, which were last reviewed and approved in December 2022. A summary of these responsibilities in relation to the Group, including the Financial Conduct Authority authorised and other regulated subsidiaries, is set out on page 88 and 108. Following the Committee's review of the 2022 Annual Report, the Committee made a recommendation to the Board that, taken as a whole, the Annual Report is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy. The 'fair, balanced and understandable' recommendation to the Board is explained on page 108. Throughout 2022 the Committee has continued to play a valuable role in the Group's governance framework, ensuring the integrity of financial information through monitoring and review, and providing challenge and oversight across the Group's financial reporting and internal controls procedures. We continued to monitor the ongoing UK government led corporate governance reforms in relation to audit and controls matters to assess the likely impact on the future work of the Committee and to enable areas of focus to be planned accordingly. In anticipation of the upcoming new requirements, a working group reporting to the Committee with representation from key functions has been established to further analyse the requirements and develop plans to support implementation. I provide regular reports to the Board on the activities of the Committee and how we have discharged our duties. To ensure I have a full understanding of the challenges facing the Group I communicate regularly with the risk and finance functions, as well as with external and internal audit, both in the UK and our principal overseas locations. I also communicate with the EMEA Sub-Group and UKRE Board Chair and Risk Chair, and regularly attend EMEA Sub-Group and UKRE Risk Committee meetings. #### Committee membership and attendance All Committee members are independent Non-executive Directors with experience in the financial services sector. Along with myself, as a Fellow of the Institute of Chartered Accountants in England and Wales, this fulfils the UK Corporate Governance Code (the 'Code') requirement of having recent and relevant financial experience. The biography of each current member of the Committee is set out in the Board biographies on pages 90 to 95. The Committee holds a minimum of four meetings annually. The Committee sets an annual work plan, developed from its Terms of Reference, with standing items that the Committee considers at each meeting, in addition to areas of risk identified for detailed review and any matters that arise during the year. The Committee meetings are routinely attended by the Board Chair. Executive Directors including the Group CFO, Group Deputy CFO, Group Chief Internal Auditor, Group Chief Risk Officer, partners from the external auditor, and members of Company Secretariat. The Committee also invites other senior finance and business heads to attend certain meetings to gain a deeper level of insight on particular items. During 2022 this included regular focused updates from the Group Director of Corporate Affairs and Group Head of Operations on matters such as ESG (including climate-related) as a part of overseeing the Group's TCFD deliverables plan. #### 2022 Committee attendance | Committee members | Week's age of the member | | --- | --- | | Angela Crawford-Ingle | 4/4 | | Kath Cases | 4/4 | | Louise Murray | 4/4 | | Edmund Ng | 4/4 | #### More online The Committee's Terms of Reference are available on the Company's website: https://tpicap.com/tpicap/investors/corporate-governance 1 In addition to the scheduled meetings, one additional Sub-Committee meeting was held to consider the 2021 full-year results at no uncertain. All Committee members were able to attend the additional meeting. 107 TP ICAP GROUP PLC Annual Report and Accounts 2022 Report of the Audit Committee continued Key responsibilities of the Committee Fair, balanced and understandable The Board has delegated responsibility to the Committee Before the 2022 Annual Report and Accounts was approved, the in relation to: Committee was asked to review and consider the processes and controls in place to help ensure it presents a fair, balanced and Financial reporting understandable view of the business. When conducting these reviews, the Committee: > Considering significant financial reporting judgements; > Examined the preparation and review process; > Reviewing the Annual Report and Accounts and > Considered the level of challenge provided through that process half-year results; and whether the Committee agreed with the results; and > Considering Group tax matters; > Considered the continuing appropriateness of the accounting policies, important financial reporting judgements and the > Considering whether the Annual Report and adequacy and appropriateness of disclosures. Accounts taken as a whole, are fair, balanced and understandable; Board and Committee members received drafts of the Annual > Monitoring compliance with accounting standards; Report and Accounts for their review and input which provided an and opportunity to discuss the drafts with both management and the external auditor, challenging the disclosures where appropriate. > Reviewing the going concern and the longer-term viability statement. We concluded that the processes and controls were appropriate, and were therefore able to make the following assurance to External audit the Board: > Reviewing the effectiveness of external audit; > Assessing external auditor independence; and > In our view, the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information > Developing a policy for non-audit services provided necessary for shareholders to assess the Group’s position, by the external auditor. performance, business model and strategy. TCFD deliverables Going concern and viability statement > Overseeing the Group’s TCFD deliverables plan; and The assumptions relating to the going concern review and viability statement were considered, including the medium-term projections, > Reviewing the Group’s progress delivering its Scopes 1, stress tests and mitigation plans, with reflection that the resulting 2 and 3 commitments. assumptions and statement would support the Directors’ solvency statement required to be made in accordance with Jersey law prior Risk management and internal control to any distribution. > Considering the effectiveness of the Group’s systems On the basis of the review, we advised the Board that it was of risk management and internal control, including appropriate for the Annual Report and Accounts to be prepared on all material controls; and a going concern basis. We also reviewed the long-term viability > Reviewing whistleblowing arrangements. statement taking into account the Group’s current position and principal risks and uncertainties, and advised the Board that the Internal audit viability statement and the three-year period of the assessment were appropriate. > Approving the internal audit function’s staffing levels, risk assessment methodology, risk assessment, internal Financial reporting audit charter and annual audit plan; The Committee has reviewed the integrity of the Consolidated > Considering the results and findings of internal audit Financial Statements included in the half-year and year-end function’s work; announcements of results and the Group’s Annual Report and Accounts. > Reviewing the performance and effectiveness of internal audit; and Significant financial reporting judgements in 2022 > Reviewing whistleblowing arrangements. We considered a number of judgements in connection with the 2022 Consolidated Financial Statements. These judgements, how the Committee addressed them and the conclusions we reached, are set out to the right: TP ICAP GROUP PLC Annual Report and Accounts 2022108 Significant financial reporting judgements in 2022 continued Judgement Note Action the Committee took Conclusions | Impairment of goodwill | 13 > Reviewed the basis on which goodwill was allocated | | > The Committee is satisfied | | --- | --- | --- | --- | | and other acquisition | | to Cash Generating Units (‘CGUs’) including the | with the process | | related intangibles. | | reallocation to CGUs based on Business Divisions and | undertaken and that | | | | discussed management’s annual impairment assessment. | no impairment charge | | | | > Considered the basis for determining the recoverable | is required in the year | | | | amount of each CGU. | and that the disclosures | | | | > Challenged the methodology and valuation | are appropriate. | assumptions used. > Considered whether the information provided to the Group’s external valuation specialists was complete and accurate. > Reviewed the carrying amounts of other intangible assets. > Discussed management’s annual review of impairment triggers. | The Group’s assessment | 27 and 36 > Reviewed the cases identified and discussed | | > The Committee is satisfied | | --- | --- | --- | --- | | and disclosure of legal | | management’s provisioning and disclosure assessment. | with the process | | cases and regulatory | | > Considered the basis for determining provisions in respect | undertaken and that the | | investigations. | | of cases. | provisions and contingent | | | | > Considered whether the information disclosed was | liability disclosures | | | | consistent with the information maintained by the Group | are appropriate. | Legal Counsel and the Group’s external legal advisers. > Reviewed the procedures performed by the external auditor, including their inquiries performed of the Group’s external legal advisers. The use, presentation Financial > Challenged management on the rationale for each of > The Committee is satisfied Governance report | and explanation of | Review, Note 4 | the Alternative Performance Measures (‘APMs’) used to | that the definition and | | --- | --- | --- | --- | | Alternative Performance | and APM | describe the Group’s performance and the justification | presentation, reconciliation | | Measures used by | Appendix | for separate presentation of significant items from the | and explanations of APMs | | management to explain | | Group’s adjusted results. | were appropriate and | | the Group’s performance. | | > Reviewed the adequacy of the disclosure of APMs used | that the disclosures relating | | | | to review Executive performance. | to adjusted performance | | | | > Challenged and reviewed the adequacy of management’s | and significant items | | | | disclosure and description of significant items to ensure | are appropriate. | sufficient clarity and justification provided in the Annual Report and Accounts. > Reviewed the Annual Report and Accounts to ensure that undue prominence was not given to APMs in line with guidance from the European Securities and Markets Authority. > Reviewed the adequacy and completeness of reconciliations of APMs to the nearest equivalent Reported measure. > Sought the view of the external auditor and reviewed its procedures as set out in its report. Other items that were less significant but were discussed included: the valuations of associates and joint ventures, expected credit losses, tax compliance, and dividend affordability. TP ICAP GROUP PLC Annual Report and Accounts 2022109 Report of the Audit Committee continued Whistleblowing External auditor The Committee oversees the operation and effectiveness of the The Committee has primary responsibility for managing the Group’s whistleblowing systems and controls. During the year the relationship with the external auditor, including assessing its Committee, in conjunction with the Board, regularly reviewed performance, effectiveness and independence, recommending whistleblowing reports and metrics and considered the effectiveness to the Board its reappointment or removal, and agreeing terms of the whistleblowing arrangements in place. Employees and of engagement. individuals outside of TP ICAP are able to raise their concerns anonymously using an independent reporting facility managed Deloitte was reappointed as external auditor of the Group at the by a third party. This mechanism is combined with a number of 2022 AGM. Fiona Walker is in her third year as lead audit partner, ‘Speak Up’ initiatives to raise employees’ awareness of the having been appointed to the role in the year ended 31 December Whistleblowing Policy and procedures. As Whistleblowing Champion, 2020. Deloitte has been the Company’s auditor since its I oversee the integrity, independence and effectiveness of the predecessor company listed in 2000. In 2013 the Board put the whistleblowing arrangements. external audit contract out for tender and concluded that Deloitte should be re-appointed. A similar tender process was completed in TCFD 2022 resulting in a proposal for PricewaterhouseCoopers LLP The Committee holds responsibility for overseeing the Group’s (‘PwC’) to be appointed as external auditor for the 2024 year-end. delivery in relation to TCFD and its Scopes 1, 2 and 3 commitments. During 2022 the Committee received reports on TCFD progress The Committee is very aware of the developments relating to the and reporting requirements, including recent FRC guidance, and external audit process driven by various reviews and welcomes discussed the progress made against the targets published in the moves to ensure the continuing robustness, challenge and 2021 Annual Report and Accounts. At the Committee’s request an independence provided that they genuinely address acknowledged additional externally facilitated climate change and TCFD quality issues. reporting Board session was arranged for December 2022. Effectiveness of the external audit process We recognise that the Group is on a journey of continual I meet regularly with the external audit partner throughout the year improvement, and in 2023 the Committee will further focus on the to ensure that there are no unresolved issues of concern. This helps Group’s adherence to the UK regulations, emerging regulatory ensure that the external auditor is able to operate effectively and requirements in other jurisdictions, and the quality of TP ICAP’s challenge management sufficiently when required. climate change data. You can read more about the Company’s compliance with the FCA Listing Rule 9.8.6R(8) on climate-related During the year as part of the 2022 effectiveness review of both the disclosure on pages 62 to 70. external auditor and the 2022 audit, the Committee considered: Internal audit > The quality of Deloitte’s 2022 external audit; The Committee is responsible for monitoring and reviewing the > The effectiveness of the external audit process including the effectiveness of the internal audit function. We approve the internal expertise, efficiency, global service delivery and cost audit plan and keep it under review during the year, to reflect the effectiveness of the auditor; changing business needs and to ensure it considers new and > The external auditor’s plans and feedback from senior emerging risks. management; and > Effectiveness of management in relation to the timely During 2022, the Committee: identification and resolution of areas of accounting judgement, analysing those judgements, the quality and timeliness of papers, > Reviewed the work and reports of internal audit; management’s approach to the value of independent audit and > Assessed the performance and effectiveness of internal audit; the booking of any audit adjustments arising, and the timely > Monitored progress against the internal audit plan; provision of draft public documents for review by the external > Reviewed how management action plans to mitigate internal auditor and the Committee. audit findings had been implemented; > Reviewed and approved the internal audit charter; The Committee is pleased to report that the effectiveness review of > Reviewed the internal audit risk assessment approach; the external auditor did not identify any significant concerns. In > Reviewed and discussed the annual internal audit opinion; and addition, the Committee concluded that the 2022 external audit > Approved the 2023 Annual Audit Plan, Resourcing, and Budget. had been effective. During early 2022 the internal audit function, led by Mark Pointer Independence and non-audit services as Group Chief Internal Auditor, continued to build out the in-house When considering the 2022 Annual Report, in addition to reviewing team and progress functional development including refinements the objectivity and independence of the external auditor, the to functional structure and strengthening the technology audit Committee also considered the professional and regulatory resourcing. EY, as co-source provider, has continued to provide guidance on auditor independence and Deloitte’s policies and specialist skills and subject matter expertise during the year procedures for managing independence. where required, to supplement the in-house team. The Committee considered the resourcing, experience, expertise and skills of the The process for approving certain non-audit services provided by internal audit function and is satisfied that it has appropriate the external auditor is governed by the non-audit services policy resources and remains organisationally independent. which is overseen by the Committee. The non-audit services policy was last updated and approved by the Committee in September 2020 to ensure the requirements of the FRC Revised Ethical Standard (2019) were fully covered by the policy. Deloitte have confirmed that no non-audit services prohibited by the FRC’s Ethical Standard were provided to the Group or Parent Company during the year. TP ICAP GROUP PLC Annual Report and Accounts 2022110 To safeguard the external auditor’s independence and objectivity, The Committee concluded that it is satisfied with the objectivity the Group does not engage Deloitte for any non-audit services and independence of the external auditor, and that the except where it is work that they must, or are clearly best suited to, effectiveness of the external audit process delivered by Deloitte perform. All proposed services must be pre-approved in accordance was robust. The Committee proposed to the Board that it seek with the non-audit services policy. The Group is also required to cap shareholder approval for the re-appointment of Deloitte for the the level of non-audit fees paid to the external auditor at 70% of financial year ending 31 December 2023. the average audit fees paid in the previous three consecutive financial years. Risk management and internal control The Board is responsible for: The Committee reviewed the level of fees paid to the external auditor for the various non-audit services provided during 2022. > Setting the Group’s risk appetite; During the period under review the non-audit services performed > Ensuring the Group has an appropriate and effective Enterprise by the external auditor amounted to £2,195k, 26% compared to the Risk Management Framework (‘ERMF’); and £8,502k of audit fees. Non-audit services primarily relate to > Monitoring the ongoing process for identifying, evaluating, regulatory reporting, the interim review of the Group’s half year managing and reporting the significant risks faced by the Group. financial statements, audits of subsidiary financial statements not mandated by law and reporting accounting services in respect of The ERMF and principal risks are described in the Risk Group strategic projects. These services are typically performed by Management section of the Strategic Report on pages 72 to 81. the external auditor. There were no advisory or consulting services The Board is also responsible for the Group’s system of internal provided by the external auditor to the Group. control and for reviewing its effectiveness. The system is designed to manage rather than eliminate the risk of failure to achieve business Audit and non-audit fees objectives and can provide only reasonable and not absolute assurance against misstatement or loss. 9 8,502k The Committee carried out an annual review of the effectiveness 8 7,378k of the internal control and risk management systems and reported 7 back to the Board to enable it to discharge its responsibilities. We conducted a formal review of the effectiveness of the Group’s 6 Governance report internal control systems for 2022, considering reports from 5 management, external audit and the work of the Group Risk and 4 Internal Audit functions. Further to the complete review and 2,954k 3 enhancement of the Group’s global risk management framework 2,195k and internal controls as a result of the changes in the business and 2 regulatory feedback during 2022, the Group remains focused on 1 continuing the enhancement of internal control and risk 0 management systems. Further details can be found in the Report 2022202120222021 of the Risk Committee on pages 112 to 115. The process for identifying, evaluating and managing the principal risks faced by the Group is reviewed regularly by the Board and has More information can be found on page 168 in Note 5 to the been in place for the year under review and up to the date of Consolidated Financial Statements. approval of the Annual Report and Accounts. It is also in accordance with the FRC’s ‘Guidance on Risk Management, Internal Control Audit tender and Related Financial and Business Reporting’. During 2022 we completed a competitive tender for the audit contract in respect of the year ending 31 December 2024, in Committee effectiveness accordance with the Code and Statutory Audit Services for Large A review of the Committee’s effectiveness was conducted in Q4 Companies Market Investigation (Mandatory Use of Competitive 2022 as a part of the external Board evaluation process. It was Tender Processes and Audit Committee Responsibilities) Order 2014 determined that the Committee was operating effectively, and (the ‘Order’). Further details on the process completed can be found management and key functions were praised for the quality of in the case study on page 95. papers and engagement provided to the Committee. Specific developments and actions to be taken by the Committee during The proposed new external auditor, PwC, recommended by the 2023 were considered in March 2023, with reflection on the length Committee and Board was announced on 28 July 2022 and will be of time allocated for Committee meetings and the breadth of presented to our shareholders for approval at the 2024 AGM. relevant financial skills held by Committee members. During the Completing the tender process within this time frame allows a year the Committee also conducted a review of its Terms of four-year term for the new lead audit partner and a cooling period Reference and agreed minor amendments, including the for the incumbent auditor. Throughout the process the Committee incorporation of TCFD responsibilities. has continued to monitor legal requirements and developments in (£m) best practice with regards to audit tender arrangements. Angela Crawford-Ingle | Reappointment of Deloitte as external auditor | Chair | | --- | --- | | The Company confirms its compliance with the requirements of the | Audit Committee | | Order throughout the year ended 31 December 2022. | 14 March 2023 | TP ICAP GROUP PLC Annual Report and Accounts 2022111 Audit Non-audit ## Report of the Risk Committee Kath Cates Chair, Risk Committee 2022 key activities How the Committee spent its time during the year in scheduled meetings | > Understanding the changes to regulatory | % | | | | | --- | --- | --- | --- | --- | | frameworks and their impacts on the Group. | | | 20222021 | | | | | 1 | | 1 | > Reviewing the acquisition and the progress 2 of the Group’s integration of Liquidnet. > Overseeing the ongoing response to Brexit. | | | 3 | 5 | | | --- | --- | --- | --- | --- | | > Reviewing the status of the Global Health | 5 | | | | | Pandemic and its impact on the Group’s | | | | 2 | Operational Resilience. > Tracking the Group’s technology expertise 4 and its ability to retain its position as a leading 3 4 market infrastructure provider. > Holding private meetings with key individuals 2021 2022 including the Group Chief Risk Officer, 1 Routine matters¹ 9% 23% Group Chief Internal Auditor and Group Head 2 Update from CRO 9% 13% of Compliance. 3 Risk culture and compliance 17% 21% > Ensuring culture, behaviour and risk factors 4 Project and function risk reviews (including are considered when setting remuneration. business continuity) and deep dives 42% 22% 5 Governance and remuneration reporting 23% 20% 1 2022: including unminuted discussion. TP ICAP GROUP PLC Annual Report and Accounts 2022112 Dear fellow shareholder, Key responsibilities of the Committee On behalf of the Board, I am pleased to present the Report of the The Board has delegated responsibility to the Committee for: Risk Committee explaining how the Committee discharged its risk oversight responsibilities during 2022. Setting risk appetite, culture, controls and policy > Defining the nature and extent of the risks the Group is willing Although the impact of the Covid pandemic had significantly to take; and abated by the start of the year, the Group continued to operate in > Defining the expectations for the Group’s risk culture. a challenging external environment throughout 2022, with Russia’s invasion of Ukraine in February 2022 exacerbating an already Monitoring, reporting and advisory activities challenging macroeconomic environment including Covid-related > Reviewing the Group’s culture monitoring arrangements and supply chain issues and increasing inflationary pressures. promoting a risk-aware culture; > Overseeing the implementation and annual monitoring of the Against this backdrop, the Committee focused its efforts on ERMF, including the adoption and implementation of risk monitoring the operational resilience of the Group (including in appetite tolerances and minimum risk management standards; relation to continuity of power supply and cyber capability), the > Ensuring the Group has an appropriate and effective risk management of the heightened financial risk profile resulting management and internal control framework; from volatile financial markets and the maintenance of a robust > Reviewing the control environment and tracking any financial position. remedial actions; > Considering the risks arising from any strategic initiatives and In addition to these specific focus areas, the Committee continued advising the Board accordingly; to monitor the Group’s enterprise-wide risk profile across all other > Identifying and considering future and emerging risks, regulatory material risks relative to risk appetite, and the status of any developments and relevant mitigants; remedial actions required to address any risk management issues. > Providing input to the Remuneration Committee on the alignment of remuneration to risk performance; Furthermore, the Committee remains cognisant of the high > Reviewing resourcing within the Three Lines of Defence; standards of risk management expected of the Group by its > Overseeing the independence and effectiveness of the Risk and investors, clients, regulators and other stakeholders, and, in that Compliance functions; and context, has continued to oversee the ongoing enhancement of > Reviewing the appointment or dismissal of the Group Chief Risk Governance report the Group’s Enterprise Risk Management Framework (‘ERMF’) Officer (‘CRO’) and Group General Counsel. throughout the year. This has included the adoption of a new Conduct Management Framework and various changes to ensure the ERMF appropriately addresses the Group’s exposure to climate-related risks. 2022 Committee attendance Meetings More online Committee members attended The Committee’s Terms of Reference are available Kath Cates 4/4 on the Company’s website: Michael Heaney 4/4 https://tpicap.com/tpicap/investors/corporate-governance Angela Crawford-Ingle 4/4 Mark Hemsley 4/4 TP ICAP GROUP PLC Annual Report and Accounts 2022113 Report of the Risk Committee continued Key matters considered by the Committee in 2022 Risk area Matters considered and actions taken by the Committee Broking process > Oversight of the key risks arising from the Group’s broking and post-trade activity, including through the review of the Risk Profile Report presented by the CRO. > This included monitoring the risk event profile relating to the broking process, particularly in the context of the heightened market volatility experienced during the year with its potential for exacerbating the potential loss associated with broking errors. > The Committee also undertook a deep-dive review into compliance with the Group’s Broking Model Policy which prescribes the broking protocols brokers must adhere to in order to manage the Group’s broking-related risks within risk appetite. Infrastructure > The Committee continued to monitor the status of the ongoing programmes to enhance the Group’s operational resilience and ensure that it can meet its targeted recovery time objectives across all areas of the business. > This included a deep-dive review into the Group’s operational resilience as it related to certain supply-chain risks arising during 2022 (including potential market-wide risks to power supply and computer hardware availability), and another deep-dive into the Group’s insurance arrangements to ensure appropriate coverage in the event of a material business interruption. > The committee also monitored the status of an ongoing programme to enhance the Group’s billing process and improve its accounts receivable collection rate. Cyber security and > The Committee continued to monitor the status of the Group’s cyber security capability with the objective of data protection ensuring that it remains fit-for-purpose in the context of the rapidly evolving cyber-threat landscape, including from potential state-sponsored activity. Human capital > The Committee continued to monitor the Group’s resourcing profile to ensure that the Group has the capability and capacity to operate effectively across the 3LOD and to implement its business strategy. This included monitoring the heightened risks associated with a highly competitive recruitment market for front office, support and control staff, which can include aggressive recruitment activity by competitors. Conduct risk > The Committee is aware that conduct risk represents a key risk for the Group which, if not managed effectively, could result in material damage to its reputation and regulatory standing. > During 2022, the Committee oversaw the adoption of the Group’s new Conduct Management and Governance Framework (which prescribes the principles to be applied in managing any employee misconduct) and conducted a deep-dive into the management of conduct within the front office, which was presented by the Global business heads of the Global Broking and Energy & Commodities divisions. Financial risk > The Committee continued to monitor the Group’s financial risk exposure, including its FX profile, credit risk exposure and liquidity demand. > Specific areas focused on included: (i) the Group’s aged debt profile; (ii) the Group’s management of its exposure to Russia/Ukraine, including the management of a number of unsettled matched principal transactions incurred as a result of the invasion; and (iii) the steps taken to mitigate the potential risks arising from the heightened volatility in the European power and natural gas markets during H2 2022. Capital and > The Committee continued to monitor the Group’s prudential position and compliance with key financial liquidity adequacy measures (namely the key financial ratios required to retain access to its RCF and maintain an investment grade debt rating), taking due consideration of the dynamic macroeconomic environment with its associated FX and interest rate volatility. > As part of this activity, the Committee reviewed the annual Group Review of Capital and Liquidity Adequacy (‘GRCLA’), which assesses the Group’s prudential position at consolidated Group level. During 2022, the GRCLA was enhanced to incorporate a new reverse stress testing approach which provides a broader assessment of the Group’s ability to withstand severe stress scenarios (across various scenarios of increasing revenue and loss event severity) and is better aligned with the Group’s going concern/viability analysis. > The Committee also reviewed the Group’s Recovery & Resolution Plan to assess the appropriateness of the various recovery actions defined in the plan and the calibration of the recovery indicators adopted to ensure that the Group has sufficient early warning of any potential deterioration in the Group’s financial position. > Finally, the Committee also monitored the potential impact of the new UK IFPR regime on the regulatory capital and liquidity requirements for the EMEA sub-consolidation group, which completed its first Internal Capital and Risk Assessment (‘ICARA’) process under the new regime in 2022. Legal and > The Committee received updates at each meeting from the Group General Counsel and Group Head of compliance Compliance on key legal and compliance issues. This included overseeing the Group’s response to a range of regulatory issues across the business and to material changes to the regulatory framework in which the Group operates. > Particular areas of focus included the ongoing programme to enhance the Group’s compliance systems and controls and the mitigating actions being taken to address an increasing prevalence of exchange issued fines relating to block-trade activity. > The Committee also continued to monitor the progress of material litigation and investigations involving the Group, as disclosed in the Group’s contingent liabilities. TP ICAP GROUP PLC Annual Report and Accounts 2022114 Risk area Matters considered and actions taken by the Committee Brexit > The Committee continued to monitor the implementation of the Group’s Brexit operating model against the backdrop of the evolving regulatory landscape and continued lack of equivalence between the UK and EU, to ensure that any associated regulatory compliance, operational and commercial risks are managed effectively. Liquidnet > The Committee continued to monitor the risk profile of Liquidnet which has been integrated into the Group’s broader ERMF and various risk identification, assessment and monitoring processes. Climate risk > The Group undertook an assessment of the climate risks it currently faces, to ensure that these are being appropriately incorporated within the Group’s ERMF, covering both physical risks and the risk associated with the transition to net zero (as defined by the Task Force on Climate-related Financial Disclosures) – noting that this assessment was reviewed by the Committee in January 2023. Risk framework > The Committee continued to monitor the operation and ongoing embedding of the new ERMF as the Group continues to enhance the Group’s risk management capability across its three-lines-of defence (‘3LOD’). > This included reviewing reports from both Risk and Internal Audit on the design and operational effectiveness of the ERMF. Review of Committee effectiveness This oversight will be informed by deep-dive reviews into specific An external review of the Committee’s effectiveness was conducted areas of the business, with a number of such reviews already in Q4 2022 and a report presented to the Board in January 2023. identified in the Group’s Annual Risk Strategy and Plan for 2023 This review determined that the Committee was operating as part of the Group’s ongoing risk assurance programme. These effectively and focusing on the risk areas which have most impact include, amongst other areas, a review of the risks associated with on the Group’s ability to deliver its strategy and maintain a robust the Group’s Exchange Give-up activity, electronic broking platforms financial position. and joint venture arrangements, noting that the Committee has already undertaken two deep-dives in 2023 covering its digital During the year the Committee also conducted a review of its Terms assets business and management of broker contracts. of Reference and confirmed that these remained appropriate. The Committee will also oversee the ongoing embedding of its Key priorities for 2023 new Conduct Management and Governance Framework, as well Governance report The Committee will continue to focus its attention on the key risks as further ERMF enhancements relating to the management of facing the Group to ensure these are being managed effectively physical and transition climate risks which will include the and in accordance with the Group’s risk appetite, whilst maintaining incorporation of climate-related stress tests within the Group’s oversight of the Group’s enterprise-wide risk profile as a whole to annual stress testing programme. identify any new or emerging areas of concern that require governance focus. Finally, I would like to thank the Committee members and Executive team for all their hard work during the last year. It is likely that the Group will continue to experience challenging macroeconomic conditions, market volatility and geopolitical issues during the coming year, and the Committee will continue to monitor Kath Cates the heightened business, financial and operational risks associated Chair with such conditions closely, including country risk exposure. Risk Committee 14 March 2023 TP ICAP GROUP PLC Annual Report and Accounts 2022115 ## Report of the Remuneration Committee Tracy Clarke Chair, Remuneration Committee 2022 key activities How the Committee spent its time during the year in scheduled meetings | > Embedding the shareholder approved | % | | | | | | --- | --- | --- | --- | --- | --- | | Directors’ Remuneration Policy and ensuring | 2021 | | | 2022 | | | | | 7 | 1 | | 1 | that it operates as intended. 2 2 > Determining the measures and targets for the annual bonus and the underpin for the new 7 | RSP award. | 6 | | --- | --- | | > Updating policies and processes to ensure that | 5 | | our Group remuneration policy for all employees | 4 | remains compliant with all regulatory and 6 3 governance requirements. 5 4 > Reviewing our all-employee remuneration 3 arrangements to ensure that we are able to 2021 2022 continue to attract and retain key talent and to 1 Routine matters 8% 10% support employees in the context of a ‘cost of 2 Senior management and wider workforce living’ crisis. remuneration 55% 41% > Reviewing our pension and benefits offerings 3 Executive Director remuneration 7% 5% across the Group to ensure that they remain 4 Risk and control impact on remuneration 3% 3% competitive. 5 Executive incentive schemes 3% 5% 6 Directors’ Remuneration Policy review 19% 15% 7 Governance and remuneration reporting 5% 21% TP ICAP GROUP PLC Annual Report and Accounts 2022116 #### Dear fellow shareholder, On behalf of the Board, I am pleased to present the Directors' Remuneration Report ("DRR") for the year to 31 December 2022. In the last year we have implemented our new Remuneration Policy, which was approved by the significant majority of investors (more than 85%) at the 2022 AGM. This report sets out the key decisions taken by the Committee over the course of the last 12 months in relation to remuneration for the Executive Directors, including the rationale for why these were most appropriate for TP ICAP. #### Introduction In spite of the unprecedented challenges faced during the year, against a backdrop of geopolitical and market disruption, the Group delivered a strong financial performance in 2022, demonstrating the power of our diversified business model. The tightening of monetary policy by Central Banks created market volatility, which particularly benefitted the higher margin flates business in Global Broking, where revenues increased 7% over the year. Conversely, the war in Ukraine led to a sharp rise in gas prices which increased margin requirements and reduced trading activity in the second half of the year. This contributed to a fall in Energy & Commodities' revenue of 2% in the year. Liquidnet faced similar challenges as a result of corrections in equity markets and subdued volumes in dark pool and larger block trading markets, where the business has a strong presence. Lastly, Parameter Solutions had another excellent year, growing revenues, 95% of which are subscription-based, by 8%. Overall Group revenues increased by 13% on a reported basis (7% in constant currency). The strong growth in our two highest margin businesses enabled us to deliver adjusted EBIT of £275m for 2022, an 8% increase on the £255m achieved in 2021, on a constant currency basis. The EBIT outcome would have been higher if not for a charge of £21m to the P&L as a result of Russian exposures. In spite of this additional cost, the dividend remains well covered and the Board will be recommending a final dividend for 2022 of 7% per share, payable on 25 May 2023, to bring the total for the year to 12.4p. In terms of our strategic priorities, the Executive Directors have continued to focus on transforming the business through initiatives such as electrorification, with significant advances in the rollout of the Fusion platform this year. Solid progress has also been made towards achieving our Capital Markets Day targets for 2023 contribution margin. Work also continues apace to deliver on our target of freeing up $100m of cash by the end of 2023 which will improve our capital management and enhance shareholder value. When considering the bonus outcomes for the Executive Directors, and the Group as a whole, the Committee has taken into account the financial performance of the Group and the broader shareholder and stakeholder experience during the year. #### Executive Director remuneration outcomes in 2022 ##### 2022 annual bonus The annual bonus for 2022 was assessed against two measures: adjusted operating profit (70%) and Executive Director performance against individual strategic objectives (30%). In line with the approach taken last year, the profit targets were set on the basis of a percentage change in profit on a constant currency basis. This was primarily to reflect that foreign exchange movements can have a significant impact on reported numbers and to ensure that Executives are measured against performance within their control. As such, the reported adjusted profit for 2021 of £233m, has been restated on a constant currency basis to £255m, and it is against this benchmark that the Committee has assessed 2022 performance. #### 2022 Committee attendance | Committee members | Percentage of total | | --- | --- | | Tracy Clarke | 42/4 | | Michael Heaney | 42/4 | | Edmund Fig | 42/4 | #### More online The Committee's terms of reference are available on the Company's website: https://tpicap.com/tpicap/investors/corporate-governance 1 In addition to the scheduled meetings, I would further meet my own field to consider Executive Director and wider workforce remuneration. All members were able to attend the additional meetings. 177 TP ICAP GROUP PLC Annual Report and Accounts 2022 Report of the Remuneration Committee continued Adjusted operating profit (EBIT) for 2022 increased by 8%, on a constant currency basis, resulting in a bonus outcome of 52.3% of maximum payout under this measure (56.6% of the bonus maximum). When assessing performance against the targets set, the Committee reviewed the formulae outcome in relation to the profit measure. Two particular factors discussed by the Committee were, (i) the fact that although LiquidNet integration has delivered cost savings above target expectations, the contribution of this division in 2022 was below expectation, in the face of challenging market conditions and, (ii) the impact of the E2™ P&L charge in relation to Russia. The Committee determined that given both issues had materially impacted the EBIT performance, it was comfortable that these had appropriately been factored into the financial outcomes for the Executive Directors and therefore no further negative discretionary adjustments were required. The Committee also noted that the actual growth achieved in adjusted operating profit for 2022 was 18% up on the reported outcome and substantially higher than the 8% figure used for incentive purposes. Whilst accepting this material difference, the Committee determined that no positive discretionary adjustments were appropriate on the basis that the constant currency approach to measuring profit growth should neutralise the impact of foreign exchange movements on bonus outcomes over time. The Committee also carefully reviewed each Executive Director's performance against their strategic priorities, and determined that a degree of differentiation in the performance appraisal was appropriate. The bonus outcomes for the strategic measures are between 24% and 25.5%, further detail is provided on pages 126 to 128. Within the strategic measures the Committee assessed a wide variety of objectives for each Executive including the development of the Group's strategy, cost, margin and cash goals as well as our ESG ambitions including, in particular, our climate related and gender diversity targets. Taking the financial and strategic results together resulted in overall bonus outcomes for the Executive Directors of 62.1% of maximum for the CEO, 60.6% for the CFO and 61.6% for the Group General Counsel ('GGC'). In absolute terms the ED bonuses increased by a range of 17% to 28% year-on-year. This result was considered to be appropriate based on a strong recovery in both Group profitability and share price performance during 2022, as well as continued Executive Director focus on delivering the strategic plan and additional value to shareholders. In line with the requirements of the IFPR regulation, deferred bonus awards for Executive Directors will be subject to a six-month post-vesting retention period from 2022 onwards. The recovery in the Group's overall performance also had a positive impact on the senior management and support staff bonus pools. For 2022, the support staff bonus pool was significantly up on the prior year. On a like-for-like basis the overall bonus pool spend increased by 38%. When the additional variable pay awards which were granted to support staff during 2022 for retention purposes are taken into account, the increase in overall spend for the non-broking population was 15%. #### 2022 annual bonus targets When settling the bonus targets for 2022, the Remuneration Committee took time to ensure they were both appropriate in light of the Group's historical financial performance and were sufficiently stretching for the Executive Directors. In a year which required continued focus on the strategic transformation of the business. The profit target continued to be set on the basis of a percentage change in like-for-like profit and included a constant currency adjustment. The range set for 2022 was 0% growth at threshold, 8% growth at target and 15% growth at maximum. This range was established taking into account both the internal budget and external analysts' forecasts at the start of the year. #### 2020 LTIP The 2020 LTIP was based on performance against three performance measures. Relative TSR (50%) EPS CAGR (30%) and New Business Growth CAGR (20%) based on performance over 2020-2022. As the threshold performance conditions were not met, the award has lapsed in full. #### Wider workforce considerations The Committee also has oversight of remuneration for the wider employee population. During the year we continued to upgrade our policies and processes to ensure that we are able to offer a compelling employee value proposition as well as to ensure that we remain compliant with the spirit and the letter of the regulatory remuneration requirements which impact the Group, notably the Investment Firms Prudential Regime ('IFPR') and its EU equivalent, the Investment Firm Directive ('IFD') for our European entities. A key activity during 2022 has been to support and maintain a healthy employee culture with a strong focus on conduct. The Group's new Triple A values emphasise the importance of Accountability in the workplace and the need to treat colleagues with respect. Aligned to this, our refreshed performance management process is designed to ensure that managers are fully reviewing the 'how' as well as the 'what' when assessing individual performance and consider culture, behaviour and risk factors when setting remuneration. We have also introduced a new Malus and Clawback Policy during the year, which goes beyond the minimum requirements of the IFPR/WD regulation in its application to all group employees, subject to compliance with local laws. In line with the regulations, individuals who are identified as Material Risk Takers under these regimes are also subject to higher rates of deferral on bonus awards, as appropriate. 118 TP/CAF GROUP PLC Annual Report and Accounts 2022 Mindful of the challenging economic environment, the Committee acted swiftly to address the various headwinds faced by our employees during the year. To retain our key talent and to address the higher-than-normal turnover rates we experienced earlier in 2022, we awarded additional variable pay awards in June and December. We also undertook a mid-year salary adjustment for business critical staff, which was effective from 1 September 2022. In addition, in order to support our colleagues in these regions most impacted by significant increases in inflation during 2022, we also awarded a one-off 'Cost of Living' payment for lower earning employees in October 2022 of $1,500 or local equivalent. As a result, having originally committed to a salary budget increase of 2.85% for support staff across the Group in last year's report, our 2022 salary spend in fact increased by 5.5% over the prior year. Recognising that inflationary and talent market pressures are likely to continue in 2023, and to ensure that our compensation levels remain competitive, we are committed to a similar salary budget increase for support staff of 5% for this year. #### Executive Director salaries The Committee has reviewed the base salaries of the Executive Directors, in light of their individual responsibilities, relevant market corporations and the salary increases we are awarding throughout the Group. TP ICAP operates in a very specific market which presents challenges when benchmarking appropriate remuneration levels for the executive team and many of its employees. As a Group TP ICAP is the largest of the three global broking firms by revenues and there are no directly comparable UK competitors of any size. The remuneration paid to senior executives among our global peers is substantially greater than that which is paid to our executive team. At this critical juncture in the Company's evolution it is important to retain our seasoned executive team to deliver on our transformation strategy in order to enhance shareholder value. However, the Committee is mindful of the heightened sensitivity in relation to Executive Director salary increases in the context of a 'Cost of Living' crisis. As a result, the Committee has decided to award salary increases to the Executive Directors just below the increase in the salary budget for the support staff population of 5%. The CEO's salary for 2023 will therefore be £785,000, an increase of 4.7%, the CFO's salary will be £465,000, an increase of 4.7%, and the GGC's salary will be £475,000, an increase of 4.9%. In line with the support staff population, these salary increases will be effective from 1 January 2023. #### Implementation of the Policy for 2023 Following strong support at our 2022 AGM, no changes are being proposed to either the incentive multiples or measures for 2023. Whilst we received very strong support (85%) on our Remuneration Policy, the Committee are cognisant that a minority of shareholders were unable to vote for this Policy. We consulted significantly with shareholders on the Policy prior to the AGM and continue to maintain a strong two-way conversation with shareholders across a range of issues. We understood when introducing the RSP as part of our Policy that this remains a relatively novel structure in the UK and would not obtain universal support. However, we strongly believe this is the right structure for our business and strategy and will continue to implement our Policy as presented in 2022. The 2023 Annual Bonus will continue to be assessed against Adjusted Operating Profit (70%) and Strategic Objectives (30%). The underpin for the 2023 RSP will be in line with our Policy and the grant made in 2022. Further information can be found on page 153. On behalf of the Board #### Tracy Clarke Remuneration Committee Chair #### Definitions used in this report 'Executive Director' means any executive member of the Board. 'Senior Management' means those members of the Company's Group Management Committee (other than the Executive Directors) and the first level of management below that level including the direct reports to the Chief Information Officer and the Group Head of Operations. 'Broker' means from office revenue generators, 'Control Functions' means those employees engaged in functions such as Compliance, Risk, Internal Audit, Legal, HR, Finance and Operations, 'Remuneration Code' means the MIFIDPRU Remuneration Code of the FCA, and '2013 Regulations' means the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2013, as amended by the 2018 and 2019 Regulations. 118 TP ICAP GROUP PLC Annual Report and Accounts 2022 Report of the Remuneration Committee continued ## REMUNERATION AT A GLANCE Summary of pay outcomes for 2022 A summary of the single total figure of remuneration and incentive outcomes is included below. For further information see pages 124 to 129. 2022 Single Figure outcome Short-term incentives | | | | | Long-term | | | Single total | | --- | --- | --- | --- | --- | --- | --- | --- | | Executive Directors | | Taxable | Total fixed | incentives | | Total variable | figure of | | (£000s) | Salaries¹ | benefits² Pension³ | remuneration Cash Deferred Total | | vested⁴ | remuneration | remuneration | Nicolas Breteau 750 3 2 755 582 582 1,1 64 – 1,16 4 1,919 Robin Stewart 444 3 6 453 269 269 538 – 538 991 Philip Price 453 3 – 456 279 279 558 – 558 1,014 1 Base salary was effective from 1 January 2022. 2 Taxable benefits represent private medical insurance. 3 Maximum pension is 6% of salary, up to a cap of £105,600. No Directors have a prospective entitlement to a DB pension. Due to lifetime allowance limits, P Price did not receive any company pension contributions during 2022. N Breteau received £1,520 company pension contribution due to the annual allowance limit. 4 No long-term incentives vested during 2022 as the LTIP granted in 2020 did not meet its performance conditions. Incentive outcomes Bonus LTIP | | Threshold | | Target | Maximum | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | performance | performance | | performance | | Actual | | Weighted payout | | | | target (25% | target (50% | | target (100% | performance | | (% of maximum total | | | | Performance measure Weighting | of maximum) | of maximum) | | of maximum) | | achieved | | | bonus) Performance measure Weighting Outcome | Adjusted Operating Profit 70% £255m £274m £293m £275m 36.6% TSR 50% 0% EPS 30% 0% | Strategic | See pages | 24%– | New Business | | --- | --- | --- | --- | | Performance 30% | 126 to 128 | 25.5% 24%–25.5% | Growth 20% 0% | | Total bonus | | | Total LTIP | | outcomes 60.6%–62.1% | | | outcome 0% | Summary of implementation of Policy in 2023 The table below sets out a summary of how we intend to implement the Policy in 2023. For further information on the policy see pages 122 to 123. Element Summary of implementation of Policy for 2023 Base salary N Breteau £785,000 – 4.7% increase R Stewart £465,000 – 4.7% increase P Price £475,000 – 4.9% increase Annual bonus Maximum opportunity unchanged (CEO: 250%, other EDs 200%). For 2023, the measures will continue to be: > Adjusted Operating Profit 70% > Strategic Objectives 30% Restricted Share Plan RSP grant of 125% of salary to be granted to each ED. Awards granted with underpin in line with Policy wording. TP ICAP GROUP PLC Annual Report and Accounts 2022120 ## DIRECTORS’ REMUNERATION POLICY (UNAUDITED) The Directors’ Remuneration Policy was last approved by Predictability shareholders at the AGM on 11 May 2022. The full Policy can be found > To set robust and stretching performance targets that reward on pages 127 to 134 of the 2021 Annual Report, which is available exceptional performance; and to view on the website and is due for renewal at the 2025 AGM. > To set remuneration within the limits established under the A summary of the key features of the Policy can be found below. Directors’ Remuneration Policy. Background Proportionality The Company’s Remuneration Policy is designed to attract, > To attract, retain and motivate the Executive Directors and senior motivate and retain employees with the necessary skills and employees by providing total reward opportunities which, subject experience to deliver the strategy, in order to achieve the Group’s to individual and Group performance, are competitive within our objectives. defined markets both in terms of quantum and structure for the responsibilities of the role; The key drivers of our Remuneration Policy are: > To ensure that remuneration practices are consistent with and encourage the principles of equality, inclusion and diversity; Alignment to culture > To consider wider employee pay when determining that of our > Align the interests of the Executive Directors, with the long-term Executive Directors; and interests of shareholders and strategic objectives of the Company; > To align management and shareholder interests. > Include incentives that are aligned with and support the Group’s business strategy and align executives to the creation of long- Further information on risk management term shareholder value; The Remuneration Committee considered the relationship between > To reinforce a strong performance culture, across a range of incentives and risk when approving the Remuneration Policy that performance metrics, including behaviours, risk management, will apply throughout the Group. customer outcomes and the development of the Company’s culture in line with its values over the short and long term; and Details of the Group’s key risks and risk management are set out > To align management and shareholder interests through building in the Strategic report of the 2022 Annual Report and Accounts material share ownership over time. on pages 75 to 81. The majority of transactions are brokered on Governance report a Name Passing basis where the business is not a counterparty Clarity to a trade. > To clearly communicate our Remuneration Policy and reward outcomes to stakeholders. Commissions earned on broking activities are received monthly in cash. The Name Passing business does not take any trading risk and Simplicity does not hold principal trading positions. This business only holds > To ensure that our Remuneration Policy is clear and easily financial instruments for identified buyers and sellers in matching understood. trades which are generally settled within one to three days. The Matched Principal business is exposed to counterparty credit risk Risk as the business is the counterparty to both the buyer and seller and > To provide a balanced package between fixed and variable pay, therefore bears the risk of counterparty default during the period and long and short-term elements, to align with the Company’s between execution and settlement of the trade. The business does strategic goals and time horizons while encouraging prudent risk not have valuation issues in measuring its profits. management; and > To ensure reward processes and policies are compliant with The Company’s Remuneration Policy reflects the risk profile of the applicable regulations, legislation and market practice, and are Group, is consistent with and promotes sound and effective risk operated within the bounds of the Board’s risk appetite. management and does not encourage excessive risk taking. The Company’s Remuneration Policy is consistent with the measures set out in the Group’s compliance manuals relating to conflicts of interest. The Company’s policy is to ensure that variable remuneration is not paid through vehicles or methods that facilitate avoidance of the Remuneration Code. TP ICAP GROUP PLC Annual Report and Accounts 2022121 Report of the Remuneration Committee continued Summary Policy Table and Implementation for 2023. The summary policy set out in this table was approved by shareholders at the AGM in 2022. Elements Summary of Policy Summary of Implementation for 2023 Base salary Reviewed periodically to ensure not N Breteau £785,000 – 4.7% increase. significantly out of line with the market. R Stewart £465,000 – 4.7% increase. P Price £475,000 – 4.9% increase. Salary increases just below the increase in the salary budget for the support staff population of 5%. Pension and benefits In line with the pension allowance available Pension allowance and benefits remain to all UK non-broking employee population, unchanged. which is currently 6% of fixed remuneration up to a cap set at £105,600 unless otherwise made available to all non- broking UK employees. Medical cover and participation in any schemes available to all UK non-broking employees. Annual discretionary bonus Annual assessment of performance against Maximum opportunity unchanged (CEO: strategic and financial objectives. 250%, other EDs: 200%). Performance measures will remain unchanged for 2023: Maximum performance delivers: > Adjusted Operating Profit 70%; and > CEO: 250% salary; and > Strategic Objectives 30%. > Other EDs: 200% salary. Deferred share awards, which vest pro-rata | | Mandatory 50% deferral into shares with | over three years, will also be subject to a | | --- | --- | --- | | | a three-year deferral period. Malus and | six-month retention period in line with | | | clawback apply. | regulatory requirements. | | Restricted Share Plan Annual awards of conditional shares or nil | | Maximum grant opportunity unchanged | | | cost share options, vesting after a three- | (125% for each ED). | year period. The awards will only vest subject to the satisfactory achievement When assessing the underpin the of the underpin. Vested shares must be Committee shall have regard to the Group’s retained for a further two years (on a net of financial and non-financial performance tax basis where shares are sold to settle tax). over the course of the vesting period, and may take into account the following factors The normal maximum award is 125% of (amongst others) when determining whether salary. Prior to the grant of the RSP award, to reduce the number of shares vesting: the Committee will consider individual, business unit and firm performance over the > Whether threshold performance levels have previous year as part of a pre-grant test. been achieved for the Bonus Plan for each of the three years in the vesting period; > The underlying financial performance progression over the vesting period, considering (but not limited to) such factors as revenue, profitability, absolute/ relative TSR performance, cash generation and adherence to the dividend policy (to maintain 2x adjusted earnings dividend cover); and > Performance against strategic priorities designed to promote the long-term success of the Company. Minimum shareholding Executive Directors must hold a minimum Minimum shareholding requirement number of the Company’s ordinary shares remains unchanged. equivalent to 300% of base salary in respect of the Chief Executive Officer and 200% of base salary for all other Executive Directors built over a five-year period. TP ICAP GROUP PLC Annual Report and Accounts 2022122 Policy on Directors’ Remuneration compared with employees generally (unaudited) The Committee has oversight of pay policies below Board level and these policies are taken into account when setting the Directors’ Remuneration Policy. As a general rule, the same principles are applied to Directors’ fixed remuneration, pension contributions and benefits as are applied to employees throughout the Group. A competitive level of fixed remuneration is paid to all employees taking into account their responsibilities and experience. Pension and benefits are provided to all employees. There are a number of different bonus schemes in operation throughout the Group for Brokers and other employees. Brokers’ bonus schemes are described below; all other bonuses are generally discretionary. For brokers earning above a certain threshold, they are required to defer a portion of their bonus into notional shares under the TP ICAP Group Global Equity Linked Plan. In addition, other employees who earn bonuses above a specific threshold are also required to defer a portion of their bonus under the TP ICAP Deferred Share Bonus Plan. For individuals identified as Material Risk Takers (‘MRT’), deferral, payment in instruments requirements and malus and clawback is applied, where applicable, in line with the regulations. Deferred bonus awards are subject to malus and clawback in line with the Executive Directors. Throughout the annual discretionary bonus review cycle, the Control Function Heads (Compliance, Risk and Internal Audit) are consulted and review year-end outcomes to ensure these are appropriate taking into account any risk events or breaches that have occurred during the year. Subject to the discretion of the Executive Directors and the Remuneration Committee for regulated staff, variable pay awards may be risk-adjusted in certain circumstances. Remuneration policies for Brokers (unaudited) The Company’s Remuneration Policy for Brokers is based on the principle that remuneration is directly linked to financial performance, generally at a desk/team level, and is calculated in accordance with formulae set out in the contracts of employment. These formulae take into account the fixed costs of the Brokers; variable remuneration payments are therefore based on the profits that the Brokers generate for the business together with an assessment of individual performance including conduct and behaviours. Typically, Brokers receive a fixed salary paid regularly throughout the year, with a significant portion of variable remuneration dependent on their revenue, conduct and performance. Deferral into instruments linked to TP ICAP Group plc shares is applied via the Global Equity Linked Plan, where the individual’s variable pay is above a certain threshold. Governance report Remuneration policies for Control Functions (unaudited) The Company’s Remuneration Policy for Control Function staff is that remuneration should be adequate to attract qualified and experienced employees, and is set in accordance with the achievement of their objectives linked to the functions they control, and is independent of the performance of the business areas they support. Employees in such functions report through an organisation structure that is separate to and independent from the business units they oversee. Heads of Control Functions are designated as MRTs and accordingly their remuneration is reviewed by the relevant Remuneration Committee as part of the annual review of MRT pay. TP ICAP GROUP PLC Annual Report and Accounts 2022123 Report of the Remuneration Committee continued ## ANNUAL REPORT ON REMUNERATION This part of the Directors’ Remuneration Report explains how we have implemented our Remuneration Policy during the year. The Annual Statement made by the Remuneration Committee Chair on pages 116 to 119 and this Annual Report on Remuneration are subject to a shareholders’ advisory vote at the forthcoming AGM. Information in this report is audited, where stated. The single total figure of remuneration for the Executive Directors who held office during the year ended 31 December 2022 was as follows: Short-term incentives | | | | | Long-term | | | Single total | | --- | --- | --- | --- | --- | --- | --- | --- | | Executive Directors | | Taxable | Total fixed | incentives | | Total variable | figure of | | (£000s) | Salaries¹ | benefits² Pension³ | remuneration Cash Deferred Total | | Vested⁴ | remuneration | remuneration | Nicolas Breteau 2022 750 3 2 755 582 582 1,164 – 1,1 64 1,919 2021 719 3 1 723 496 496 992 – 992 1,715 Robin Stewart 2022 444 3 6 453 269 269 538 – 538 991 2021 438 3 6 447 210 210 420 – 420 868 Philip Price 2022 453 3 – 456 279 279 558 – 558 1,014 2021 445 3 – 448 231 231 463 – 463 911 1 Base salary was effective from 1 January 2022. 2 Taxable benefits represent private medical insurance. 3 Maximum pension is 6% of salary, up to a cap of £105,600. No Directors have a prospective entitlement to a DB pension. Due to lifetime allowance limits, P Price did not receive any company pension contributions during 2022. N Breteau received £1,520 company pension contribution due to the annual allowance limit. 4 No long-term incentives vested during 2022 as the LTIP granted in 2020 did not meet its performance conditions. Base Salary (audited) For 2023, the Executive Directors’ base salaries have been reviewed and as set out in the Chair’s letter on pages 116 to 119, the following increases will apply: Base salary effective from Executive Date of appointment Current Base salary¹ 1 January 2023 Nicolas Breteau 10 July 2018 £750,000 £785,000 Robin Stewart 10 July 2018 £444,000 £465,000 Philip Price 3 September 2018 £453,000 £475,000 1 Base salary was effective from 1 January 2022. TP ICAP GROUP PLC Annual Report and Accounts 2022124 2022 annual bonus (audited) For 2022, the annual bonus was based 70% on financial performance and 30% on strategic performance, with a maximum opportunity of 250% of base salary for the CEO and 200% of base salary for the CFO/GGC. Details of the 2022 financial measures and weightings, the targets set and performance against these targets are provided in the table below: | | | Target | Maximum | | | | --- | --- | --- | --- | --- | --- | | | Threshold | performance | performance | Actual | Weighted payout | | | performance target | target (50% of | target (100% of | performance | (% of maximum | | Financial performance measure Weighting | (25% of maximum) | maximum) | maximum) | achieved | total bonus) | Adjusted operating profit (Like-for-like adjusted EBIT growth) 70% £255m £274m £293m £275m 36.6% Strategic performance Strategic objectives, along with the corresponding 30% performance assessment, are set out in the tables below. 24%–25.5% 24%–25.5% Total bonus outcomes 60.6%–62.1% When setting targets for the annual bonus, the Remuneration Committee considered a range of factors to ensure that they were both appropriate, in light of the Group’s historical performance, and sufficiently stretching, in the context of global economic and market conditions, whilst at the same time being motivational for participants. In line with the approach taken last year, the profit targets were set on the basis of a percentage change in profit on a constant currency basis. This was primarily to reflect that foreign exchange movements can have a significant impact on reported numbers. As such, the reported adjusted profit for 2021 of £233m, has been restated on a constant currency basis to £255m, and it is against this benchmark that the Committee has assessed 2022 performance. In contrast to the experience last year the Group benefitted from a foreign currency tailwind, with an average depreciation of Sterling against the US Dollar of 10% during 2022. This contributed to the 18% increase in adjusted operating profit over last year’s reported outcome (£275m versus £233m). Stripping out these currency impacts, the Committee was satisfied that the profit target of £274m, which represented a 7.5% increase over the restated prior year number was appropriate. Governance report When determining the overall bonus awards for each Executive Director, the Committee considered the broader performance of the Executive Directors and the business in the face of unprecedented challenges over the course of the last year. In the context of our core markets, Central Bank monetary tightening created a beneficial environment for the Rates business in Global Broking. However, this was offset by challenging conditions in the European energy sector and pronounced falls in major stock markets, which adversely impacted trading in the Energy & Commodities and Liquidnet divisions. The Committee also took into account the £21m impact on the P&L as a result of Russian exposures, which could not have been foreseen at the beginning of the year. In spite of these headwinds, the Executive Directors have continued to focus on the delivery of the corporate strategy, to transform and diversify the business. TP ICAP GROUP PLC Annual Report and Accounts 2022125 Report of the Remuneration Committee continued Details of the 2022 strategic objectives for each Executive Director, along with the corresponding performance assessment, are set out in the following tables: Nicolas Breteau CEO strategic objectives Weighting¹ Score Assessment of performance Execute on our strategic road map 5% 4% > Good progress made towards the delivery of the Capital Markets across Global Broking, Energy & Day targets for improved contribution margin by end of 2023. Commodities and Parameta > Strong momentum achieved with the roll out of Fusion, with an Solutions. increase in coverage from 20% to 40% of targeted in-scope revenues during 2022. Execute on integration and business 5% 3.5% > Integration is progressing well with the majority of deliverables development of Liquidnet. completed. > On track to complete the integration by the end of 2023 and deliver at least £30m of integration cost synergies, ahead of our £25m target. Develop and strengthen the 5% 5% > Significantly strengthened the Leadership Team including critical leadership team with a focus on hires for the CEO roles within Global Broking and Liquidnet. succession and building the bench. > CEO’s personal efforts noted as a key differentiator in developing capabilities below Board. Implement ESG Strategy: 4% 3% > External benchmarking of emissions and engagement with our top specifically, make progress towards 30 suppliers to reduce Scope 3 emissions undertaken for the first time delivery of the three ESG targets on in 2022. Net Zero, gender diversity and new > Progression on gender targets among non-broking employees, with business approval. female representation increasing from 34% to 35% in 2022, with an objective to reach 38% by end of 2025. Continue to improve the firm’s 3% 3% > The CEO delivered the Group’s key strategic messages through profile and standing with regulators leading a number of events with colleagues across the globe in 2022. and policy makers to deliver > Significant improvements made to the control environment and the positive operational and effectiveness of risk management within the organisation. reputational outcomes. Continue to > The CEO has continued to take a proactive approach to embed the right Risk, Control and engagement with policy makers and regulators across Europe. Culture framework. Improve our employee engagement 3% 3% > Strong growth in all employee communication channels during with a focus on internal the year. communication. > The participation rate in November’s global employee survey increased by over 20% versus the prior year, with an increase of seven percentage points in the engagement score to 67%. Remuneration Committee 5% 4% > The Committee took account of the CEO’s effective leadership of the discretion. business over a year in which trading improved across the core divisions, and a strong recovery in both profitability and share price performance was achieved. Total for strategic metrics 30% 25.5% 1 Expressed in percentage points summing to 30% in total, 30% being the proportion of the total bonus determined by reference to non-financial metrics. TP ICAP GROUP PLC Annual Report and Accounts 2022126 Robin Stewart CFO strategic objectives Weighting¹ Score Assessment of performance Create consistent global 4% 2% > The CFO has led the improvement in investor relations during management information and the year. financial challenge to the Business > Good progress made in embedding the Finance operating model divisions and lead communications within the Business divisions. Work to continue in 2023 to strengthen with the external market. MI reporting. Strategically review and assess the 5% 4% > Continued progress with business rationalisation including Group’s utilisation of resources to through the consolidation of legal entities and other capital | target opportunities and release | | efficiency initiatives. | | --- | --- | --- | | cash and capital from the business. | | > On track to free up £100m of cash by the end of 2023. | | Facilitate the delivery of cost | 5% 5% > Achieved target to deliver £25m of Group P&L cost savings by end | | | improvement targets outlined in | | 2022, alongside continued investment in the business. | | preliminary statement. | | > On track to deliver at least £30m in Liquidnet integration cost | synergies by end 2023; original target £25m. Continue to embed the right Risk, 4% 4% > Management of, and accountability for, conduct and risk within the Control and Culture framework for first line of defence continues to improve. TP ICAP with a particular focus > All outstanding audit points have been remediated, including 100% on Conduct. that relate to Finance, or have a delivery plan to resolve. Review the global finance structure 3% 2% > Continued progress embedding Finance structure within the core with an aim to better align with business divisions. Business divisions and transversal > Dedicated finance team supporting Global Broking has contributed | functions. | | to driving improved margins across the division. | | | --- | --- | --- | --- | | Implement ESG Strategy: | 4% 3% > Commencement of engagement with TP ICAP’s Top 30 suppliers to | | | | specifically, make progress towards | | reduce Scope 3 emissions. | | | delivery of the three ESG targets on | | > Acceleration of the Group TCFD action plan. CFO will lead on | | | Net Zero, gender diversity and new | | ensuring obligations are within FRC scope. | Governance report | | business approval – take ownership | | > Progress made towards gender targets among non-broking | | | for the shareholder communications. | | employees, with female representation increasing from 34% to 35% | | in 2022, with the objective of reaching 38% by the end of 2025. Remuneration Committee 5% 4% > The Committee took account of the successful delivery of cost discretion. savings and capital efficiencies in the face of a challenging inflationary environment during the year. Total for strategic metrics 30% 24% 1 Expressed in percentage points summing to 30% in total, 30% being the proportion of the total bonus determined by reference to non-financial metrics. TP ICAP GROUP PLC Annual Report and Accounts 2022127 Report of the Remuneration Committee continued Philip Price GGC strategic objectives Weighting¹ Score Assessment of performance | Continue to develop the Legal team | 4% 4% > Lead capability upgrade of legal function. | | | --- | --- | --- | | and where practicable (i) insource | | > Significant cost savings achieved with a reduction in external legal | | more legal advice and reduce | | spend of 30% year-on-year. | | external legal expenses and (ii) | | > Proactive management of litigation with a number of favourable | | pro-actively seek to settle/ | | settlements of disputes achieved in 2022. | compromise the Group’s regulatory investigations. | Ensure Compliance delivers its 2022 | 4% 3% > Compliance achieved a number of PTG deliverables for 2023 with | | | --- | --- | --- | | strategy and executes its steps on | | material progress in relation to Conduct of Business and Financial | | the Path-to-Green (‘PTG’) project | | Crime initiatives, | | plan. Continue to ensure adherence | | > Key role in the development of the Group’s new Conduct | | to the Group’s Compliance and | | Management Framework. | control frameworks across TP ICAP with a particular emphasis on conduct & culture. In conjunction with the Business and 4% 3% > Group Risk Conduct and Governance Committee (‘GRCGC’) Regional CEOs manage the Group’s dashboard is showing all risks are within appetite for 2022. legal and regulatory risks to ensure > Worked closely with the first line of defence management to ensure that the Group remains within risk the risk of regulatory fines and claims is mitigated. appetite. Work with Business Division CEOs to minimise the Group’s exposure to legal claims and regulatory fines. Drive the Group’s commitment to 4% 3% > Lead the Group’s ESG agenda, particularly in relation to social ESG principles and continue to engagement. engage with stakeholders to > Progress made towards gender targets among non-broking enhance internal communication. employees, with female representation increasing from 34% to 35% Implement ESG Strategy: in 2022, with the objective of reaching 38% by the end of 2025. specifically, make progress towards delivery of the three ESG targets on Net Zero, gender diversity and new business approval. Continue to ensure adherence to 5% 4% > Active engagement with Business Division heads and their direct the Group’s Risk frameworks across reports to ensure conduct issues are addressed promptly. TP ICAP with a focus on risk > Group is within the target risk appetite level for 2022. management and accountability. Continue to improve the firms 4% 4% > The GGC has continued to promote the Group’s good standing with profile and standing with regulators global regulators and external stakeholders. and policy makers to deliver > In particular, the GGC’s relationship with UK regulatory bodies has positive operational and helped to navigate a challenging post-Brexit landscape, to preserve reputational outcomes, especially revenues and broker retention. with respect to Brexit. Remuneration Committee discretion.5% 4% > The Committee acknowledged the continued efforts of the GGC in driving cultural change throughout the Group, as well as his contribution towards embedding a robust control environment. Total for strategic metrics 30% 25% 1 Expressed in percentage points summing to 30% in total, 30% being the proportion of the total bonus determined by reference to non-financial metrics. TP ICAP GROUP PLC Annual Report and Accounts 2022128 ### Total annual bonus outcome for 2022 performance (audited) The total bonus for each Executive Director for the year to 31 December 2022 is therefore as follows: | Measure | Weighting | CEO bonus (% Max bonus) | CFD bonus (% Max bonus) | OBC bonus (% Max bonus) | | --- | --- | --- | --- | --- | | Adjusted operating profit | 70% | 38.6% | 36.6% | 36.6% | | Strategic performance | 50% | 25.5% | 24.0% | 25.0% | | Total bonus (as a percentage of maximum) | 100% | 62.1% | 60.6% | 61.6% | | **Total bonus (£000s)** | | **£164** | **£58** | **£58** | 50% of the total bonus for each Executive Director will be awarded in Company shares and deferred for three years vesting in equal tranches, in accordance with the rules of the Executive Director Bonus Plan. Deferred share awards will also be subject to a six-month retention period following vesting, which is considered to be in line with regulatory requirements. The Committee determined that the bonus outcome for the Executive Directors appropriately reflected the financial performance and strategic progress that has been made during 2022. ### Long-term incentives (audited) #### LTIP awarded in 2020 On 30 March 2020, conditional share awards under the LTIP were granted to the Executive Directors. The performance measures, weightings and vesting outcomes are set out in the table below. As the threshold conditions were not met, these awards lapsed in full. | Performance measure | Threshold (20% vesting) | Maximum 3 (100% vesting) | Actual achieved | Overall vesting | | --- | --- | --- | --- | --- | | Relative TSR (50% weighting) | Median | Upper Quartile or above | Below median | 0% | | EPS Growth1 (30% weighting) | 3% p.a. | 10% p.a. | -6% | 0% | | New Business Growth2 (20% weighting) | 10%+ p.a. | 16%+ p.a. | 0.9% | 0% | | **Overall vesting outcome** | | | | **0%** | 1 CAOR over three years 2020 to 2022. EPS was adjusted from 2021 rights issue. 2 CAOR over three years 2020 to 2022. Defined as growth in underlying operating profit of the sum of Energy & Commodities, Institutional Services and Data & Analytics. 3 Payout between threshold and maximum rises on a straight line basis to 100% of payout for attainment of maximum performance condition. ### Performance graph A graph depicting the Company's TSR in comparison to other companies in the FTSE 250 Index (excluding investment trusts) in the ten years to 31 December 2022 is shown below. The Board believes that this index is most relevant as it comprises listed companies of a similar size. ### Total shareholder return ![img-9.jpeg](img-9.jpeg) Source: Eikon from Refinitiv. This graph shows the value, by 31 December 2022, of £100 invested in TP/ICAP on 31 December 2012, compared with the value of £100 invested in the FTSE 250 Index (excluding investment trusts) on the same date. 128 TP/ICAP GROUP PLC Annual Report and Accounts 2022 Report of the Remuneration Committee (continued) # **Chief Executive remuneration history** | Year ended | Name | Total remuneration (000) | Annual bonus % of minutes (x) | LT% of max. renting | | --- | --- | --- | --- | --- | | 31 December 2022 | Nicolas Breteau | 1919 | 62% | 0% | | 31 December 2021 | Nicolas Breteau | 1715 | 54% | 0% | | 31 December 2020 | Nicolas Breteau | 1937 | 750% | 0% | | 31 December 2019 | Nicolas Breteau | 2184 | 940% | 0% | | 31 December 2018 | Nicolas Breteau^{1} | 757 | 56.6% | 0% | | | John Phizackerley^{2} | 325 | 0% | 0% | | 31 December 2017 | John Phizackerley^{3} | 1666 | 88% | 62% | | 31 December 2016 | John Phizackerley | 3381 | 94% | 74% | | 31 December 2015 | John Phizackerley | 2250 | 80% | n/a | | 31 December 2014 | John Phizackerley^{4} | 720 | n/a | n/a | | | Terry Smith^{5} | 433 | n/a | - | | 31 December 2013 | Terry Smith | 2856 | 57% | - | 1 For the six-month period from 10 July 2018. Percentage represents the overall percentage as described on individual performance targets. 2 Total Remuneration includes base salary received through co-termination date of 9 July 2018. 3 For the four-month period from 1 September 2014. 4 For the eight-month period from 1 January 2014 to 31 August 2014. 5 2017 reflects the final LTN post-out in 2018 relating to 2017 reduced by the forfeiture of deferred bonus relating to 2017. # **Relative importance of spend on remuneration** The table below shows the expenditure and percentage change in overall spend on employee remuneration and dividend payments. | £m | 2018 | 2021 | % change | | --- | --- | --- | --- | | Employee remuneration^{1} | 1,320 | 1152 | 15% | | Shareholder dividends paid^{2} | 78 | 47 | 66% | 1 Employee remuneration includes employer's social security costs and pension contributions. 2 Shareholder dividends comprises the dividends paid. # **Directors' shareholdings and share interests (audited)** The interests (all beneficial) as at 31 December 2022 in the ordinary share capital of the Company were as follows: | Director | BSF share^{1} | LTF share^{2} | Unvested share^{3} | Shares^{4} | | --- | --- | --- | --- | --- | | Richard Bertrand | - | - | - | 105,000 | | Nicolas Breteau | 768,883 | 1,299,145 | 840,459 | 235,908 | | Robin Stewart | 455,179 | 801,090 | 394,651 | 100,587 | | Philip Price | 464,405 | 812,544 | 419,870 | 138,854 | | Tracy Clarke | - | - | - | 14,000 | | Edmund Ng | - | - | - | 28,000 | | Michael Heaney | - | - | - | 66,000 | | Angelo Crowford-Ingle | - | - | - | 27,934 | | Mark Hemsley | - | - | - | 22,000 | | Kath Cates | - | - | - | 19,274 | | Louise Murray | - | - | - | - | 1 Shares owned outright. 2 Unvested shares awarded under the Deferred Bonus Plan, not subject to performance conditions. Share-verting is governed by the rules of the Plan. 3 LTF shares are subject to performance conditions, details of which are set out in the 2021 Annual Report on page 142. 4 BSF shares are subject to performance underpins, details of which are set out on the next page under the table. Conditional Share Awards under the BSF. The Company operates a SAYE share option scheme on the same terms for all employees. Nicolas Breteau remains a participant in the 2021 SAYE cycle with options over shares of 9,329. Robin Stewart and Philip Price withdrew from the 2021 scheme and participated in the 2022 cycle, with options over shares of 15,003, respectively. There has been no change in Director's shareholdings between 31 December 2022 and 14 March 2023. 130**TP/CAF GROUP PLC**^{}[] Annual Report and Accounts 2022 ### Shareholding requirements (audited) Executive Directors must build a holding in minimum value of the Company's ordinary shares equivalent to 500% of base salary in respect of the Chief Executive Officer and 200% of base salary for all other Executive Directors. The normal expectation is that this is built up over a maximum five-year period from appointment to the Board. While the shareholding thresholds have not yet been met, all Executive Directors who served during the year compiled with the Company's requirements in respect of their interests in the shares of the Company: | Executive Director | Number of eligible shares as at 31 December 2022^{1} | Value of shares held as at 31 December 2022^{1} | Shareholding as % of base salary as at 31 December 2022 | Shareholding requirement (% salary) | | --- | --- | --- | --- | --- | | Nicolas Breteau | 681,551 | £1,188,957 | 159% | 300% | | Robin Stewart | 309,741 | £540,498 | 122% | 200% | | Philip Price | 361,585 | £650,617 | 139% | 200% | 1 Includes all shares owned outright and all unvested deferred bonus shares not subject to performance conditions on a nominal net of tax basis 2 Based on share price of £1,705 as at 30 December 2022 ### Scheme interests awarded in the year (audited) The table below sets out scheme interests awarded to Executive Directors in the year, alongside details of the performance conditions, vesting schedule and retention period. | Executive Director | Date of grant | Grand-during tax year | Year value £000 | Year value % of salary | Performance conditions/independence | Visiting date | Initial retention period | | --- | --- | --- | --- | --- | --- | --- | --- | | **Conditional Share Awards under the RSP^{1}** | | | | | | | | | Nicolas Breteau | 25/05/22 | 768,883 | £938 | 125% | see information below on the RSP underpin | 25 May 2025 | 25 May 2027 | | Robin Stewart | 25/05/22 | 455,179 | £555 | 125% | | 25 May 2025 | 25 May 2027 | | Philip Price | 25/05/22 | 464,405 | £566 | 125% | | 25 May 2025 | 25 May 2027 | | **Deferred shares awarded under the Annual Bonus^{2}** | | | | | | | | | Nicolas Breteau | 31/03/22 | 353,305 | £496 | 66% | n/a | 31 March 2025 | 31 Sept 2025 | | Robin Stewart | 31/03/22 | 141,242 | £210 | 47% | | 31 March 2025 | 31 Sept 2025 | | Philip Price | 31/03/22 | 155,458 | £231 | 51% | | 31 March 2025 | 31 Sept 2025 | 1 The final value of the RSP awards was converted into a number of shares using a share price of £1,2195, being the five-day volume weighted average price up to and including the date of grant on the 25 May 2022. 2 The final value of the deferred share awards was converted into a number of shares using a share price of £1,4865, being the five-day volume weighted average price up to and including the date of grant on the 31 March 2022. Note that the vesting date of 31 March 2025 represents the date on which the final tranche of the deferred share award will vest and the end of the retention period on the 31 September 2025 also relates to the final tranche of the deferred share award. ### RSP underpin assessment The performance underpins applicable to the above RSP are as follows. The Committee shall have regard to the Group's financial and non-financial performance over the course of the vesting period and may take into account the following factors (among others) when determining whether to reduce the number of shares vesting: - Whether threshold performance levels have been achieved for the Bonus Plan for each of the three years in the vesting period; - The underlying financial performance progression over the vesting period, considering (but not limited to) such factors as revenue, profitability, absolute/effective TSP performance, cash generation and adherence to the dividend policy (to maintain 2x adjusted earnings dividend cover); and - Performance against strategic priorities designed to promote the long-term success of the Company including (but not limited to) operating model improvements, building on the Group's competitive advantage, digital and technology improvements, focus on ESG (including sustainability), employee satisfaction and the management of day-to-day risks. ### Payments for loss of office and payments to post Directors (audited) There were no payments made for loss of office or remuneration payments made to former Executive Directors during the year. 131 TP ICAP GROUP PLC Annual Report and Accounts 2022 Report of the Remuneration Committee continued Chief Executive pay ratio The table below compares the 2022 single total figure of remuneration for the CEO with that of the Group’s UK employees who are paid at the 25th percentile (lower quartile), 50th percentile (median) and 75th percentile (upper quartile). The Remuneration Committee considers the relative stability in the median pay ratio over the last three years to reflect the alignment of CEO and all employee pay outcomes, albeit that the quantum of ‘at risk’ variable pay is higher for the CEO than for the wider workforce. The Committee is also satisfied that the median pay ratio is consistent with the pay, reward and progression policies for our employee population. 25 th percentile 50 th percentile 75 th percentile Year Method pay ratio pay ratio pay ratio 2022 A 31:1 17:1 9:1 2021 A 29:1 16:1 8:1 2020 A 34:1 18:1 8:1 The Committee chose to use Option A to calculate the ratio as the data was available and the approach is considered to be the most accurate. The employee data was taken as at 31 December 2022; employee means anyone employed under a contract of service. Afull- time equivalent total was created for part-time employees and the remuneration of employees hired during the year was annualised. The resulting list was then ranked to identify the individuals at the 25th, 50th and 75th percentiles. The CEO pay ratios were then calculated based on these percentiles. The table below sets out the salary and total pay and benefits for the three identified quartile point employees. The compensation numbers for all employees exclude the additional variable pay awards that were awarded to employees in 2022. No such awards were made to the Executive Directors. As shown below, total pay has increased this year across all three percentiles due to an increase in the bonus spend for support staff. The movement in salary levels is reflective of the range of compensation arrangements within the Group. 25 th percentile 50 th percentile 75 th percentile 2022 Salary £44,470 £88,833 £90,000 Total pay and benefits £61,938 £111,537 £210,167 2021 Salary £50,000 £85,000 £130,000 Total pay and benefits £58,448 £106,055 £209,029 Percentage change in Directors’ remuneration The Committee monitors the changes year-on-year between our Directors’ pay and average employee pay. In accordance with the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, the table below shows the percentage change in Executive Director and Non-executive Director total remuneration compared to the change for the average of employees within the Company, over the last two years. | | % change in remuneration | | | | % change in remuneration | | | | % change in remuneration | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | between 2022 and 2021 | | | | between 2021 and 2020 | | | | between 2020 and 2019 | | | | | | | | Short-term | | | | Short-term | | | | Short-term | | | | | Taxable | variable | | | Taxable | variable | | | Taxable | variable | | | Salary/Fee | | benefits⁶ | | pay Salary/Fee | | benefits | | pay Salary/Fee | | benefits | | pay | Chief Executive Officer 4% 2% 17% 7% 5% -21% 3% 3% -17% Chief Financial Officer 1% 2% 28% 1% 5% -33% 2% 3% -19% Group General Counsel 2% 2% 21% 2% 5% -30% 3% 3% -17% Richard Berliand 0% n/a n/a 0% n/a n/a 5% n/a n/a Tracy Clarke¹ 6% n/a n/a n/a n/a n/a n/a n/a n/a Michael Heaney 21% n/a n/a -12% n/a n/a 2% n/a n/a Edmund Ng 0% n/a n/a -21% n/a n/a -6% n/a n/a Angela Crawford-Ingle² 5% n/a n/a 39% n/a n/a n/a n/a n/a Mark Hemsley³ 0% n/a n/a 29% n/a n/a n/a n/a n/a Kath Cates⁴ 13% n/a n/a n/a n/a n/a n/a n/a n/a Louise Murray⁵ n/a n/a n/a n/a n/a n/a n/a n/a n/a Employees 14% 2% 41% 4% 7% -28% 2% 10% -15% 1 Appointed as Remuneration Committee Chair on 12 May 2021. 2 Appointed to the Board on 16 March 2020. 3 Appointed to the Board on 16 March 2020. 4 Appointed to the Board on 1 February 2021. 5 Appointed to the Board on 31 December 2021. As pro-rated fee for 2021 was negligible at £219, the percentage change is disclosed as n/a. 6 Although NED expenses tax settled through a PAYE Settlement Agreement (‘PSA’) is available for the 2021/2022 income tax year, information for prior years is not readily available. Year-on-year percentage change is therefore shown as n/a. Disclosure of the percentage change in taxable benefits for NEDs will be available going forwards. TP ICAP GROUP PLC Annual Report and Accounts 2022132 Short-term variable pay includes annual bonus (both cash and deferred bonus) and Special Equity Awards made to employees. As the Parent Company does not have employees, the data above represents a voluntary disclosure against a suitable comparator group. A large portion of the Group's remuneration is payable to Brokers who earn a significant portion of their income as contractual bonus based on a formula linked to revenue. It is therefore considered that a comparison of the Executive Director's remuneration with that of UK non-broker staff is more meaningful than a comparison with all employees. Employee calculations are based on an average percentage change in salary and short-term variable pay on a same-store comparison ie when comparing employees who have been employed by the firm for both performance years 2021 and 2022. The average increase in employees' short-term variable pay between 2021 and 2022 is 41%, which includes the additional variable pay awards for support staff paid during 2022. #### Fees paid to Non-executive Directors (audited) The single total figure of remuneration for each of the Non-executive Directors who held office during the year ended 31 December 2022 was as follows: | | Fees | | Benefits^{1} | | Total | | | --- | --- | --- | --- | --- | --- | --- | | | 2022 £000 | 2021 £000 | 2022 £ | 2021 £ | 2023 £000 | 2021 £000 | | Richard Benland | 300 | 300 | 739 | - | 301 | 300 | | Tracy Clarke^{2} | 95 | 90 | 739 | - | 96 | 90 | | Michael Heaney | 150 | 124 | 332 | - | 150 | 124 | | Edmund Ng | 100 | 100 | 0 | - | 100 | 100 | | Angela Crawford Ingle | 105 | 100 | 737 | - | 106 | 100 | | Mark Hemsley | 90 | 90 | 739 | - | 91 | 90 | | Kath Cates^{2} | 105 | 92 | 739 | - | 106 | 92 | | Louise Murray^{2} | 80 | - | 12 | - | 80 | - | 1 Appointed as Remuneration Committee Chair on 12 May 2021 2 Appointed to the Board on 11 January 2021, the 2021 remuneration has been pre-rated accordingly 3 Appointed to the Board on 31 December 2021 4 Note that 2022 disclosure is £ 1bn (2020-2022 figures show expenses tax settled through a RAYI Settlement Agreement (PSA)) in respect of the 2021/2022 tax year. Expenses principally reflect the cost of Board drivers. Due to use of a different expense system and PSA arrangement in 2020/21, equivalent information is not readily available for 2021. #### Non-executive Director fees (audited) The fees for the Non-executive Directors for 2023 are as follows: | In | Fees from 1 January 2023 | Fees from 1 January 2022 | | --- | --- | --- | | Chair | £300,000 | £300,000 | | Base fee | £70,000 | £70,000 | | Senior Independent Director | £15,000 | £15,000 | | Chair of the Audit, Risk and Remuneration Committees | £25,000 | £25,000 | | Membership of the Audit, Risk and Remuneration Committees | £10,000 | £10,000 | | Overseas-based NED supplement | £35,000 | £35,000 | | Regional Engagement NED | £10,000 | £10,000 | Non-executive Directors received no other benefits or other remuneration other than reimbursement of all reasonable and properly documented travel, hotel and other incidental expenses incurred in the performance of their duties and any tax and social costs arising thereon. Non-executive Directors based overseas will be reimbursed for reasonable costs of travel and accommodation for trips to London to attend Board meetings. Any UK tax liability thereon will be met by the Company. There has been a temporary suspension of Overseas Attendance Allowance for some Non-executive Directors in certain jurisdictions. #### Voting on the 2022 AGM At the AGM held on 11 May 2022 the following votes were cast in respect of the Report on Directors' Remuneration. The votes shown below in relation to the Directors' Remuneration Policy were cast on 11 May 2022: | | For^{1, 2} | | Against^{2} | | Votes with A and^{3} | | --- | --- | --- | --- | --- | --- | | | Number | % | Number | % | Number | | Approval of the Directors' Remuneration Report | 592,716,545 | 85.83 | 114,352,627 | 16.17 | 8,753 | | Approval of the Directors' Remuneration Policy | 602,189,092 | 85.17 | 104,878,431 | 14.85 | 10,400 | 1 Votes 'For' and 'Against' are expressed as a percentage of votes cast. A 'Vote withheld' is not a vote in law. 2 Votes 'For' includes those giving the Chairman discretion. 153 TP ICAP GROUP PLC Annual Report and Accounts 2022 Report of the Remuneration Committee continued Governance > Reviewing and approving, after consultation with the Chief The Directors’ Remuneration Report has been prepared in Executive, the level and structure of remuneration for senior accordance with the Large and Medium-sized Companies and management; Groups (Accounts and Reports) (Amendment) Regulations 2008 > Reviewing and approving the level and structure of remuneration (as amended by the 2013 Regulations) the UKLA Listing Rules and for the Heads of Control Functions; and the UK Corporate Governance Code. The Companies Act 2006 > Keeping under review a formal policy for post-employment requires the auditor to report to the Company’s members on certain shareholding requirements encompassing both unvested and parts of the Directors’ Remuneration Report and to state whether in vested shares. their opinion those parts of the report have been properly prepared in accordance with the regulations. Key Remuneration Committee activities in 2022 The Committee’s focus areas this year were: The Remuneration Committee Chair’s statement, the Remuneration at a Glance section and certain parts of the Annual Report on > Assessing the performance of the Executive Directors against Remuneration (indicated in that report) are unaudited. the financial and strategic non-financial metrics; > Determining the financial metrics used to assess 70% of the Remuneration Committee Executive Directors’ 2022 Bonus and the RSP underpin; Members of the Remuneration Committee during the year were: > Setting specific 2022 strategic performance objectives for each Tracy Clarke (Chair), Edmund Ng and Michael Heaney. of the Executive Directors to assess 30% of their 2022 Annual Bonus; Key responsibilities of the Remuneration Committee > Benchmarking the remuneration of the Executive Directors; The role of the Committee is to set the overarching principles of the > Reviewing risk-adjusted reward policies and processes to ensure Remuneration Policy and provide oversight on remuneration across conduct and culture are considered in all reward decisions; the firm. The Board has delegated responsibility to the Committee for: > Reviewing the Company’s compliance with the FCA‘s MIFIDPRU Remuneration Code, reviewing the Group’s Material Risk Takers > Working with management to develop, formalise and approve and related remuneration disclosure requirements; transparent policies on remuneration for the Company’s > Reviewing all employee remuneration arrangements to ensure workforce, that support the Company’s long-term strategic goals that the Company is able to continue to attract and retain key and are aligned to its culture; talent and to support employees in the context of a ‘cost of living’ > Reviewing the Company’s remuneration policies with regard to crisis; and the Company’s risk appetite, alignment to the long-term strategic > Reviewing our pension and benefits offerings across the Group goals, ongoing appropriateness, and compliance with corporate to ensure that they remain competitive. governance and regulatory requirements; reviewing the ongoing appropriateness and relevance of the remuneration policies; and Outside directorships consulting with significant shareholders as appropriate; Nicolas Breteau, Robin Stewart and Philip Price did not have any > Ensuring implementation of the Company’s remuneration policies outside directorships from which they received any remuneration is subject to review; during 2022. > Considering relationships between incentives and risk to ensure that risk management and appetite are properly considered in The alignment of Executive remuneration with wider Company setting and implementing the Remuneration Policy; pay policy > Reviewing wider workforce pay and, whilst the Committee does The employees of TP ICAP are critical to its long-term success and not directly consult employees on the remuneration policy for the Remuneration Committee is responsible for developing and Executive Directors, considering mechanisms for explaining to maintaining formal and transparent policies on remuneration for the workforce how executive pay and any related policies are the Company’s employees. aligned with remuneration for the wider workforce; > Keeping under review the Company’s gender and ethnic pay Our philosophy on remuneration, that applies to all employees: gaps and overseeing the implementation of actions identified as being required; > We seek to attract and retain high-performing and motivated > Ensuring Executive Director remuneration is in line with the most employees and remunerate them with a competitive base salary; recent Directors’ Remuneration Policy and that wider workforce > We align reward with the delivery of the Group’s business pay has been considered when setting Executive pay; strategy, values, key priorities and long-term goals; > Setting appropriately challenging incentive targets for the > We reward behaviours that both create sustainable results in line Executive Directors; with our core values of honesty, integrity, respect and excellence > Ensuring risk management and conduct events are reflected in and do not encourage excessive risk taking and are in line with remuneration outcomes; our current risk conduct framework; > Determining and approving the rules of any new employee share > We align remuneration with the principle of protection of scheme or other equity-based long-term incentive programme or customers and the prevention of conflicts of interest; any new performance related pay schemes and total annual > We deliver some elements of compensation as shares in the payments under such schemes; Company to align senior employee, Executive and shareholder > Reviewing and approving the total incentive pools for the interests; and non-broking workforce, save with respect to the senior > We provide standard benefits that apply across all management population; employee groups. TP ICAP GROUP PLC Annual Report and Accounts 2022134 ### 2023 AGM Copies of the Executive Directors' employment contracts and the Non-executive Directors' letters of appointment are available for inspection at the registered office of the Company during normal business hours and will be available for shareholders to view at the 2023 AGM. Executive Directors have calling contracts which may be terminated by either the Company or the Director giving 12 months' notice. Details of the contractual arrangements for the Non-executive Directors are set out in the Directors' Remuneration Policy. ### Implementation of Remuneration Policy in 2023 #### Base salaries It was agreed that the following increases would apply for the Executive Directors: - Chief Executive: £785,000 (4.7% increase) - Chief Financial Officer: £465,000 (4.7% increase) - Group General Counsel: £475,000 (4.9% increase) #### Annual bonus The annual bonus will continue to be based on the existing scorecard of financial and strategic performance targets aligned to the business strategy, conduct and risk KPIs, with no change to the maximum bonus opportunities of 250% of base salary and 200% of base salary for the Chief Executive Officer and CFO/GGC respectively. The performance measures will be: - Adjusted Operating Profit - 10% - Strategic Objectives - 50% Details of targets are deemed to be commercially sensitive and will be disclosed retrospectively in the next Directors' Remuneration Report. In addition, 50% of the total bonus awarded will be deferred into shares, pro-rate vesting over three years. The deferred share awards will also be subject to a six-month retention period following vesting. #### RSP For the RSP awards of 125% of salary to be granted to each Executive Director in March 2023, the following conditions will apply. The RSP will vest after three years, subject to the assessment of an underpin at the end of 2025. When assessing the underpin the Committee shall have regard to the Group's financial and non-financial performance over the course of the vesting period, and may take into account the following factors (amongst others) when determining whether to reduce the number of shares vesting: - Whether threshold performance levels have been achieved for the performance conditions for the Bonus Plan for each of the three years in the vesting period, - The underlying financial performance progression over the vesting period, considering (but not limited to) such factors as revenue, profitability, absolute/relative TSR performance, cash generation and adherence to the dividend policy (to maintain 2x adjusted earnings dividend cover), and - Performance against strategic priorities designed to promote the long-term success of the Company including (but not limited to) operating model improvements, building on the Group's competitive advantage, digital and technology improvements, focus on ESG (including sustainability), employee satisfaction and the management of day-to-day risks. ### Advice provided to the Remuneration Committee During 2022, PricewaterhouseCoopers ('PwC') provided external remuneration advice to the Remuneration Committee. They advised on aspects of our Remuneration Policy and practice, including in relation to the Directors' Remuneration Policy which was approved at the May 2022 AGM, trends in market practice and regulatory disclosures. PwC was appointed by the Remuneration Committee, initially in November 2018 to provide advice to the Remuneration Committee on the development of the new Directors' Remuneration Policy and was subsequently appointed as the sole adviser to the Committee. In addition, PwC provided tax advice to the Company. PwC is a signatory to the Remuneration Consultants Group Code of Conduct which requires it to provide objective and impartial advice. The Remuneration Committee is satisfied that the PwC engagement partner and team, which provide remuneration advice to the Committee, do not have connections with TP/ICAP that might impair their independence or objectivity. The fees payable for advice provided by PwC in 2022 were £80,900 (excluding VAT). Fees are charged on a time and materials basis, other than when a scope of fees is provided for services upfront. The Committee is satisfied that these fees are appropriate for the work undertaken. Allen & Overy LLP provided advice on law and regulation in relation to employee incentive matters. This firm also provided general legal advice to the Company. Advice was also provided on occasion by the CEO, CFO, Group General Counsel, Group Head of HR and CRO. Approved by the Board and signed on its behalf by Tracy Clarke Chair Remuneration Committee 14 March 2023 155 TP/ICAP GROUP PLC Annual Report and Accounts 2022 ## Directors' report The Directors present their report together with the audited Consolidated Financial Statements for the year ended 31 December 2022. TP ICAP Group plc is incorporated as a public limited company and is registered in Jersey with the registered number 150617. The Company's registered office is 22 Grenville Street, St Helier, Jersey, JE4 8PX. Although the Company is subject to Jersey law, the following report also includes certain disclosures required for a UK incorporated company under the UK Companies Act 2006 in the interests of good governance. As permitted by legislation, the following statements made pursuant to company law, the UK Listing Authority's Listing Rules, Disclosure Guidance and Transparency Rules are set out elsewhere in this Annual Report and are incorporated into this report by reference. | Disclosure | Location | | --- | --- | | Board of Directors | Board of Directors (pages 90 to 93) | | Results for the year | Consolidated Income Statement (page 147) | | Dividends | Strategic report (page 1, 9 and 26) | | DTR 7 Corporate Governance Statement (excluding DTR 7.2.6, which is covered by this Directors' report) | Governance report (page 82 to 139) | | How the Directors have engaged with and had regard to employees | Strategic report, Stakeholder engagement (pages 41 to 45) | | How the Directors have had regard to the need to foster business relationships with stakeholders | Strategic report, Stakeholder engagement (pages 40 to 49) | | Directors' share interests | Report of the Remuneration Committee (page 150) | | Financial instruments | Note 29 to the Consolidated Financial Statements (pages 186 to 193) | | Viability statement | Strategic report (page 71) | | Going concern statement | Strategic report (page 71) | | Principal risks and uncertainties | Strategic report (pages 72 to 81) | | Human rights and equal opportunities | Strategic report (pages 54 to 56) | | Related party transactions | Note 38 to the Consolidated Financial Statements (page 208) | | Business activities and performance | Strategic report (pages 6 to 39) | | Financial position | Strategic report (pages 18 to 31) | | Key risk analysis | Strategic report (pages 72 to 81) | | Loans and other provisions | Notes 3, 25 and 27 to the Consolidated Financial Statements (pages 154 to 164, 183 to 184, and 185 to 186) | | Issued share capital | Note 30 to the Consolidated Financial Statements (page 194) | | Future developments | Strategic report (pages 6 to 37) | | Statement of Directors' responsibilities | Page 139 | ### Listing Rule 9.8.4 disclosure The trustee of the Employee Benefit Trust waived its rights to receive dividends on shares held by them. Information regarding long-term incentive schemes is contained within the Report of the Remuneration Committee (pages 116 to 135) and incorporated into this report by reference. Otherwise than as indicated, there are no further disclosures to be made under Listing Rule 9.8.4. ### Listing Rule 9.8.6(9) and 14.3.33 disclosure The Company is supportive of the FCA's drive to increase gender and ethnicity diversity amongst the boards and executive management of premium and standard listed companies. As at 1 March 2023 the Board comprises 36% women, our Senior Independent Director is a woman, and one member of the Board is from a minority ethnic background. The Nominations & Governance Committee and Board will continue to focus on the new disclosure requirements for the year ending 31 December 2023 as a part of the Board's succession planning. Otherwise than as indicated, there are no further disclosures to be made under Listing Rules 9.8.6(9) and 14.3.33. ### Post balance sheet events There are no post balance sheet events. ### Scheme of Arrangement On 24 February 2021, the High Court of England and Wales approved a scheme of arrangement (the 'Scheme of Arrangement') pursuant to which TP ICAP Group plc became the new holding company of the TP ICAP Group. On 26 February 2021, following delivery of the Court order sanctioning the Scheme of Arrangement, the Scheme of Arrangement became effective and TP ICAP Group plc's Ordinary Shares were listed on the premium listing segment of the Official List and to trading on the London Stock Exchange plc's main market for listed securities. TP ICAP Group plc therefore replaced TP ICAP Finance plc (previously TP ICAP plc) as the ultimate parent entity of the TP ICAP Group. 136 TP ICAP GROUP PLC Annual Report and Accounts 2022 #### **Directors** The biography for each of the current Directors is set out on pages 90 to 93. Each of the Directors served on the Board of TP ICAP Group plc throughout the year. With regards to the appointment and replacement of Directors, the Company is governed by its Articles of Association (the 'Articles'), the Companies (Jersey) Law 1991, the Companies Act 2006, related legislation, and the UK Corporate Governance Code. The Articles may be amended by special resolution of the shareholders and were last amended in February 2021. The Articles provide that, at each AGM, all the Directors who held office on the date seven days before the Notice of that AGM must retire from office and each Director wishing to continue to serve must submit themselves for election or re-election by shareholders. #### **Directors' conflicts** The Directors are required to notify the Company of any potential conflicts of interest that may affect them in their roles as Directors of TP ICAP Group plc. All new potential conflicts of interest are recorded and reviewed by the Board as they arise, and the Register of Conflicts and Relevant Situations is reviewed at each scheduled meeting of the Nominations & Governance Committee. #### **Directors' indemnity arrangements** The Company maintains liability insurance for its Directors and officers and, to the extent allowed by Jersey law and the Company's Articles of Association, the Company provides a standard indemnity against certain liabilities that Directors may incur in their capacity as a Director of the Company. The liability insurance provided to a Director does not provide cover in the event a ruling of actual dishonest or fraudulent activity is found. The principal employer of the Tullett Prebon Pension Scheme has given indemnities to the Directors who are trustees of that Scheme. #### **Share capital and control** The Company has one class of ordinary shares, which carry no right to fixed income. Each share carries the right to one vote of general meetings of the Company. No shareholder has any special rights of control over the Company's share capital and all issued shares are fully paid. The voting rights of the ordinary shares held by the Tullett Prebon plc Employee Benefit Trust 2007 are exercisable by the trustees in accordance with their fiduciary duties. The right to receive dividends on these shares has been waived. Details of employee share schemes are set out in Note 32 to the Consolidated Financial Statements on pages 197 to 199. #### **Restriction on transfer of securities** There are no specific restrictions on the size of a holding nor on the transfer of shares, both of which are governed by the provisions in the Articles and prevailing legislation. The Directors are not aware of any agreements between holders of the Company's shares that may result in restrictions on the transfer of securities or on voting rights, nor are there any arrangements by which, with the Company's cooperation, financial rights carried by securities are held by a person other than the holder of those securities. #### **Powers of the Directors** The Directors were granted at the 2022 AGM the authority to allot shares and to buy the Company's shares in the market up to a maximum of approximately 10% of its issued share capital. At the last AGM, resolutions were passed to authorise the Directors to allot up to a nominal amount of £65,722,577.50 (subject to restrictions specified in the relevant resolutions) and to purchase up to 78,867,095 ordinary shares. During 2022 no shares were purchased in the market under the authority granted at the 2022 AGM. #### **Significant agreements and change of control** The Company's banking facilities give the lenders the right not to renew loans and to cancel commitments in the event of a change of control. TP ICAP's lenders were therefore engaged in the lead up to the Scheme of Arrangement. TP ICAP's share schemes contain provisions relating to change of control, subject to the satisfaction of relevant performance conditions and pro-rata for time, if appropriate. As a consequence of the 2021 reorganisation and the Scheme of Arrangement the Company assumed the awards under the share schemes. The Company is not aware of any other significant agreements that take effect, alter or terminate upon a change of control of the Company following a takeover bid, nor any agreements with the Company and its employees or Directors for compensation for loss of office or employment that occur because of a takeover bid. #### **Research and development** The Group uses various bespoke information technology in the course of its business and undertakes research and development to enhance that technology. #### **Employees** The Group is an inclusive employer and considers diversity to be of utmost importance. We give full and fair consideration to applications we receive from disabled persons and support those who incur a disability while employed at the Group. All opportunities of career progression and development, including promotions and training, are equally applied to all employees. All employees receive information of relevance to them and factors affecting the Group's performance through emails and our regular Group-wide newsletter, The Wire. The Group consults employees, taking into account their views in the Board's decision-making processes, using surveys to encourage employee involvement in the Company's performance. This has been supplemented by the Workforce Engagement Programme, where Mark Hemsley, Edmund Ng and Michael Heaney represent the Board in engaging with the workforce in EMEA, Asia Pacific and the Americas respectively. For more information on the progress made over the course of 2022, see Stakeholder engagement on pages 40 to 49. #### **Political donations** It is the Company's policy not to make cash contributions to any political party. However, within the normal activities of the Group, there may be occasions when an activity might fall within the broader definition of 'political expenditure' contained within the UK Companies Act 2006. Therefore, the Company has sought to obtain shareholder authority to make limited political donations at each AGM. During 2022, no political donations were made by the Group (2021: Enil). 137 TP ICAP GROUP PLC Annual Report and Accounts 2022 Directors’ report continued Statement of Directors’ responsibilities Disclosure of information to the auditor The Directors’ Statement regarding their responsibility for Each of the persons who is a Director at the date of approval of this preparing the Annual Report is set out on the following page. Annual Report confirms that: Substantial shareholders > So far as the Director is aware, there is no relevant audit The following table shows the holdings of the Company’s total information of which the Company’s auditor is unaware; and voting rights attached to the Company’s issued ordinary share > The Director has taken all steps that they ought to have taken as capital, that were notified to the Company in accordance with a Director in order to make themselves aware of any relevant DTR 5 of the FCA’s Disclosure Guidance and Transparency Rules audit information and to establish that the Company’s auditor as at 31 December 2022, together with information on further is aware of that information. notifications received by the Company as at the date of this Annual Report. It should be noted that the percentages are shown Annual General Meeting as notified and that these holdings are likely to have changed since The Annual General Meeting (‘AGM’) of the Company will be held the Company was notified, however notification of any change is at 2.15pm BST on 17 May 2023. Details of the resolutions to be not required until the next notifiable threshold is crossed. proposed at the AGM are set out in a separate Notice of Meeting together with explanatory notes set out in a separate circular. The 31 December 14 March Notice of Meeting will be sent to all shareholders entitled to receive Date of Notification 2022 % 2023 % such notice. Only members on the register of members of the Liontrust Asset 12 December Company as at close of business on 15 May 2023 (or two days Management plc 2022 11.09 11.09 before any adjourned meeting, excluding non-business days) will be Schroders plc 27 October 2022 9.87 9.87 entitled to attend and vote at the AGM. Any proxy must be lodged | Jupiter Asset | with the Company’s registrars or submitted to CREST at least | | --- | --- | | Management Limited 3 July 2020 8.85 8.85 | 48 hours, excluding non-business days, before the AGM or any | | Ameriprise Financial | adjourned meeting thereof. | Inc. 18 February 2021 5.13 5.13 Silchester International Approved by the Directors and signed on behalf of the Board. Investors LLP 17 July 2017 5.04 5.04 Vicky Hart Greenhouse gas emissions Group Company Secretary TP ICAP, as an office-based business, is not engaged in activities 14 March 2023 that are generally regarded as having a high environmental impact. However, the Board has agreed that it will seek to adopt policies to safeguard the environment to meet statutory requirements or where such policies are commercially sensible. The emission of greenhouse gases resulting from office-based business activities and business travel, is the Company’s main environmental impact and statistics relating to these emissions are set out in the Strategic report on page 70. Auditor Deloitte LLP have expressed their willingness to continue in office as auditor and a resolution to re-appoint them will be proposed at the forthcoming AGM. As outlined in the case study on page 95 and Audit Committee Report on page 111, during 2022 the Company completed a competitive tender process for the audit contract in respect of the year ending 31 December 2024. The proposal for PricewaterhouseCoopers LLP (‘PwC’) to be appointed as the Company’s new external auditor was announced on 28 July 2022 and will be presented to shareholders for approval at the 2024 Annual General Meeting. TP ICAP GROUP PLC Annual Report and Accounts 2022138 ## Statement of Directors’ responsibilities The Directors are responsible for preparing the Annual Report, Responsibility statement the Report of the Remuneration Committee and the Financial Each of the Directors, whose names and functions are set out statements in accordance with applicable law and regulations. on pages 90 to 93 and who are Directors as at the date of this Statement of Directors’ responsibilities, confirm to the best Company law requires the Directors to prepare financial statements of their knowledge that: for each financial year. Under that law, the Directors are required to prepare the Group financial statements in accordance with > The Financial Statements, prepared in accordance with the UK-adopted international accounting standards in conformity relevant financial reporting framework, give a true and fair view with the requirements of the Companies (Jersey) Law 1991 and of the assets, liabilities, financial position and profit or loss of International Financial Reporting Standards (‘IFRS’). the Company and the undertakings included in the consolidation taken as a whole; Under company law, the Directors must not approve the accounts > The Strategic report includes a fair review of the development unless they are satisfied that they give a true and fair view of the and performance of the business and the position of the state of affairs of the Company and of the profit or loss of the Company and the undertakings included in the consolidation Company for that period. taken as a whole, together with a description of the principal risks and uncertainties that it faces; and In the case of Group Financial Statements, IAS 1 requires that Directors: > The Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provide the information > Select and apply accounting policies properly; necessary for shareholders to assess the Company’s position, > Present information, including accounting policies, in a manner performance, business model and strategy. that provides relevant, reliable, comparable and understandable information; On behalf of the Board. > Provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events Nicolas Breteau and conditions on the entity’s financial position and financial Chief Executive Officer performance; and 14 March 2023 > Make an assessment of the Company’s ability to continue Governance report as a going concern. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 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 statements may differ from legislation in other jurisdictions. TP ICAP GROUP PLC Annual Report and Accounts 2022139 Independent Auditor's Report to the members of TP ICAP Group plc Report on the audit of the financial statements 1. Opinion In our opinion the financial statements of TP ICAP Group plc and its subsidiaries (the 'Group') - Give a true and fair view of the state of the Group's affairs as at 31 December 2022 and of the Group's profit for the year then ended; - Have been properly prepared in accordance with United Kingdom adopted international accounting standards and International Financial Reporting Standards (IFRSs), and - Have been properly prepared in accordance with Companies (Jersey) Law, 1993. We have audited the financial statements which comprise: - The consolidated income statement; - The consolidated statement of comprehensive income; - The consolidated balance sheet; - The consolidated statement of changes in equity; - The consolidated cash flow statement, and - The related notes to the consolidated financial statements 1 to 39. The financial reporting framework that has been applied in their preparation is applicable law, United Kingdom adopted international accounting standards and IFRSs. 2. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under these standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council's (the 'FRC's') Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services provided to the Group for the year are disclosed in note 5 to the financial statements. We confirm that we have not provided any non-audit services prohibited by the FRC's Ethical Standard to the Group. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 3. Summary of our audit approach | **Key audit matters** | The key audit matter that we identified in the current year was: - Impairment of goodwill and acquisition-related intangible assets. | | --- | --- | | **Materiality** | The materiality that we used for the Group financial statements was £8.1m (2021: £8.4m) which was determined with reference to the three-year average normalised adjusted profit before tax. | | **Scoping** | Our Group audit scope focused primarily on 7 locations (2021: 5 locations) with 22 subsidiaries (2021: 26 subsidiaries) subject to a full scope audit and 10 subsidiaries (2021: 4 subsidiaries) subject to specified audit procedures. In aggregate, these subsidiaries represent the principal business units within each of the Group's operating segments. These subsidiaries account for 88% (2021: 96%) of the Group's total assets, 91% (2021: 96%) of the Group's total liabilities, 81% (2021: 87%) of the Group's revenue and 84% (2021: 90%) of the Group's expenses. | | **Significant changes in our approach** | The acquisition of Liquidnet was finalised in the 2021 year end audit and as such is no longer considered to be a key audit matter in the current year. Consistent to the prior year, the impairment of goodwill is still considered to be a key audit matter. This key audit matter is however broadened in the current year to include the impairment of acquisition-related intangible assets. This change specifically accommodates for the impairment assessment over material intangible assets derived from prior year acquisitions and is closely linked to the impairment assessment performed over goodwill. As such we deem this change to be appropriate. | 148 TP ICAP GROUP PLC Annual Report and Accounts 2022 4. Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group’s ability to continue to adopt the going concern basis of accounting included: > Assessing the underlying data and key assumptions used to make the Directors’ assessment, including cash flow forecasts, capital and liquidity requirements; > Considering the Group’s forecasts and stressed scenarios; > Performing our own stress tests in relation to key assumptions; > Evaluating the Directors’ plans for future actions, including evaluating the feasibility of the mitigating actions that they control, including the scenario where the Group does not refinance the £247m 2024 Sterling Notes maturing in January 2024; and > Assessing the related going concern disclosures in the financial statements. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. 5. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Financial statements TP ICAP GROUP PLC Annual Report and Accounts 2022141 Independent Auditor's Report to the members of TP ICAP Group plc continued ### 5.1. Impairment of goodwill and acquisition-related intangible assets | **Key audit matter description** | The Group holds goodwill of £1,232m (2021: £1,180m) and acquisition-related intangible assets of £548m (2021: £582m), of which £122m relate to a Liquidnet client-relationship intangible asset. As a result of reduced revenue due to lower market volumes in equity block trading, an impairment of £20m was recognised on the Liquidnet client-relationship intangible asset, decreasing the balance from £144m to £122m. As detailed in the accounting policy on page 156, acquisition-related intangible assets are reviewed for indicators of impairment at each balance sheet date and, if an indicator of impairment exists, an impairment assessment is performed. Goodwill is assessed for impairment at least annually, irrespective of whether or not indicators of impairment exist. Impairment assessments are performed by comparing the carrying amount of each cash generating unit ('CGU'), or Groups of CGUs, to its recoverable amount, using the higher of the value in use ('VIU') or fair value less costs to dispose ('FVLCD'). The VIU approach was used to estimate the recoverable amount of the Global Broking, Energy and Commodities, Parameter Solutions and Agency Execution Groups of CGUs while the FVLCD approach was used to assess the recoverable amount of the Liquidnet CGU and the related customer relationships. The impairment assessment requires management judgement in the estimation of future cash flows, including revenue growth, contribution margin, and the selection of a suitable discount rate. As a result, these assessments are inherently subjective with an increased risk of material misstatement due to fraud or error. Goodwill and acquisition-related intangible assets' disclosures are included in the Significant Items section of the Financial and Operating Review Report on page 24, the Report of the Audit Committee on page 109 and Notes 3, 4 and 15 to the Consolidated Financial Statements. | | --- | --- | | **How the scope of our audit responded to the key audit matter** | We obtained an understanding of relevant controls in relation to the impairment review process for goodwill and acquisition-related intangible assets. We challenged the assumptions used in the impairment reviews, in particular the forecast revenue and contribution growth rates for Liquidnet and Agency Execution, and discount rates used by the Group in its impairment tests of the divisional Groups of CGUs. For budgeted revenue and contribution growth rate assumptions, we challenged management's assumptions with reference to recent performance, including comparing growth rates to those achieved historically and to external market data, where available. Working with our valuations specialists, we independently derived discount rates and compared these to the rates used by the Group. Additionally, we benchmarked the discount rates used by the Group to external peer data. We performed scenario analysis, stressed key assumptions with reference to historical performance, and assessed for impairment triggers between 30 September 2022 and 31 December 2022. Additionally, given the sensitivity of the VIU and FVLCD models to reasonably possible changes in the revenue and discount rate assumptions, we reviewed management's sensitivity disclosures in Note 13. We evaluated the impact of climate-related risks on the forecasts prepared by management. For acquisition-related intangible assets, we specifically tested the assumptions used by management as part of the impairment review exercise to assess whether they meet the requirements of IAS 36 'Impairment of Assets'. We challenged the key assumptions around the impairment triggers identified for the Liquidnet client-relationship, which we have assessed for reasonableness, and we evaluated the accuracy of the inputs used by management. | | **Key observations** | We concur with management's conclusion to recognise a £20m impairment with respect to the Liquidnet customer relationships. We concur with the Directors' conclusion that no goodwill impairment was required for any of the divisional Groups of CGUs or the Liquidnet CGU in the current year and concluded that the disclosures are reasonable. | 142 TP ICAP GROUP PLC Annual Report and Accounts 2022 6. Our application of materiality 6.2. Performance materiality 6.1. Materiality We set performance materiality at a level lower than materiality to We define materiality as the magnitude of misstatement in the reduce the probability that, in aggregate, uncorrected and undetected financial statements that makes it probable that the economic misstatements exceed the materiality for the financial statements decisions of a reasonably knowledgeable person would be changed as a whole. Group performance materiality was set at 65% of or influenced. We use materiality both in planning the scope of our Group materiality for the 2022 audit (2021: 65%). In determining audit work and in evaluating the results of our work. performance materiality, we considered the following factors: Based on our professional judgement, we determined materiality > The control environment remains decentralised and reliant on for the financial statements as a whole as follows: manual processes, and improvements are required to the information technology environment; Group financial statements > Our past experience of the audit, which has indicated a low number of uncorrected misstatements identified in prior periods; | Materiality £8.1m (2021: £8.4m) | | and | | --- | --- | --- | | Basis for | We have used 5% of the three-year average | > Our risk assessment, which has indicated no changes in the | | determining | normalised adjusted profit before tax as a basis | business that could affect our ability to forecast potential | | materiality | for determining materiality. We have determined | misstatements. | normalised adjusted profit before tax as profit before tax less significant items excluding 6.3. Error reporting threshold amortisation of intangible assets arising on We agreed with the Audit Committee that we would report to the consolidation. Amortisation of intangible assets Committee all audit differences in excess of £0.4m (2021: £0.4m), as arising on consolidation is a recurring cost and, well as differences below that threshold that, in our view, warranted therefore, reflects ongoing business performance. reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing Materiality equates to less than 1% (2021: less the overall presentation of the financial statements. than 1%) of total equity. Rationale for In determining the Group materiality, we the benchmark considered a number of factors, including the applied needs and interests of the users of the Group financial statements. Normalised adjusted profit before tax is considered to be the key metric for the users of the financial statements and, as detailed above, we have used a three-year average in the current year as it is a more stable metric considering the volatility of profits in recent years. Financial statements TP ICAP GROUP PLC Annual Report and Accounts 2022143 Independent Auditor’s Report to the members of TP ICAP Group plc continued 7. An overview of the scope of our audit 7.2. Our consideration of the control environment 7.1. Identification and scoping of components The Group uses a number of different IT systems across components, Our Group audit scope focused primarily on 7 locations (2021: 5 and we worked with our IT specialists to test the General IT controls locations) with 22 subsidiaries (2021: 26 subsidiaries) subject to for relevant systems. Although we rely on controls for certain a full scope audit and 10 subsidiaries (2021: 4 subsidiaries) subject revenue streams, the control environment remains decentralised, to specified audit procedures. In aggregate, these subsidiaries reliant on manual processes to mitigate IT control deficiencies and represent the principal business units within each of the Group’s further improvements are required in order for us to adopt a wider operating segments. controls-reliant approach across the Group. These subsidiaries account for 88% (2021: 96%) of the Group’s total 7.3. Our consideration of climate-related risks assets, 91% (2021: 96%) of the Group’s total liabilities, 81% (2021: In planning our audit, we have considered the potential impact 87%) of the Group’s revenue and 84% (2021: 90%) of the Group’s of climate change on the Group’s business and its financial expenses. There has not been any significant changes to our audit statements. The Group continues to develop its assessment of and approach compared to prior year. response to the potential impacts of environmental, social and governance (‘ESG’) related risks, including climate change, as The subsidiaries were selected based on their quantitative outlined in the Sustainability Report and the Task Force on Climate- contribution to the Group and qualitative risk factors. Our audits related Financial Disclosures (‘TCFD’). of each of the subsidiaries were performed using lower levels of materiality based on their size relative to the Group. The materiality We held discussions with management to understand the process for each subsidiary audit ranged from £2.6m to £3.1m (2021: £2.7m for identifying climate-related risks, the consideration of mitigating to £3.3m). We tested the Group’s consolidation process and carried actions and the impact on the Group’s financial statements which out analytical procedures to confirm that there were no significant can we found in the Task Force on Climate-related Financial risks of material misstatement in the aggregated financial Disclosures (‘TCFD’) section of the Sustainability report and Note 13 information of the remaining subsidiaries not subject to a full scope to the financial statements. Management do not expect any audit or specified audit procedures. material climate change-related financial impact on their business. We performed our own qualitative risk assessment of the potential impact of climate change on the Group’s account balances and classes of transactions based on our understanding of the nature | Assets Liabilities | | | | | | of the Group’s underlying operations. | | --- | --- | --- | --- | --- | --- | --- | | | | | 1 | | 1 | | | | | | | 2 3 | | | | | | 3 | | | | We read the climate-related disclosures included in the annual | | | 2 | | | | | report and considered whether they are materially consistent with | the financial statements and our knowledge obtained in the audit. 7.4. Working with other auditors The Group audit team maintained dialogue with all component auditors throughout all phases of the audit and received written reports from component auditors setting out the results of their audit procedures. The Senior Statutory Auditor met with key members of overseas management in person and remotely. The | 1 Full audit scope 83% | 1 Full audit scope 90% | | | --- | --- | --- | | 2 Specified audit procedures 5% | 2 Specified audit procedures 1% | Group audit team performed a file review of the work performed | | 3 Analytical review at Group level 12% | 3 Analytical review at Group level 9% | by all component auditors. | 8. Other information The other information comprises the information included in the annual report including the Strategic report and the Governance Revenue Expenses Report, other than the financial statements and our auditor’s report 1 1 thereon. The Directors are responsible for the other information 3 contained within the annual report. 3 2 Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of | 1 Full audit scope 81% | 1 Full audit scope 77% | the audit, or otherwise appears to be materially misstated. | | --- | --- | --- | | 2 Specified audit procedures 0% | 2 Specified audit procedures 7% | | | 3 Analytical review at Group level 19% | 3 Analytical review at Group level 16% | | If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. TP ICAP GROUP PLC Annual Report and Accounts 2022144 9. Responsibilities of Directors > the internal controls established to mitigate risks of fraud or As explained more fully in the statement of Directors’ responsibilities, non-compliance with laws and regulations; and the Directors are responsible for the preparation of the financial > The matters discussed among the audit engagement team statements and for being satisfied that they give a true and fair including significant component audit teams and relevant view, and for such internal control as the Directors determine is internal specialists, including tax, valuations, pensions, IT necessary to enable the preparation of financial statements that specialist regarding how and where fraud might occur in the are free from material misstatement, whether due to fraud or error. financial statements and any potential indicators of fraud. In preparing the financial statements, the Directors are responsible As a result of these procedures, we considered the opportunities for assessing the Group’s ability to continue as a going concern, and incentives that may exist within the organisation for fraud and disclosing as applicable, matters related to going concern and identified the greatest potential for fraud in the impairment of using the going concern basis of accounting unless the Directors goodwill and acquisition-related intangible assets. In common with either intend to liquidate the Group or to cease operations, or have all audits under ISAs (UK), we are also required to perform specific no realistic alternative but to do so. procedures to respond to the risk of management override. 10. Auditor’s responsibilities for the audit of the financial We also obtained an understanding of the legal and regulatory statements frameworks that the Group operates in, focusing on provisions Our objectives are to obtain reasonable assurance about whether the of those laws and regulations that had a direct effect on the financial statements as a whole are free from material misstatement, determination of material amounts and disclosures in the financial whether due to fraud or error, and to issue an auditor’s report that statements. The key laws and regulations we considered in this includes our opinion. Reasonable assurance is a high level of context included the Companies (Jersey) Law, 1991, UK Companies assurance, but is not a guarantee that an audit conducted in Act, Listing Rules, FCA regulations, pensions legislation and accordance with ISAs (UK) will always detect a material tax legislation. misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, In addition, we considered provisions of other laws and regulations they could reasonably be expected to influence the economic that do not have a direct effect on the financial statements but decisions of users taken on the basis of these financial statements. compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: 11.2. Audit response to risks identified www.frc.org.uk/auditorsresponsibilities. This description forms As a result of performing the above, we identified impairment of part of our auditor’s report. goodwill and acquisition-related intangible assets a key audit matter related to the potential risk of fraud. The key audit matters 11. Extent to which the audit was considered capable section of our report explains the matter in more detail and also of detecting irregularities, including fraud describes the specific procedures we performed in response to that Irregularities, including fraud, are instances of non-compliance with key audit matter. laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in In addition to the above, our procedures to respond to risks Financial statements respect of irregularities, including fraud. The extent to which our identified included the following: procedures are capable of detecting irregularities, including fraud is detailed below. > Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions 11.1. Identifying and assessing potential risks related of relevant laws and regulations described as having a direct to irregularities effect on the financial statements; In identifying and assessing risks of material misstatement in > Enquiring of management, the audit committee and in-house/ respect of irregularities, including fraud and non-compliance with external legal counsel concerning actual and potential litigation laws and regulations, we considered the following: and claims; > Performing analytical procedures to identify any unusual or > The nature of the industry and sector, control environment and unexpected relationships that may indicate risks of material business performance including the design of the Group’s misstatement due to fraud; remuneration policies, key drivers for Directors’ remuneration, > Reading minutes of meetings of those charged with governance, bonus levels and performance targets; reviewing internal audit reports and reviewing correspondence > The Group’s own assessment of the risks that irregularities may with HMRC and regulators, including the FCA; and occur either as a result of fraud or error that was approved by the > In addressing the risk of fraud through management override of Board on 8 March 2023; controls, testing the appropriateness of journal entries and other > Results of our enquiries of management, internal audit, the adjustments; assessing whether the judgements made in making Directors and the audit committee about their own identification accounting estimates are indicative of a potential bias; and and assessment of the risks of irregularities including those that evaluating the business rationale of any significant transactions are specific to the group’s sector; that are unusual or outside the normal course of business. > Any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to: We also communicated relevant identified laws and regulations > identifying, evaluating and complying with laws and and potential fraud risks to all engagement team members regulations and whether they were aware of any instances of including internal specialists and significant component audit non-compliance, including their assessment of open litigation teams, and remained alert to any indications of fraud or non- and regulatory matters as disclosed in note 27 and note 36; compliance with laws and regulations throughout the audit. > detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; TP ICAP GROUP PLC Annual Report and Accounts 2022145 Independent Auditor's Report to the members of TP ICAP Group plc continued # Report on other legal and regulatory requirements # 13. Opinion on other matter prescribed by our engagement letter In our opinion the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the provisions of the UK Companies Act 2006 as if that Act had applied to the Group. # 13. Corporate Governance Statement The Listing Rules require us to review the Directors' statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Group's compliance with the provisions of the UK Corporate Governance Code specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit: - The Directors' statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 71. - The Directors' explanation as to its assessment of the Group's prospects, the period this assessment covers and why the period is appropriate set out on page 71. - The Directors' statement on fair, balanced and understandable set out on page 139. - The Board's confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 71. - The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 72, and - The section describing the work of the audit committee set out on page 109. # 14. Matters on which we are required to report by exception 14.1. Adequacy of explanations received and accounting records Under the Companies (Jersey) Law, 1991 we are required to report to you if, in our opinion, - We have not received all the information and explanations we require for our audit, or - Proper accounting records have not been kept, or proper returns adequate for our audit have not been received from branches not visited by us, or - The financial statements are not in agreement with the accounting records and returns. We have nothing to report in respect of these matters. # 15. Other matters which we are required to address # 15.1. Auditor tenure Following the recommendation of the audit committee, we were appointed by a predecessor company of the Group in 2001 to audit the financial statements for the year ending 31 December 2001 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 22 years, covering the years ending 31 December 2001 to 31 December 2022. # 15.2. Consistency of the audit report with the additional report to the audit committee Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISAs (UK). # 16. Use of our report This report is made solely to the Company's members, as a body, in accordance with Article 113A of the Companies (Jersey) Law, 1991. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and/or those matters we have expressly agreed to report to them on in our engagement letter and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed. As required by the Financial Conduct Authority ('FCA') Disclosure Guidance and Transparency Rule ('DTR') 4.1.14R, these financial statements form part of the European Single Electronic Format ('ESEF') prepared Annual Financial Report filed on the National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard ('ESEF RTS'). This auditor's report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS. Fiona Walker, FCA (Senior Statutory Auditor) Far and on behalf of Deloitte LLP Recognised Auditor London, United Kingdom 14 March 2023 146 TP ICAP GROUP PLC Annual Report and Accounts 2022 # Consolidated Income Statement for the year ended 31 December 2022 | | Note | 2022 £m | 2021 £m | | --- | --- | --- | --- | | **Revenue** | 4 | **2,115** | 1,865 | | Employment, compensation and benefits | | **(1,320)** | (1,152) | | General and administrative expenses | | **(506)** | (476) | | Depreciation and impairment of property, plant and equipment and right-of-use assets | | **(58)** | (68) | | Amortisation and impairment of intangible assets | | **(98)** | (82) | | Impairment of other assets | | **-** | - | | **Total operating costs** | 5 | **(1,982)** | (1,778) | | Other operating income | 6 | **30** | 10 | | **EBIT/operating profit** | | **163** | 97 | | Finance income | 8 | **8** | 3 | | Finance costs | 9 | **(58)** | (76) | | **Profit before tax** | | **113** | 24 | | Taxation | 10 | **(36)** | (23) | | **Profit after tax** | | **77** | 1 | | Share of results of associates and joint ventures | 17,18 | **29** | 7 | | **Profit for the year** | | **106** | 8 | | **Attributable to:** | | | | | Equity holders of the parent | | **103** | 5 | | Non-controlling interests | | **3** | 3 | | | | **106** | 8 | | **Earnings per share** | | | | | - Basic | 11 | **13.2p** | 0.7p | | - Diluted | 11 | **13.0p** | 0.7p | Financial Report 147 TP (CAP GROUP PLC Annual Report and Accounts 2022 ## Consolidated Statement of Comprehensive Income for the year ended 31 December 2022 2022 2021 Notes £m £m Profit for the year 106 8 Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit pension schemes 37(a) – 3 Equity instruments at FVTOCI – net change in fair value 19 – 1 – 4 Items that may be reclassified subsequently to profit or loss: Fair value movements on net investment hedge – 3 Effect of changes in exchange rates on translation of foreign operations 153 1 Taxation 10 (5) (1) 148 3 Other comprehensive income for the year 148 7 Total comprehensive income for the year 254 15 Attributable to: Equity holders of the parent 250 12 Non-controlling interests 4 3 254 15 TP ICAP GROUP PLC Annual Report and Accounts 2022148 ## Consolidated Balance Sheet as at 31 December 2022 | | 31 December | | 31 December | | | --- | --- | --- | --- | --- | | | | 2022 | | 2021 | | Notes | | £m | | £m | Non-current assets Intangible assets arising on consolidation 13 1,78 0 1,76 2 Other intangible assets 14 97 91 Property, plant and equipment 15 110 123 Right-of-use assets 16 165 187 Investment in associates 17 63 51 Investment in joint ventures 18 34 28 Other investments 19 23 21 Deferred tax assets 21 15 17 Retirement benefit assets 37 1 1 Other long-term receivables 22 51 44 2,3 39 2,325 Current assets Trade and other receivables 22 2, 198 2,068 Financial assets at fair value through profit or loss 24 264 158 Financial investments 20 1 74 115 Cash and cash equivalents 35 888 784 3,5 24 3 , 125 Total assets 5, 863 5 ,450 Current liabilities Trade and other payables 23 (2, 149) ( 1,9 7 7) Financial liabilities at fair value through profit or loss 24 (255) (120) Loans and borrowings 25 (9) (77) Lease liabilities 26 (29) (34) Derivative financial instruments 29(a) – (1) Current tax liabilities (37) (28) Short-term provisions 27 (9) (5) (2, 488) (2,242) Net current assets 1,03 6 883 Non-current liabilities Loans and borrowings 25 (785) (7 79) Lease liabilities 26 (250) (252) Deferred tax liabilities 21 (85) (1 07) Long-term provisions 27 (31) (38) Other long-term payables 28 (60) (53) Financial statements Retirement benefit obligations 37 (3) (1) (1 ,214) (1 ,230) Total liabilities (3,70 2) (3 ,472) Net assets 2, 161 1 ,9 7 8 Equity Share capital 30,31(a) 197 197 Other reserves 31(b) (854) (1 , 005) Retained earnings 31(c) 2,800 2 ,7 6 9 Equity attributable to equity holders of the parent 31(c) 2, 143 1,9 6 1 Non-controlling interests 31(c) 18 17 Total equity 2, 161 1,9 7 8 The Consolidated Financial Statements of TP ICAP Group plc (registered number 130617) were approved by the Board of Directors and authorised for issue on 14 March 2023 and are signed on its behalf by Nicolas Breteau Chief Executive Officer TP ICAP GROUP PLC Annual Report and Accounts 2022149 ## Consolidated Statement of Changes in Equity for the year ended 31 December 2022 | | Equity attributable to equity holders of the parent (Note 31) | | | | | | | | | | Note 31(a) | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share capital £m | Share premium account £m | Margin reserve £m | Revenue acquisition reserve £m | Re-organization reserve £m | Re-valuation reserve £m | Hedging and translation £m | Own shares £m | Retained earnings £m | Total £m | Non-controlling interests £m | Total equity £m | | **2022** | | | | | | | | | | | | | | Balance at 1 January 2022 | 197 | - | - | - | (946) | 5 | (38) | (26) | 2,769 | 1,961 | 17 | 1,978 | | Profit for the year | - | - | - | - | - | - | - | - | 103 | 103 | 3 | 106 | | Other comprehensive income for the year | - | - | - | - | - | - | 147 | - | - | 147 | 1 | 148 | | Total comprehensive income for the year | - | - | - | - | - | - | 147 | - | 103 | 250 | 4 | 254 | | Dividends paid | - | - | - | - | - | - | - | - | (78) | (78) | (3) | (81) | | Share settlement of share-based awards | - | - | - | - | - | - | - | 7 | (7) | - | - | - | | Own shares acquired for employee trusts | - | - | - | - | - | - | - | (3) | - | (3) | - | (3) | | Credit arising on share-based awards | - | - | - | - | - | - | - | - | 13 | 13 | - | 13 | | Balance at 31 December 2022 | 197 | - | - | - | (946) | 5 | 109 | (22) | 2,800 | 2,143 | 18 | 2,161 | 156 TPJCAP GROUP PLC Annual Report and Accounts 2022 # Consolidated Statement of Changes in Equity for the year ended 31 December 2023 continued | | Equity attributable to equity holders of the parent (Note 31) | Note 31(a) | | --- | --- | --- | | Share capital £m | Share premium amount £m | Margin reserve £m | Revenue population reserve £m | Re-oxygen number reserve £m | Re- valuation reserve £m | Holding and translation £m | Own shares £m | Restricted earnings £m | Total £m | Non-controlling interest £m | Total equity £m | | **2021** | | Balance at 1 January 2021 | 141 | 17 | 1,384 | (1,182) | - | 4 | (41) | (27) | 1,383 | 1,679 | 19 | | Profit for the year | - | - | - | - | - | - | - | - | 5 | 5 | 3 | | Other comprehensive income for the year | - | - | - | - | - | 1 | 3 | - | 3 | 7 | - | | Total comprehensive income for the year | - | - | - | - | - | 1 | 3 | - | 8 | 12 | 3 | | Rights issue | 56 | 259 | - | - | - | - | - | - | - | 315 | - | | Rights issue costs | - | (6) | - | - | - | - | - | - | - | (6) | - | | Scheme of Arrangement: | | | | | | | | | | | | | Conceitation of existing shares and reserves | (197) | (270) | (1,384) | 1,182 | 669 | - | - | - | - | - | - | | Scheme of Arrangement: Issue of ordinary shares | 197 | 1,418 | - | - | (1,615) | - | - | - | - | - | - | | Capital reduction | - | (1,418) | - | - | - | - | - | - | 1,418 | - | - | | Dividends paid | - | - | - | - | - | - | - | - | (47) | (47) | (2) | | Share settlement of share-based awards | - | - | - | - | - | - | - | 3 | (3) | - | - | | Own shares acquired for employee trusts | - | - | - | - | - | - | - | (2) | - | (2) | - | | Decrease in non-controlling interests | - | - | - | - | - | - | - | - | - | - | (3) | | Credit arising on share-based awards | - | - | - | - | - | - | - | - | 10 | 10 | - | | Balance at 31 December 2021 | 197 | - | - | - | (946) | 5 | (38) | (26) | 2,769 | 1,961 | 17 | 151 TP ICAP GROUP PLC Annual Report and Accounts 2022 T E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O P E A R O # Consolidated Cash Flow Statement for the year ended 31 December 2022 | | 1st Qtr. | 2022 £m | 2021 £m | | --- | --- | --- | --- | | **Net cash flow from operating activities** | 34 | **324** | 111 | | **Investing activities** | | | | | (Purchase)/sale of financial investments | 35 | **(50)** | 11 | | Settlement of derivative financial instruments^{1} | | - | 5 | | Interest received | | 7 | 2 | | Dividends from associates and joint ventures | 17,18 | 15 | 15 | | Expenditure on intangible fixed assets | 14 | **(35)** | (35) | | Purchase of property, plant and equipment | 15 | **(18)** | (23) | | Sale of property, plant and equipment | | 12 | - | | Deferred consideration paid | 33 | **(10)** | (14) | | Disposal/(investment) in associates and joint ventures | 17,18 | 1 | (1) | | Acquisition consideration paid | | - | (451) | | Cash acquired with acquisitions | | - | 202 | | **Net cash flow from investment activities** | | **(78)** | (289) | | **Financing activities** | | | | | Dividends paid | 12 | **(78)** | (47) | | Dividends paid to non-controlling interests | 31(1) | **(3)** | (2) | | Proceeds of rights issue | | - | 315 | | Issue costs of rights issue | | - | (6) | | Purchase of non-controlling interest | | - | (3) | | Own shares acquired for employee trusts | 31(1) | **(3)** | (2) | | Net repayment of bank loans^{2} | 35 | - | (5) | | Net (repayment)/borrowing of loans from related parties^{2} | 35 | **(47)** | 27 | | Funds received from issue of Sterling Notes | | - | 249 | | Repurchase of Sterling Notes^{3} | | - | (200) | | Bank facility arrangement fees and debt issue costs | | **(3)** | (2) | | Payment of lease liabilities | 35 | **(29)** | (28) | | **Net cash flow from financing activities** | | **(163)** | 296 | | **Increase in cash and overdrafts** | 35 | **83** | 118 | | **Cash and overdrafts at the beginning of the year** | | **767** | 649 | | Effect of foreign exchange rate changes | 35 | **38** | - | | **Cash and overdrafts at the end of the year** | 35 | **888** | 767 | | Cash and cash equivalents | 35 | **888** | 784 | | Overdrafts | 35 | - | (17) | | | | **888** | 767 | 1 Relates to foreign exchange derivatives undertaken in 2021 in respect of acquisition cash flows. 2 The Group utilizes credit facilities throughout the year, ensuring that numerous short-term bank and other loans where maturities are less than three months. The turnover is paid and the volume is large and excellent flows are presented net. Further details are set out in Note 23. 3 Relates to the repurchase of £188m of Sterling Notes 2022 (Note 25) plus £1km of premium paid in 2021. The premium paid is reported as part financing activities, rather than operating activities. Interest paid is reported as a cash outflow from operating activities. 152 TP/ICAP GROUP PLC Annual Report and Accounts 2022 # Notes to the Consolidated Financial Statements for the year ended 31 December 2022 ## 1. General information As at 31 December 2022 TP ICAP Group plc (the 'Company') was a public company limited by shares incorporated in Jersey under the Companies (Jersey) Law 1991. During 2021 following a Scheme of Arrangement, described in Note 2(c), TP ICAP Group plc acquired the entire share capital of TP ICAP plc, resulting in TP ICAP Group plc becoming the Group's ultimate parent undertaking. The address of the registered offices of the Company is given on page 221. The nature of the Group's operations and its principal activities are set out in the Directors' report on pages 136 to 138 and in the Strategic Report on pages 6 to 81. The Company has taken advantage of the exemption provided in Article 105 (1) of the Companies (Jersey) Law 1991 and therefore does not present its individual financial statements and related notes. ## 2. Basis of preparation ### (a) Basis of accounting The Group's Consolidated Financial Statements have been prepared in accordance with UK adopted International Accounting Standards in conformity with the requirements of the Companies (Jersey) Law 1991. The Financial Statements are presented in Pounds Sterling because that is the currency of the primary economic environment in which the Group operates and are rounded to the nearest million pounds (expressed as £m), except where otherwise indicated. The significant accounting policies are set out in Note 3. The Financial Statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments held at fair values at the end of each reporting period, as explained in the accounting policies. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these Consolidated Financial Statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IFRS 16, and measurements that have some similarities to fair value but are not fair value, such as value in use in IAS 36. For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: - Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; - Level 2 inputs are 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 - Level 3 inputs are unobservable inputs for the asset or liability. ### (b) Basis of consolidation The Group's Consolidated Financial Statements incorporate the Financial Statements of the Company and entities controlled by the Company made up to 31 December each year. Under IFRS 10 'Consolidated Financial Statements', 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. The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All inter company transactions, balances, income and expenses are eliminated on consolidation. Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. These interests of non-controlling shareholders that are present ownership interest, entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non-controlling interests proportionate share of the fair value of the acquiree's identifiable net assets. Other non-controlling interests are initially measured at fair value. The choice of measurement is made on an acquisition by acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interest having a deficit balance. Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any differences between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company. When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets, including goodwill, less liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control was lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity. 153 TP ICAP GROUP PLC Annual Report and Accounts 2022 Notes to the Consolidated Financial Statements continued for this year ended 31 December 2022 ## 2. Basis of preparation continued ### (c) Corporate reorganisation In February 2021 the Group adjusted its corporate structure. TP ICAP Group plc was incorporated in Jersey on 23 December 2019 and became the new listed holding company of the Group on 26 February 2021 via a court-approved scheme of arrangement under Part 26 of the UK Companies Act 2006, with the former holding company. TP ICAP plc subsequently being renamed TP ICAP Limited, and now renamed TP ICAP Finance plc. Under the scheme of arrangement, shares in the former holding company of the Group were cancelled and the same number of new ordinary shares were issued to the new holding company in consideration for the attainment to shareholders of one ordinary share of 25 pence in the new holding company for each ordinary share of 25 pence they held in the former holding company. On 26 February 2021, TP ICAP Group plc effected a reduction of its share capital by cancelling its share premium and recognising an equivalent increase in the profit and loss account in reserves. The share for share exchange between TP ICAP plc and TP ICAP Group plc was a common control transaction and has been accounted for using merger accounting principles. Under these principles the results and cash flows of all the combining entities are brought into the consolidated financial statements from the beginning of the financial year in which the combination occurs and comparative figures also reflect the combination of the entities. The Group's equity is adjusted to reflect that of the new holding company, but in all other aspects the Group results and financial position are unaffected by the change and reflect the continuation of the Group. ### (d) Going concern The Directors of the Company have, at the time of approving the Financial Statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adapt the going concern basis of accounting in preparing the Group's Consolidated Financial Statements. Further detail is contained in the going concern section and viability statement included in the Strategic Report on page 71. ### (e) Adoption of new and revised Standards The following new and revised Standards and Interpretations have been endorsed by the UK Endorsement Board and are effective from 1 January 2022 but they do not have a material effect on the Group's Consolidated Financial Statements. - > Amendment to IFRS 3 'Business Combinations'; - > Amendments to IAS 16 'Property, Plant and Equipment'; - > Amendments to IAS 37 'Provisions, Contingent Liabilities and Contingent Assets'; and - > Annual Improvements 2018-2020. At the date of authorisation of these Consolidated Financial Statements, the following new and revised Standards and Interpretations were in issue but not yet effective. The Group has not applied these Standards or Interpretations in the preparation of these Consolidated Financial Statements. - > IFRS 17 'Insurance Contracts' including Amendments to IFRS 17; - > Amendments to IAS 12 'Income Taxes', Liabilities arising from a Single Transaction; - > Amendments to IAS 8 'Accounting policies', Changes in Accounting Estimates and Errors – Definition of Accounting Estimates; and - > Amendments to IAS 1 'Presentation of Financial Statements' and IFRS Practice Statement 2 – 'Disclosure of Accounting policies'. The following Standards and Interpretations have not been endorsed by the UK and have not been applied in the preparation of these Consolidated Financial Statements: - > Classification of Liabilities as Current or Non-current (including the amendment deferring the effective date) and non-current Liabilities with Covenants; and - > Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback. The Directors do not expect the adoption of the above Standards and Interpretations will have a material impact on the Consolidated Financial Statements of the Group in future periods. ## 3. Summary of significant accounting policies ### (a) Income recognition Revenue, which excludes sales taxes, includes brokerage including commissions, fees earned and subscriptions for information sales. Fee income is recognised when the related services are completed and the income is considered receivable. Each segment comprises the following types of revenue: - (i) Name Passing brokerage, where counterparties to a transaction settle directly with each other. Revenue for the service of matching buyers and sellers of financial instruments is stated net of sales taxes, rebates and discounts and is recognised in full on trade date (point in time recognition); - (ii) Matched/Principal brokerage revenue, being the net proceeds from a commitment to simultaneously buy and sell financial instruments with counterparties, is recognised on settlement date. - (iii) Executing Broker brokerage, where the Group executes transactions on certain regulated exchanges and then 'gives up' the trade to the relevant client, or its clearing member. Revenue for the service of matching buyers and sellers of financial instruments is stated net of sales taxes, rebates and discounts and is recognised in full on trade date (point in time recognition); - (iv) Introducing Broker brokerage, where the Group arranges matched transactions where the counterparties transact through a third-party clearing entity acting as principal. Revenue for the service of matching buyers and sellers of financial instruments is stated net of sales taxes, rebates and discounts and is recognised in full on trade date (point in time recognition); - (v) Fees earned from the sales of price information from financial and commodity markets to third parties are recognised on an accruals basis to match the provision of the service (recognised over time). In relation to these contracts the Group has a right to consideration in an amount that corresponds directly with the value to the customer of the Group's performance completed to date. In respect of contracts for the sale of price information from financial and commodity markets, the Group has applied the practical expedient in IFRS 15, allowing for the non-disclosure of both the amount of the transaction price allocated to the remaining performance obligations, and an explanation of when it expects to recognise that amount; and - (vi) Fees from the sales of price information from financial and commodity markets that are provided over time, but which are contingent on the validation of price information usage, are recognised once usage has been verified (point in time). 154 TP ICAP GROUP PLC Annual Report and Accounts 2022 Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. Dividend income from investments is recognised when the Group’s right to receive the payment is established. (b) Business combinations Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition costs are recognised in profit or loss as incurred. Where applicable, deferred consideration for the acquisition includes any asset or liability resulting from a non-contingent or contingent consideration arrangement, measured at its acquisition date fair value. Subsequent changes in such fair values of contingent consideration are adjusted against the cost of the acquisition where they qualify as measurement period adjustments. The measurement period is the period from the date of acquisition to the date the Group obtains complete information about the facts and circumstances that existed as of the acquisition date, and is subject to a maximum of one year. All subsequent changes in the fair value of contingent consideration classified as an asset or a liability are accounted for in accordance with relevant IFRSs. The cash settlement of deferred consideration is reported as part of investing activities in the cash flow. Deferred consideration classified as equity is not remeasured (outside of the measurement period) with subsequent settlement accounted for within equity. Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date and any resulting gain or loss is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest was disposed of. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 (2008) are recognised at their fair value at the acquisition date, except that: > Deferred tax assets or liabilities are recognised and measured in accordance with IAS 12 ‘Income Taxes’; > Liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 19 ‘Employee Benefits’; > Acquiree share-based payment awards replaced by Group awards are measured in accordance with IFRS 2 ‘Share-based Payments’; > Assets or disposal groups that are classified for sale are measured in accordance with IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’; and > Lease liabilities are valued based on the present value of the remaining lease payments. Right-of-use-assets are measured at the same amount of the lease liability, adjusted to reflect favourable or unfavourable terms of the lease when compared with market terms. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, provisional amounts are reported. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities recognised, to reflect the facts and circumstances that existed as at the acquisition date. Non-controlling interests in the acquired entity are initially measured at the non-controlling interest’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised. (c) Investment in associates An associate is an entity over which the Group is in a position to exercise significant influence. Significant influence is the power to participate in the financial and operating decisions of the investee but is not control or joint control over these policies. The results and assets and liabilities of associates are incorporated in these Financial Statements based on financial information made up to 31 December each year using the equity method of accounting, except when classified as held for sale. Investments in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of the associates in excess of the Group’s interest in those associates are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost of acquisition over the Group’s share of the fair values of the identifiable net assets of the associate at the date of acquisition is recognised as goodwill, which is included within the carrying amount of the investment. Any discount in the cost of acquisition below the Group’s share of the fair value of the identifiable net assets of the associate at the date of acquisition (discount on acquisition) is credited to profit and loss in the year of acquisition. Where a Group company transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate. Losses may provide evidence of impairment of the asset transferred in which case appropriate provision is made for impairment. (d) Interests in joint arrangements A joint arrangement is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control. Joint ventures are joint arrangements which involve the establishment of a separate entity in which each party has rights to the net assets of the arrangement. The Group reports its interests in joint ventures using the equity method of accounting, based on financial information made up to 31 December each year. Investments in joint ventures are carried in the balance sheet at cost as adjusted by post-acquisition changes in the Group’s share of the net assets of the joint venture, less any impairment in the value of individual investments. Losses of the joint venture in excess of the Group’s interest in those joint ventures are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments under the terms of the joint venture. (e) Goodwill Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary or associate at the date of acquisition. Goodwill is initially recognised at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts at that date. Financial statements TP ICAP GROUP PLC Annual Report and Accounts 2022155 Notes to the Co nsolidated Financial Statements continued for the year ended 31 December 2022 TP ICAP GROUP PLC Annual Report and Accounts 2022156 3. Summary of significant accounting policies continued (e) Goodwill continued Goodwill recognised as an asset is reviewed for impairment at least annually. Any impairment loss is recognised as an expense immediately and is not subsequently reversed. For the purpose of impairment testing goodwill is allocated to groups of individual cash-generating units (‘CGUs’) expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than the carrying amount of any goodwill allocated to the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Goodwill arising on the acquisition of an associate or joint venture is included within the carrying value of the associate or the joint venture. Goodwill arising on the acquisition of subsidiaries is presented separately in the balance sheet. On disposal of a subsidiary, associate or joint venture, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. (f) Intangible assets Software and software development costs An internally generated intangible asset arising from the Group’s software development is recognised at cost only if all of the following conditions are met: > An asset is created that can be identified; > It is probable that the asset created will generate future economic benefits; and > The development costs of the asset can be measured reliably. Where the above conditions are not met, costs are expensed as incurred. Acquired separately or from a business combination Intangible assets acquired separately are capitalised at cost and intangible assets acquired in a business acquisition are capitalised at fair value at the date of acquisition. The useful lives of these intangible assets are assessed to be either finite or indefinite. Amortisation charged on assets with a finite useful life is taken to the income statement through administrative expenses. Other than software development costs, intangible assets created within the business are not capitalised and expenditure is charged to the income statement in the year in which the expenditure is incurred. Intangible assets are amortised over their finite useful lives generally on a straight-line basis, as follows: Software: Purchased or developed – up to 5 years Software licences – over the period of the licence Acquisition intangibles: Brand/Trademarks – up to 5 years Customer relationships – 2 to 20 years Other intangibles – over the period of the contract Intangible assets are subject to impairment review if there are events or changes in circumstances that indicate that the carrying amount may not be recoverable. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised. (g) Property, plant and equipment Freehold land is stated at cost. Buildings, furniture, fixtures, equipment and motor vehicles are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value based on prices prevailing at the date of acquisition, of each asset on a straight-line basis over its expected useful life as follows: Furniture, fixtures, equipment and motor vehicles – 3 to 10 years Short and long leasehold land and buildings – period of the lease Freehold land – infinite Freehold buildings – 50 years Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income. (h) Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets with finite lives to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the CGU to which the asset belongs. Intangible assets with indefinite useful lives are tested for impairment annually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less any cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present values using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or CGU) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Financial statements TP ICAP GROUP PLC Annual Report and Accounts 2022157 (i) Broker contract payments Payments made to brokers under employment contracts which are in advance of the expected economic benefit due to the Group are accounted for as prepayments and included within trade and other receivables. Payments made in advance are subject to repayment conditions during the contract period and the prepayment is amortised over the shorter of the contract term and the period the payment remains recoverable. Amounts that are irrecoverable, or become irrecoverable, are written off immediately. Payments made in arrears are accrued and are included within trade and other payables. (j) Financial instruments Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities subsequently measured at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities that are subsequently measured at fair value through profit or loss are recognised immediately in profit or loss. All regular way purchases or sales of financial assets are recognised and derecognised on a settlement date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets. Classification of financial assets The classification of financial assets is based both on the business model within which the asset is held and the contractual cash flow characteristics of the asset. Debt instruments that meet the following conditions are measured subsequently at amortised cost: > The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and > The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (‘FVTOCI’): > The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and > The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. By default, all other financial assets are measured subsequently at fair value through profit or loss (‘FVTPL’). The Group may make the following irrevocable elections or designations at initial recognition of a financial asset: > To irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if certain criteria are met; and > To irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch. Debt instruments at FVTOCI Debt instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, changes in the carrying amount as a result of foreign exchange gains and losses, impairment gains or losses, and interest income calculated using the effective interest method are recognised in profit or loss. All other changes in the carrying amount of these corporate bonds are recognised in other comprehensive income and accumulated in the revaluation reserve. When such assets are derecognised, the cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss. Equity instruments at FVTOCI On initial recognition, the Group may make an irrevocable election, on an instrument-by-instrument basis, to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognised by an acquirer in a business combination. A financial asset is held for trading if: > It has been acquired principally for the purpose of selling it in the near term; or > On initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has evidence of a recent actual pattern of short-term profit-taking; or > It is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument. Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the revaluation reserve. The cumulative gain or loss is not reclassified to profit or loss on disposal of the equity investments, instead, it is transferred to retained earnings. Dividends on these investments in equity instruments are recognised in profit or loss unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included as finance income in profit or loss. The Group has designated all investments in equity instruments that are not held for trading as at FVTOCI on initial application of IFRS 9. Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 TP ICAP GROUP PLC Annual Report and Accounts 2022158 3. Summary of significant accounting policies continued (j) Financial instruments continued Financial assets at FVTPL Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL. Specifically: > Financial assets held for trading, having been acquired for the purpose of fulfilling a sell commitment either immediately meeting or in the very near term. Regular way purchases are recognised at fair value on settlement date, however fair value movements between trade date and settlement date are recognised in profit or loss with the associated asset or liability recorded in financial assets or financial liabilities at fair value through profit or loss until the asset is recognised; > Investments in equity instruments are classified as at FVTPL, unless the Group designates an equity investment that is neither held for trading nor a contingent consideration arising from a business combination as at FVTOCI on initial recognition; and > Debt instruments that do not meet the amortised cost criteria or the FVTOCI criteria are classified as at FVTPL. Debt instruments that meet either the amortised cost criteria or the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The Group has not designated any debt instruments as at FVTPL. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss to the extent they are not part of a designated hedging relationship. The net gain or loss recognised in profit or loss includes any dividend or interest earned on the financial asset and is included in finance income. Derecognition of financial assets The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. On derecognition of an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. On derecognition of an investment in equity instrument which the Group has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings. Impairment of financial assets The Group recognises a loss allowance for expected credit losses (‘ECL’) on investments in debt instruments that are measured at amortised cost or at FVTOCI, lease receivables, trade receivables and contract assets. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The Group always recognises lifetime ECL for trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, 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, including time value of money where appropriate. For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. Significant increase in credit risk In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. The following information is taken into account when assessing whether credit risk has increased significantly since initial recognition: > An actual or expected significant deterioration in the financial instrument’s external or internal credit rating; > Significant deterioration in external market indicators of credit risk for a particular financial instrument; > Existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations; > An actual or expected significant deterioration in the operating results of the debtor; and > Significant increases in credit risk on other financial instruments of the same debtor; an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations. The Group presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise. The Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if: > The financial instrument has a low risk of default; > The debtor has a strong capacity to meet its contractual cash flow obligations in the near term; and > Adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligation s. The Group considers a financial asset to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ‘investment grade’. The Group considers this to be Financial statements TP ICAP GROUP PLC Annual Report and Accounts 2022159 Baa3 or higher per Moody’s or BBB- or higher per both Standard & Poor’s and Fitch. The Group monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due. Credit-impaired financial assets A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Definition of default The Group considers a financial asset to be in default when: > The borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or > The financial asset is more than 90 days past due. The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. Write-off policy The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss. Presentation of impairment Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVTOCI, the loss allowance is recognised in OCI, instead of reducing the carrying amount of the asset. Impairment losses related to trade and other receivables, including settlement balances and deposits paid for securities borrowed, are presented in general and administrative expenses due to materiality consideration. Impairment losses on other financial assets are presented under ‘finance costs’, and not presented separately in the statement of profit or loss and OCI owing to materiality considerations. Financial liabilities and equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs. Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Financial liabilities All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL. Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, and financial guarantee contracts issued by the Group, are measured in accordance with the specific accounting policies set out below. Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business combination, (ii) held for trading or (iii) it is designated as at FVTPL. A financial liability is classified as held for trading if: > It has been acquired principally for the purpose of repurchasing it in the near term; or > On initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or > It is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument. A financial liability other than a financial liability held for trading or contingent consideration of an acquirer in a business combination may be designated as at FVTPL upon initial recognition if: > Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or > The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or > It forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits the entire combined contract to be designated as at FVTPL. Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value recognised in profit or loss to the extent that they are not part of a designated hedging relationship. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in ‘other gains and losses’ in profit or loss. In respect of financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. The remaining amount of change in the fair value of the liability is recognised in profit or loss. Changes in fair value attributable to a financial liability’s credit risk that are recognised in other comprehensive income are not subsequently reclassified to profit or loss; instead, they are transferred to retained earnings upon derecognition of the finan cial liability. Notes to the Consolidated Financial Sta tements continued for the year ended 31 December 2022 TP ICAP GROUP PLC Annual Report and Accounts 2022160 3. Summary of significant accounting policies continued (j) Financial instruments continued Financial liabilities measured subsequently at amortised cost Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-for-trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method. Derecognition of financial liabilities The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. When the Group exchanges with the existing lender one debt instrument into another one with substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between: (i) the carrying amount of the liability before the modification; and (ii) the present value of the cash flows after modification should be recognised in profit or loss as the modification gain or loss within other gains and losses. (k) Derivative financial instruments Derivative financial instruments, such as foreign currency contracts and interest rate swaps, are entered into by the Group in order to manage its exposure to interest rate and foreign currency fluctuations or as simultaneous back-to-back transactions with counterparties. The Group does not use derivative financial instruments for speculative purposes. Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. Derivatives are not offset in the financial statements unless the Group has both the legal right and intention to offset. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities. An embedded derivative is a component of a hybrid contract that also includes a non-derivative host – with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. Derivatives embedded in hybrid contracts with a financial asset host within the scope of IFRS 9 are not separated. The entire hybrid contract is classified and subsequently measured as either amortised cost or fair value as appropriate. Derivatives embedded in hybrid contracts with hosts that are not financial assets within the scope of IFRS 9 are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL. If the hybrid contract is a quoted financial liability, instead of separating the embedded derivative, the Group generally designates the whole hybrid contract at FVTPL. An embedded derivative is presented as a non-current asset or non-current liability if the remaining maturity of the hybrid instrument to which the embedded derivative relates is more than 12 months and is not expected to be realised or settled within 12 months. (l) Hedge accounting Derivatives designated as hedges are either ‘fair value hedges’ or ‘hedges of net investments in foreign operations’. Fair value hedges Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss except when the hedging instrument hedges an equity instrument designated at FVTOCI in which case it is recognised in other comprehensive income. The carrying amount of a hedged item not already measured at fair value is adjusted for the fair value change attributable to the hedged risk with a corresponding entry in profit or loss. For debt instruments measured at FVTOCI, the carrying amount is not adjusted as it is already at fair value, but the hedging gain or loss is recognised in profit or loss instead of other comprehensive income. When the hedged item is an equity instrument designated at FVTOCI, the hedging gain or loss remains in other comprehensive income to match that of the hedging instrument. Where hedging gains or losses are recognised in profit or loss, they are recognised in the same line as the hedged item. Hedge accounting is discontinued when the hedging relationship no longer meets the risk management objective or where the hedging relationship no longer complies with the qualifying criteria or if the hedging instrument has been sold or terminated. Net investment hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as net investment hedges is recognised in other comprehensive income and accumulated in the hedging and translation reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in financial income or financial expense respectively. Where the Group designates the intrinsic value of purchased options as the hedging instrument in a net investment hedge, changes in the time value of the option are required to be recorded initially in other comprehensive income. Under the ‘cost of hedging’ approach, the initial option premium cost is recycled from other comprehensive income and recognised in the income statement on a straight-line basis over the period of the hedge. Financial statements TP ICAP GROUP PLC Annual Report and Accounts 2022161 Gains and losses deferred in the hedging and translation reserve are recognised in profit or loss on disposal of the foreign operation. (m) Matched Principal and stock lending transactions Certain Group companies engage in Matched Principal transactions 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 takes place within a few business days of the trade date according to the relevant market rules and conventions. Matched Principal transactions in regular way financial assets are recognised on settlement date, classified as FVTPL, and are derecognised on settlement of the related sale. Fair value movements on unsettled Matched Principal regular way transactions between trade date and settlement are recognised in profit or loss with the associated asset or liability recorded in financial assets or liabilities held at fair value through profit or loss. Matched Principal broking involving simultaneous back-to-back derivative transactions with counterparties are classified as financial instruments at fair value through profit or loss (‘FVTPL’) and 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 Group acts as an intermediary between its customers for collateralised stock lending transactions. Such trades are complete only when both the collateral and stock for each side of the transaction are returned. The gross amounts of collateral due to and receivable are disclosed in the balance sheet as deposits paid for securities borrowed and deposits received for securities loaned. (n) Restricted Funds, Cash and cash equivalents Cash comprises cash in hand and demand deposits which may be accessed without penalty. Cash equivalents comprise short-term highly liquid investments with a maturity of less than three months from the date of acquisition. For the purposes of the Consolidated Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts which are repayable on demand and form an integral part of the group’s cash management. The Group holds money, and occasionally financial instruments, on behalf of customers (client monies) in accordance with local regulatory rules. Since the Group is not beneficially entitled to these amounts, they are excluded from the Consolidated Balance Sheet along with the corresponding liabilities to customers. Restricted funds comprise amounts held with a central counterparty clearing house (‘CCP’), or a financial institution providing the Group with access to a CCP, and funds set aside for regulatory purposes, but excluding client money. The funds represent amounts for which the Group does not have immediate and direct access or for which regulatory requirements restrict its use. (o) Interest bearing loans and borrowings All loans and borrowings are initially recognised at fair value, being the consideration received net of issue costs associated with the borrowing. After initial recognition, interest bearing loans and borrowings are measured at amortised cost using the effective interest rate method. Amortised cost is calculated taking into account any issue costs and any discounts or premium on settlement. Gains and losses are recognised in the income statement when the liabilities are derecognised, as well as through the amortisation process. (p) Provisions Provisions are recognised when the Group has a present obligation, legal or constructive, as a result of a past event where it is probable that this will result in an outflow of economic benefits that can be reliably estimated. Provisions for restructuring costs are recognised when the Group has a detailed formal plan for the restructuring, which has been notified to affected parties. (q) Foreign currencies The individual financial statements of each Group company are prepared in the currency of the primary economic environment in which it operates, its functional currency. For the purpose of the Consolidated Financial Statements, the results and financial position of each Group company are expressed in Pounds Sterling, which is the functional currency of the Company and the presentation currency for the Consolidated Financial Statements. In preparing the financial statements of the individual companies, transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. Gains and losses arising from the settlement of these transactions, and from the retranslation of monetary assets and liabilities denominated in currencies other than the functional currency at rates prevailing at the balance sheet date, are recognised in the income statement. Non-monetary assets and liabilities denominated in currencies other than the functional currency that are measured at historical cost or fair value are translated at the exchange rate at the date of the transaction or at the date the fair value was determined. For the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the balance sheet date. Exchange differences arising are classified as other comprehensive income and transferred to the Group’s translation reserve. Such translation differences are recognised as income or as expense in the year in which the operation is disposed of. Income and expense items are translated at average exchange rates for the year, unless exchange rates fluctuate significantly during that year, in which case the exchange rates at the date of transactions are used. (r) Taxation The tax expense represents the sum of current tax payable arising in the year, movements in deferred tax and movements in tax provisions. The tax expense includes any interest and penalties payable. The current tax payable arising in the year is based on taxable profit for the year using tax rates that have been enacted or substantively enacted by the balance sheet date, and any adjustment to tax payable in respect of prior years. Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 TP ICAP GROUP PLC Annual Report and Accounts 2022162 3. Summary of significant accounting policies continued (r) Taxation continued Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the carrying amount of assets and liabilities in the Financial Statements and the corresponding tax basis used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences may be utilised. Temporary differences are not recognised if they arise from goodwill or from initial recognition of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the rates that are expected to apply when the asset or liability is settled or when the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity. (s) Leases Definition of a lease On transition to IFRS 16 the Group elected to apply the practical expedient not to reassess whether a contract was or contained a lease. The Group therefore applied IFRS 16 only to contracts that had been previously identified as leases, in accordance with IAS 17 and IFRIC 4, before 1 January 2019. Thereafter the Group has applied the definition of a lease and related guidance to all lease contracts entered into or modified on or after 1 January 2019. The Group assesses whether a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of the relative stand-alone prices. However, for leases of properties the Group has elected not to separate non-lease components and will instead account for the lease and non-lease components as a single lease component. As a lessee The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases (up to 12 months) and leases of low value assets (less than £3,500). The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. The Group recognises a right-of-use asset and a lease liability at the lease commencement date, the date at which power to control the asset is obtained. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate reflecting the lease term and the country in which it resides. Generally, the Group uses its incremental borrowing rate as the discount rate. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in the future lease payments arising from a change in an index or a rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised. Where a lease contract is modified and the lease modification is not accounted for as a separate lease, the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. Lease cash flows are split into payments of principal and interest and are presented as financing and operating cash flows respectively. The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that includes termination and/or renewal options and for leases which the Group has enforceable rights that extend the lease agreement. The assessment of whether the Group is reasonably certain to exercise such options or whether the Group is able to enforce its additional rights impacts the lease term, which affects the amount of lease liabilities and right-of-use assets recognised. As a lessor The Group sub-leases some of its leased properties. Where the Group is an intermediate lessor, it accounts for the head lease and the sub-lease as two separate contracts and classifies the sub-lease as either a finance or operating lease by reference to the right-of- use asset arising from the head lease. Where sub-lease agreements are assessed as finance leases, the Group derecognises the right-of-use asset and records its interest in finance lease receivables. Lease receipts are apportioned between finance income and a reduction in the finance lease receivable. As required by IFRS 9, an allowance for expected credit losses is recognised on the finance lease receivables. Where sub-leases are classified as operating leases, operating lease receipts are recognised in the income statement on a straight-line basis over the lease term. Financial statements TP ICAP GROUP PLC Annual Report and Accounts 2022163 (t) Retirement benefit costs Defined contributions made to employees’ personal pension plans are charged to the income statement as and when incurred. For defined benefit retirement plans, the cost of providing the benefits is determined using the projected unit credit method. Actuarial gains and losses are recognised in full in the year in which they occur. They are recognised outside the income statement and are presented in other comprehensive income. Past service cost is recognised in profit or loss when the plan amendment or curtailment occurs, or when the Group recognises related restructuring costs or termination benefits, if earlier. Gains or losses on settlement of a defined benefit plan are recognised when the settlement occurs. The amount recognised in the balance sheet represents the net of the present value of the defined benefit obligation as adjusted for actuarial gains and losses and past service cost, and the fair value of plan assets. The Trust Deed provides the Group with an unconditional right to a refund of surplus assets assuming the full settlement of plan liabilities. In the ordinary course of business the Trustee has no rights to unilaterally wind up, or otherwise augment the benefits due to members of, the plan. Based on these rights, any net surplus in the plan would be recognised in full. Where such rights do not exist, or are no longer enforceable, the Group applies the requirements of IFRIC 14 and restricts recognition of the net surplus by applying an asset recognition ceiling. Changes in the asset ceiling are recorded in other comprehensive income. (u) Share-based awards Equity-settled share-based awards issued employees are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based awards is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. The estimated grant date fair value of awards is based on the share price at grant date, reduced where shares do not qualify for dividends during the vesting period. Market-based performance conditions for equity-settled awards are reflected in the initial fair value of the award. The fair value of share options issued is determined using appropriate valuation models. The expected life used in the models has been adjusted, based on management’s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations. Cash-settled share-based awards are initially measured at fair value at the date of grant. Subsequently the awards are fair valued at each reporting date and a proportionate expense for the duration of the vesting period elapsed is recognised in the Income Statement together with a liability on the Group’s balance sheet. (v) Treasury and own shares Where share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. When treasury shares are sold or re-issued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to or from retained earnings. Shares repurchased from the open market are recorded in ‘own shares’ within reserves. Own shares issued to beneficiaries under share award plans are recorded as a transfer to retained earnings. (w) Contingent liabilities Contingent liabilities, which include certain guarantees and letters of credit pledged as collateral security, and contingent liabilities related to legal proceedings or regulatory matters where a possible outflow of economic benefit might occur, or where that outflow cannot be reliably estimated, are not recognised in the financial statements but are disclosed. (x) Accounting estimates and judgements In the application of the Group’s accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Estimates and assumptions are reviewed on an ongoing basis and revisions to accounting estimates are recognised in the period an estimate is revised. The following are the critical judgements and estimates that the Directors have made in the process of preparing the Financial Statements. Provisions and contingent liabilities Provisions are established by the Group based on management’s assessment of relevant information and advice available at the time of preparing the Financial Statements. Judgements Judgement is required when determining whether a present obligation exists. Professional advice is taken on the assessment of litigation and similar obligations. Provisions for legal proceedings and regulatory matters typically require a higher degree of judgement than other types of provisions. When matters are at an early stage, accounting judgements can be difficult because of the high degree of uncertainty associated with determining whether a present obligation exists, and estimating the probability and amount of any outflows that may arise. As matters progress, management and legal advisers evaluate on an ongoing basis whether provisions should be recognised, revising previous estimates as appropriate. At more advanced stages, it is typically easier to make estimates around a better defined set of possible outcomes. for the year ended 31 December 2022 TP ICAP GROUP PLC Annual Report and Accounts 2022164 3. Summary of significant accounting policies continued (x) Accounting estimates and judgements continued Estimates Provisions for legal proceedings and regulatory matters remain very sensitive to the assumptions used in the estimate. There could be a wider range of possible outcomes for any pending legal proceedings, investigations or inquiries. As a result it is often not practicable to quantify a range of possible outcomes for individual matters. It is also not practicable to meaningfully quantify ranges of potential outcomes in aggregate for these types of provisions because of the diverse nature and circumstances of such matters and the wide range of uncertainties involved. Notes 27 and 36 provide details of the Group’s provisions and contingent liabilities and the key sources of estimation uncertainty. Impairment of goodwill and intangible assets Judgements Forecast cash flows are subject to a high degree of uncertainty in volatile market conditions. Under such circumstances, management tests goodwill for impairment more frequently than once a year when indicators of impairment exist. This ensures that the assumptions on which the cash flow forecasts are based continue to reflect current market conditions and management’s best estimate of future performance. Estimates The future cash flows of the CGUs are sensitive to the cash flows projected for the periods for which detailed forecasts are available and to assumptions regarding the long-term pattern of sustainable cash flows thereafter. The rates used to discount future expected cash flows can have a significant effect on a CGU’s valuation. The discount rate incorporates inputs reflecting a number of financial and economic variables, including the risk-free interest rate in the region concerned and a premium for the risk of the business being evaluated. These variables are subject to fluctuations in external market rates and economic conditions beyond management’s control. Note 13 sets out the key sources of estimation uncertainty, the key assumptions made and the resultant sensitivity to reasonable possible changes in those assumptions. 4. Segmental analysis Products and services from which reportable segments derive their revenues The Group has a matrix management structure. The Group’s Chief Operating Decision Maker (‘CODM’) is the Executive Committee (‘ExCo’) which operates as a general executive management committee under the direct authority of the Board. The ExCo members regularly review operating activity on a number of bases, including by business division and by legal ownership which is structured geographically based on the region of incorporation for TP ICAP legacy entities plus Liquidnet. Following the redomiciliation of the Group’s parent in February 2021, the operational responsibility of entities was aligned with their legal ownership and as a result the Group at that time considered that the Primary Operating Segments continued to be the geographical regions of incorporation being Americas, EMEA, APAC and Corporate/Treasury. Liquidnet, acquired in March 2021 with its own separate international legal structure, was managed separately by the CODM, representing its own separate primary operating segment, even though it itself had operations across Americas, EMEA and APAC and represented a significant component of the Agency Execution business division, subsequently renamed to Liquidnet Division. In 2022, as a consequence of the inclusion of Liquidnet into Agency Execution, the balance of the CODM review of operating activity and allocation of the Group’s resources had become more focused on business division. This structure is now considered to represent the more appropriate view for the purposes of Group resource allocation and assessment of the nature and financial effects of the business activities in which the Group engages. Whilst the Group’s Primary Operating Segments are now by business division, individual entities and the legal ownership of such entities continue to operate with discrete management teams and decision making and governance structures. Each regional sub-group has its own independent governance structure including CEOs, board members and Sub-Group regional Conduct and Governance Committees with separate autonomy of decision making and the ability to challenge the implementation of Group level strategy and initiatives within its region. In the EMEA regional sub-group, in particular, there are also independent non-executive directors on the regional Board of directors, which further strengthens the independence and judgement of the governance framework. Notes to the Consolidated Financial Statements continued Information regarding the Group's revised primary operating segments is reported below: # Analysis by primary operating segment | 2022 | Global Braking £m | Energy & Commodities £m | Liquidnet (formerly Agency Execution) £m | Parameca Solutions £m | Corporate £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | | **Revenue** | | | | | | | | > External | 1,229 | 384 | 325 | 177 | - | 2,115 | | > Inter-division | 22 | 3 | - | - | (25) | - | | | 1,251 | 387 | 325 | 177 | (25) | 2,115 | | **Total front-office costs:** | | | | | | | | > External | (780) | (263) | (246) | (63) | - | (1,352) | | > Inter-division | - | - | - | (25) | 25 | - | | | (780) | (263) | (246) | (88) | 25 | (1,352) | | **Contribution** | 471 | 124 | 79 | 89 | - | 763 | | Net management and support costs | (224) | (65) | (78) | (8) | (43) | (418) | | Other operating income | 2 | - | - | - | 10 | 12 | | **Adjusted EBITDA** | 249 | 59 | 1 | 81 | (33) | 357 | | Depreciation and impairment of property, plant and equipment and right-of-use assets | (20) | (6) | (12) | (2) | (9) | (49) | | Amortisation and impairment of intangibles | (16) | (4) | (13) | - | - | (33) | | **Adjusted EBIT** | 213 | 49 | (24) | 79 | (42) | 275 | Corporate represents the cost of Group and central functions that are not allocated to the Group's divisions. | 2021 | Global Braking (revised) £m | Energy & Commodities (revised) £m | Liquidnet (formerly Agency Execution) (revised) £m | Parameca Solutions (revised) £m | Corporate (revised) £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | | **Revenue** | | | | | | | | > External^{1} | 1,088 | 367 | 261 | 149 | - | 1,865 | | > Inter-division | 19 | 3 | - | - | (22) | - | | | 1,107 | 370 | 261 | 149 | (22) | 1,865 | | **Total front-office costs** | | | | | | | | > External^{2} | (694) | (248) | (170) | (51) | - | (1,163) | | > Inter-division | - | - | - | (22) | 22 | - | | | (694) | (248) | (170) | (73) | 22 | (1,163) | | **Contribution^{3}** | 413 | 122 | 91 | 76 | - | 702 | | Net management and support costs^{4} | (200) | (63) | (63) | (8) | (63) | (397) | | Other operating income | 2 | - | - | - | 8 | 10 | | **Adjusted EBITDA^{5}** | 215 | 59 | 28 | 68 | (55) | 315 | | Depreciation and impairment of property, plant and equipment and right-of-use assets | (16) | (5) | (14) | (2) | (15) | (52) | | Amortisation and impairment of intangibles | (13) | (4) | (11) | - | (2) | (30) | | **Adjusted EBIT^{6}** | 186 | 50 | 3 | 66 | (72) | 233 | 1. Divisional Revenue for 2021 has been restated to be comparable with 2022's divisional groupings. Revenue for Global Braking increased by £3m, Liquidnet (formerly Agency Execution) increased by £13m and Parameca Solutions reduced by £11m. There is no restatement of Group revenues. 2. Divisional Total front-end costs for 2021 have been restated to be comparable with 2022's divisional groupings. Total front-end costs for Liquidnet (formerly Agency Execution) have reduced by £8m and Parameca Solutions increased by £4m. There is no restatement of Group Total front-end costs. 3. As a result of the restatement in footnotes 1 and 2 above, Divisional contribution for Global Braking increased by £2m, Liquidnet (formerly Agency Execution) increased by £8m and Parameca Solutions reduced by £8m. There is no restatement of Group contribution. 4. As a result of the restatement in footnotes 1 and 2 above, Divisional net management and support costs for Global Braking decreased by £3m, Parameca Solutions decreased by £6m and Corporate increased by £1m. Additionally, Divisional Net management and support costs have been restated to recieve the RPA 16 interest charge. This restatement aligns with RPA statutory reporting where the RPA 16 interest rate is the lowest within Group finance costs. As a result Net management and support costs for Global Braking reduced by £8m, Energy & Commodities reduced by £3m, Liquidnet (formerly Agency Execution) reduced by £3m, Parameca Solutions reduced by £1m and Corporate increased by £13m. There is no restatement of Group Net management and support costs. 5. As a result of the above restatement, Adjusted EBITDA and EBIT for Global Braking increased by £13m, Energy & Commodities increased by £5m, Liquidnet (formerly Agency Execution) increased by £4m, Parameca Solutions reduced by £3m and Corporate reduced by £23m. There is no restatement to the consolidated Group Adjusted EBITDA on EBIT. 163 TP (CAP GROUP PLC Annual Report and Accounts 2022 Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 TP ICAP GROUP PLC Annual Report and Accounts 2022166 4. Segmental analysis continued Significant items are centrally managed and controlled by the Group and are not allocated to regional or divisional segments. Analysis of significant items 2022 Restructuring and other related costs £m Disposals, acquisitions and investment in new businesses £m Legal and regulatory matters £m Total £m Employment, compensation and benefits costs 24 – – 24 Premises and related costs 1 – – 1 Deferred consideration – 8 – 8 Charge relating to significant legal and regulatory settlements – – 6 6 Pension scheme past service and settlement costs – – 1 1 Remeasurement of employee long-term benefits (7) – – (7) Gain on disposal of property, plant and equipment (3) – – (3) Gain on derecognition of right-of-use assets/lease liabilities (3) – – (3) Net foreign exchange losses – 4 – 4 Other general and administration costs 20 5 – 25 Total included within general and administration costs 8 17 7 32 Depreciation and impairment of property, plant and equipment and right-of-use assets 9 – – 9 Amortisation and impairment of intangible assets – 65 – 65 Total included within operating costs 41 82 7 130 Other operating income – (16) (2) (18) Included in finance income – 1 – 1 Total significant items before tax 41 67 5 113 Taxation of significant items (22) Total significant items after tax 91 2021 Restructuring and other related costs £m Disposals, acquisitions and investment in new businesses £m Legal and regulatory matters £m Total £m Employment, compensation and benefits costs 12 – – 12 Premises and related costs 9 – – 9 Deferred consideration – 2 – 2 Charge relating to significant legal and regulatory settlements – – 6 6 Pension scheme past service and settlement costs 1 – – 1 Acquisition costs – 8 – 8 Net loss on derivative instruments – 8 – 8 Net foreign exchange gains – (4) – (4) Other general and administration costs 4 13 9 26 Total included within general and administration costs 14 27 15 56 Depreciation and impairment of property, plant and equipment and right-of-use assets 16 – – 16 Amortisation and impairment of intangible assets – 52 – 52 Impairment of other assets Total included within operating costs 42 79 15 136 Included in other operating income 16 1 – 17 Total significant items before tax 58 80 15 153 Taxation on significant items (21) Total significant items after tax 132 Impairment of investment in associates – reflected together with Share of results of associates and joint venture 11 Total significant items 143 The Group's reported performance includes significant items. A reconciliation from adjusted operating profit, as considered by CODM, to Group reported performance is included. #### Adjusted profit reconciliation | | Adjusted £m | Significant Items £m | Reported £m | | --- | --- | --- | --- | | **2022** | | | | | EBIT/operating profit | 275 | (112) | 163 | | Net finance costs | (49) | (1) | (50) | | Profit before tax | 226 | (113) | 113 | | Taxation | (58) | 22 | (36) | | Profit after tax | 168 | (91) | 77 | | Share of profit from associates and joint ventures | 29 | - | 29 | | Profit for the year | 197 | (91) | 106 | | | Adjusted £m | Significant Items £m | Reported £m | | --- | --- | --- | --- | | **2021** | | | | | EBIT/operating profit | 233 | (136) | 97 | | Net finance costs | (56) | (17) | (73) | | Profit before tax | 177 | (153) | 24 | | Taxation | (44) | 21 | (23) | | Profit after tax | 153 | (132) | 1 | | Share of profit from associated and joint ventures | 18 | (11) | 7 | | Profit for the year | 151 | (143) | 8 | #### Revenue by type | | Global Rooting £m | Energy & Commodities £m | Liquidnet £m | Pneumatic Solutions £m | Eliminations £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | | **2022** | | | | | | | | **Revenue** | | | | | | | | Home Passing brokerage | 949 | 337 | 16 | - | - | 1,302 | | Executing Broker brokerage | 40 | 42 | 64 | - | - | 146 | | Matched Principal brokerage | 240 | 5 | 153 | - | - | 400 | | Introducing Broker brokerage | - | - | 90 | - | - | 90 | | Data & Analytics price information fees | 22 | 3 | - | 177 | (25) | 177 | | | 1,251 | 387 | 325 | 177 | (25) | 2,115 | | | Global Rooting £m | Energy & Commodities £m | Liquidnet £m | Pneumatic Solutions £m | Eliminations £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | | **2021** | | | | | | | | **Revenue** | | | | | | | | Home Passing brokerage | 864 | 326 | 19 | - | (2) | 1,207 | | Executing Broker brokerage | 25 | 37 | 43 | - | - | 105 | | Matched Principal brokerage | 201 | 5 | 112 | - | - | 318 | | Introducing Broker brokerage | - | - | 86 | - | - | 86 | | Data & Analytics price information fees | 17 | 2 | 1 | 149 | (20) | 149 | | | 1,107 | 370 | 261 | 149 | (22) | 1,865 | #### Revenue by country | | 2022 £m | 2021 £m | | --- | --- | --- | | United Kingdom | 743 | 750 | | United States of America | 779 | 654 | | Rest of the world | 593 | 461 | | | 2,115 | 1,865 | 167 TP ICAP GROUP PLC Annual Report and Accounts 2022 Financial Summary Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 ### 5. Operating costs | | 2022 £m | 2021 (revised) £m | | --- | --- | --- | | Broker compensation costs^{1} | **1,032** | 917 | | Other staff costs^{2} | **268** | 223 | | Share-based payment charge | **20** | 12 | | **Employee compensation and benefits** | **1,320** | 1,152 | | Technology and related costs | **216** | 191 | | Premises and related costs | **28** | 37 | | Gains on disposal of property, plant and equipment | **(3)** | - | | Gain on derecognition of right-of-use assets/lease liabilities | **(3)** | - | | Adjustments to deferred consideration | **8** | 2 | | Charge relating to significant legal and regulatory settlements | **7** | 6 | | Pension scheme past service and settlement costs | **1** | 1 | | Remeasurement of long-term employee benefits | **(7)** | - | | Acquisition costs | **6** | 20 | | Impairment losses on trade receivables | **5** | - | | Net foreign exchange (gains)/losses | **(21)** | 3 | | Net loss on FX derivative instruments | **11** | 12 | | Other administrative costs | **258** | 204 | | **General and administrative expenses** | **506** | 476 | | Depreciation of property, plant and equipment | **23** | 23 | | Impairment of property, plant and equipment | **5** | 10 | | Depreciation of right-of-use assets | **26** | 29 | | Impairment of right-of-use assets | **4** | 6 | | **Depreciation and impairment of property, plant and equipment and right-of-use assets** | **58** | 68 | | Amortisation of other intangible assets | **33** | 30 | | Impairment of other intangible assets | **-** | 6 | | Amortisation of intangible assets arising on consolidation | **45** | 46 | | Impairment of intangible assets arising on consolidation | **20** | - | | **Amortisation and impairment of intangibles assets** | **98** | 82 | | | **1,982** | 1,778 | 1 Broker compensation cost and Other staff costs for 2021 have been increased and decreased by £35m respectively, reflecting a reclassification of certain staff as braking. The analysis of auditor's remuneration is as follows: | | 2022 £000 | 2021 £000 | | --- | --- | --- | | Audit of the Group's annual accounts | **1,517** | 1,291 | | Audit of the Company's subsidiaries and associates pursuant to legislation | **6,985** | 6,087 | | Total audit fees | **8,502** | 7,378 | | Audit related assurance services^{3} | **1,390** | 1,225 | | Other assurance services^{4} | **45** | 45 | | Corporate finance services^{5} | **760** | 1,684 | | Total non-audit fees | **2,195** | 2,954 | | Audit fees payable to the Company's auditor and its associates in respect of associated pension schemes | **34** | 31 | 1 Audit related assurance services relate to services required by law or regulation, assurance on regulatory returns and review of interim financial information. 2 Other assurance services relate to non-statutory audits and other permitted assurance services. 3 In 2022 Corporate finance fees relate to work undertaken in connection with strategic projects and in 2021 related to the Group's redistribution to Jersey and the acquisition of Liquidate. ### 6. Other operating income Other operating income includes: | | 2022 £m | 2021 £m | | --- | --- | --- | | Acquisition related income | **16** | - | | Business relocation grants | **2** | 3 | | Employee related insurance receipts | **4** | 2 | | Management fees from associates | **1** | 2 | | Legal settlement receipts | **4** | 1 | | Other receipts | **3** | 2 | | | **30** | 10 | 168 TPJCAP GROUP PLC Annual Report and Accounts 2022 Other receipts include royalties, rebates, non-employee related insurance proceeds, tax credits and refunds. Costs associated with such items are included in administrative expenses. Acquisition related income relates to funds received following arbitration in connection with the purchase of Liquidnet. The arbitration was completed after the one-year measurement period applicable to the acquisition. #### 7. Staff costs The aggregate employment costs of staff and Directors of the Group were: | | 2022 £m | 2021 £m | | --- | --- | --- | | Wages, salaries, bonuses and incentive payments | 1,182 | 1,054 | | Social security costs | 102 | 90 | | Defined contribution pension costs (Note 37)(i) | 16 | 16 | | Share-based compensation expense (Note 32) | 20 | 12 | | | **1,320** | **1,152** | The average monthly number of full-time equivalent employees and Directors directly attributable to Business Divisions and to Management & Support were: | | 2022 No. | 2021 No. | | --- | --- | --- | | Global Broking | 1,856 | 1,971 | | Energy & Commodities | 632 | 652 | | Liquidnet | 467 | 484 | | Parameta Solutions | 189 | 187 | | Management & Support | 2,053 | 2,071 | | | **5,197** | **5,365** | The average monthly number of full-time equivalent employees and Directors by geographical region were: | | 2022 No. | 2021 (increed)^{1} No. | | --- | --- | --- | | EMEA | 2,394 | 2,434 | | Americas | 1,614 | 1,700 | | Asia Pacific | 1,106 | 1,151 | | Corporate | 83 | 80 | | | **5,197** | **5,365** | $^{1}$ The average number of full-time equivalent employees and Directors for 2021 have been received to reallocate 456 Liquidnet employees into their relevant geographical location. The 456 employees have been reallocated to EMEA AT, Americas 240 and Asia Pacific 170. #### 8. Finance income | | 2022 £m | 2021 £m | | --- | --- | --- | | Interest and similar income | 6 | 2 | | Interest on finance leases (Note 22) | 2 | 1 | | | **8** | **5** | #### 9. Finance costs | | 2022 £m | 2021 £m | | --- | --- | --- | | Fees payable on bank and other loan facilities | 2 | 2 | | Interest on bank and other loans | 2 | 2 | | Interest on Sterling Notes January 2024 | 13 | 22 | | Interest on Sterling Notes May 2026 | 13 | 13 | | Interest on Sterling Notes November 2028 | 7 | 1 | | Interest on Liquidnet Vendor Loan Notes | 1 | 1 | | Other interest | 1 | 1 | | Amortisation of debt issue and bank facility costs | 2 | 2 | | Borrowing costs | 41 | 44 | | Interest on lease liabilities (Note 16) | 17 | 14 | | Amortisation of options premium | – | 2 | | Premium on repurchase of Sterling Notes January 2024 | – | 16 | | | **58** | **76** | 169 TP (CAP GROUP PLC Annual Report and Accounts 2022 TECHNOLOGY Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 # 10. Taxation | | 2022 £m | 2021 £m | | --- | --- | --- | | **Current tax** | | | | UK corporation tax | 22 | 18 | | Overseas tax | 41 | 13 | | Prior year UK corporation tax | (4) | - | | Prior year overseas tax | - | 2 | | | **59** | **33** | | **Deferred tax (Note 21)** | | | | Current year | (26) | (9) | | Prior year | 3 | (1) | | | **(23)** | **(10)** | | **Tax charge for the year** | **36** | **23** | The charge for the year can be reconciled to the profit in the income statement as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | **Profit before tax** | **113** | **24** | | Tax based on the UK corporation tax rate of 19% (2021: 19%) | 21 | 5 | | Tax effect of items that are not deductible: | | | | > expenses | 7 | (1) | | Prior year adjustments | (1) | 1 | | Impact of tax rate change | - | 12 | | Impact of overseas tax rates | 6 | 5 | | Net movement in unrecognised deferred tax | 3 | 1 | | **Tax charge for the year** | **36** | **23** | In 2021 the tax effect of items that are not deductible includes a £12m credit due to the remeasurement of a tax provision recognised during the ICAP acquisition. This offsets a corresponding debit to Other general and administration costs due to the release of the related indemnification asset that was also recognised during the ICAP acquisition. Therefore no net impact on profit after tax arose in respect of this remeasurement. In addition to the income statement charge, the following current and deferred tax items have been included in other comprehensive income and equity: | | Recognised in other comprehensive income £m | Recognised in equity £m | Total £m | | --- | --- | --- | --- | | **2022** | | | | | Current tax | 5 | - | 5 | | Deferred tax charge relating to: | | | | | > Other temporary differences | - | - | - | | Tax charge on items taken directly to other comprehensive income and equity | 5 | - | 5 | | | Recognised in other comprehensive income £m | Recognised in equity £m | Total £m | | **2021** | | | | | Deferred tax charge relating to: | | | | | > Other temporary differences | 1 | - | 1 | | Tax charge on items taken directly to other comprehensive income and equity | 1 | - | 1 | 170 TP ICAP GROUP PLC Annual Report and Accounts 2022 ## 11. Earnings per share | | 2022 | 2021 | | --- | --- | --- | | Basic | 13.2p | 0.7p | | Diluted | 13.0p | 0.7p | The calculation of basic and diluted earnings per share is based on the following number of shares. | | 2022 No.(m) | 2021 No.(m) | | --- | --- | --- | | Basic weighted average shares | 779.1 | 759.5 | | Contingency taxable shares | 11.5 | 8.9 | | Diluted weighted average shares | 790.6 | 768.2 | The earnings used in the calculation of basic and diluted earnings per share are set out below: | | 2022 £m | 2021 £m | | --- | --- | --- | | Earnings for the year | 106 | 8 | | Non-controlling interests | (3) | (3) | | Earnings attributable to equity holders of the parent | 103 | 5 | ## 12. Dividends | | 2022 £m | 2021 £m | | --- | --- | --- | | Amounts recognised as distributions to equity holders in the year: | | | | Final dividend for the year ended 31 December 2021 of 5.5p per share | 43 | - | | Interim dividend for the year ended 31 December 2022 of 4.5p per share | 35 | - | | Final dividend for the year ended 31 December 2020 of 2.0p per share | - | 16 | | Interim dividend for the year ended 31 December 2021 of 4.0p per share | - | 31 | | | 78 | 47 | A final dividend of 7.9 pence per share will be paid on 25 May 2023 to all shareholders on the Register of Members on 14 April 2023. During the year, the Trustees of the TP ICAP plc EBT waived their rights to dividends. ## 13. Intangible assets arising on consolidation | | Goodwill £m | Other £m | Total £m | | --- | --- | --- | --- | | At 1 January 2022 | 1,180 | 582 | 1,762 | | Amortisation of acquisition related intangibles | - | (45) | (45) | | Impairment | - | (20) | (20) | | Effect of movements in exchange rates | 52 | 31 | 83 | | At 31 December 2022 | 1,232 | 548 | 1,780 | | | Goodwill £m | Other £m | Total £m | | At 1 January 2021 | 989 | 474 | 1,465 | | Recognised on acquisitions | 187 | 154 | 541 | | Amortisation of acquisition related intangibles | - | (46) | (46) | | Effect of movements in exchange rates | 4 | - | 4 | | At 31 December 2021 | 1280 | 582 | 1,762 | As at 31 December 2022 the gross cost of goodwill and other intangible assets arising on consolidation amounted to £1,482m and £835m respectively (2021: £1,428m and £797m). Cumulative amortisation and impairment charges amounted to £250m for goodwill and £285m for other intangible assets arising on consolidation (2021: £248m and £215m). 171 TP ICAP GROUP PLC Annual Report and Accounts 2022 Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 # **13. Intangible assets arising on consolidation continued** # **Goodwill** Goodwill arising through business combinations is allocated to groups of individual cash-generating units ('CGUs'), reflecting the lowest level at which the Group monitors and tests goodwill for impairment purposes. The Group's CGUs are as follows: | | 2022 £m | 2021 (reallocated) £m | | --- | --- | --- | | **CGU** | | | | Global Broking | **489** | 466 | | Energy & Commodities | **156** | 150 | | Parameta Solutions | **342** | 336 | | Liquidnet – Agency Execution | **40** | 39 | | Liquidnet – acquired business | **205** | 189 | | Goodwill allocated to CGUs | **1,232** | 1,180 | As a result of the change in the Primary Operating Segments as at 1 January 2022, from the geographic grouping of CGUs to a Business Division grouping of CGUs the goodwill allocated to the regional CGU groupings has been reallocated to each Business Division based on the relative value of those Business Divisions. The goodwill arising on the Liquidnet acquisition has not been reallocated and is reviewed and tested as its own group of CGUs. Immediately prior to the reallocation, the Regional CGUs were tested for impairment. No impairments were identified. The Group's annual impairment testing of its CGUs is undertaken each September. Between annual tests the Group reviews each CGU for impairment triggers that could adversely impact the valuation of the CGU and, if necessary, undertakes additional impairment testing. As at 30 June 2022 impairment triggers were identified for the Global Broking and Liquidnet CGUs which were subject to full impairment review as at that date. Determining whether goodwill is impaired requires an estimation of the recoverable amount of each CGU. The recoverable amount is the higher of its value in use ('VIU') or its fair value less cost of disposal ('FVLCD'). VIU is a pre-tax valuation, using pre-tax cash flows and pre-tax discount rates which is compared with 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 with a post-tax carrying value of the CGU. The CGU's recoverable amount is compared with its carrying value to determine if an impairment is required. The key assumptions for the VIU calculations are those regarding expected divisional cash flows arising in future years, divisional growth rates and divisional discount rates as considered by management. 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. # **Impairment assessment and testing as at 30 June 2022** # **– Global Broking** In June 2022 the Group's Global Broking CGU was subject to impairment testing, triggered as a result of the impact of inflation on expected cash flows, coupled with a change in the discount rate. For the 30 June 2022 impairment test the recoverable amount of the Global Broking CGU was based on its VIU. Future projections were based on the most recent financial forecasts considered by the Board which were used to project cash flows for the next five years. After this period a steady state cash flow was used to derive a terminal value for the CGU. Annual growth rates of 0.5% to 2027 and nil thereafter were used with pre-tax discount rate of 12.5%. The calculations were subject to stress tests reflecting reasonably possible changes in key assumptions. No impairment was identified as at 30 June 2022 although the CGU remained sensitive to reasonable possible changes in the assumptions. As at June 2022, changes in discount rates and/or revenue assumptions, reflecting inherent uncertainties in any long-term forecasting, including potential effects of Brexit in EMEA and other structural changes, would impact the respective carrying value of the CGU. The CGU's value would equate to its carrying value should the discount rate, revenue growth over the forecast period, or revenues used in the terminal value fall by the following: | CGU | Valuation discount rate % | Breakarea discount rate % | Valuation revenue growth rate % | Breakarea revenue growth rate % | Changes in terminal value amount % | | --- | --- | --- | --- | --- | --- | | Global Broking | **12.5%** | **17.8%** | **0.5%** | **(1.8%)** | **(15.0%)** | 172**TP/ICAP GROUP PLC**^{}[] Annual Report and Accounts 2022 # – Liquidnet acquired business As the Liquidnet acquired business was measured on a FVLCD basis at 31 December 2021, a decline in equity market conditions triggered an impairment review as at 30 June 2022. The fall impairment test did not identify an impairment although the outcome is highly sensitive to changes in valuation assumptions. As at 30 June 2022 the recoverable amount for the Liquidnet acquired business was based on its FVLCD. The Income Approach was used for the FVLCD valuation under which the CGU had a FVLCD in excess of its carrying value. The key assumptions for the Income Approach are those regarding expected cash flows, CGU growth rates and the discount rate. Future projections are based on the most recent financial forecasts considered by the Board which are used to project 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. Annual growth rates on the existing equities business of 2.8% to 2027 and 1% thereafter have been used with post-tax discount rate of 11.1%. Projected cash flows for new credit business lines have been projected to 2027 at an annual growth rate of 62%, based on the development and roll-out of the Credit platform, with growth thereafter at 2%, and have been discounted at a post-tax discount rate of 15%, reflecting the greater uncertainty associated with these projections. The calculations have been subject to stress tests reflecting reasonably possible changes in key assumptions. Under this approach the recoverable amount for Liquidnet exceeded its carrying value, but was sensitive to changes in the cash flow projections for new business lines to 2027. An annualized reduction in the projected revenues for new business lines of c.50% per annum over the period to 2027, would eliminate the headroom. The impact on future cash flows resulting from lower new business inflows or falling growth rates does not reflect any management actions that would be taken under such circumstances. # Impairment testing as at 30 September 2022 # – Business divisions (excluding Liquidnet – acquired business) For the 30 September 2022 annual impairment testing, the recoverable amounts for Global Braking, Energy & Commodities, Parameta Solutions and Liquidnet – Agency Execution were based on their VIU. Growth rates on five year projected revenues, growth rates on terminal value cash flows and discount rates used in the VIU calculations together with their respective breakeven rates were as follows: | September 2022 | Valuation discount rate % | Breakeven discount rate % | Valuation revenue growth rates % | Breakeven revenue growth rates % | Valuation terminal value growth rate % | Breakeven terminal value growth rate % | | --- | --- | --- | --- | --- | --- | --- | | **CGU** | | | | | | | | Global Braking | 13.4% | 17.4% | 1.0% | (1.4%) | 1.0% | (7.0%) | | Energy & Commodities | 13.2% | 16.4% | 2.1% | 0.2% | 2.1% | (3.6%) | | Parameta Solutions | 13.8% | 31.1% | 6.0% | (18.1%) | 3.0% | (85.0%) | | Liquidnet – Agency Execution | 13.6% | 14.5% | 3.0% | 2.6% | 2.0% | 0.7% | | December 2021 (at date of reeducation of goodwill) | Valuation discount rate % | Breakeven discount rate % | Valuation revenue growth rates % | Breakeven revenue growth rates % | Valuation terminal value growth rate % | Breakeven terminal value growth rate % | | --- | --- | --- | --- | --- | --- | --- | | **CGU** | | | | | | | | Global Braking | 11.5% | 11.7% | 0.5% | 0.4% | 0.0% | (0.3%) | | Energy & Commodities | 11.0% | 14.7% | 2.0% | 0.2% | 0.0% | (6.4%) | | Parameta Solutions | 11.3% | 20.9% | 4.8% | (6.0%) | 0.0% | (24.6%) | | Liquidnet – Agency Execution | 13.0% | 15.0% | 5.0% | 4.1% | 0.0% | (2.0%) | No impairments were identified as a result of the 2022 annual testing. As shown in the table above, the VIU of the Liquidnet – Agency Execution CGU is sensitive to reasonably possible changes in the growth and discount rates. The impact on future cash flows resulting from falling growth rates does not reflect any management actions that would be taken under such circumstances. The Group does not expect climate change to have a material impact on the financial statements. However, the assessment of the financial risks and opportunities related to climate change is ongoing and the Group recognises the increased uncertainty in forecasting medium and long-term revenues, particular in the Energy & Commodities ('E&C') division. A 5% decline in E&C terminal growth rates from 2027 in Oil, Power and Gas, would eliminate any headroom in the CGU. 172 TP (CAP GROUP PLC Annual Report and Accounts 2022 Financial Summary Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 ### 13. Intangible assets arising on consolidation continued #### Impairment testing as at 30 September 2022 continued ##### – Liquidnet acquired business For the 30 September 2022 annual impairment testing the recoverable amounts for the Liquidnet acquired business was based on its FVLCD. The Income Approach was used for the FVLCD valuation under which the CGU had a FVLCD in excess of its carrying value. The key assumptions for the Income Approach are those regarding expected cash flows, growth rates and the discount rate. Future projections are based on the most recent financial budgets considered by the Board which are used to project 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 the five year projected revenues, growth rates on terminal value cash flows and discount rates used in the FVLCD calculations together with their respective breakeven rates were as follows: | Liquidnet acquired business | Valuation discount rate % | Breakeven discount rate % | Valuation revenue growth rate % | Breakeven revenue growth rate % | Valuation terminal value growth rate % | Breakeven terminal value growth rate % | | --- | --- | --- | --- | --- | --- | --- | | **September 2022** | **10.9%** | **12.3%** | **14.7%** | **13.1%** | **2.4%** | **0.5%** | | December 2021 | 10.8% | 11.4% | 5.0% | 1.1% | 1.0% | 0.3% | The valuation revenue growth rate percentage have increased from 5% in December 2021 to 14.7% as at September 2022. This reflects management's expectation that the Equities business will return to a similar revenue projection in 2027, but from a lower starting position in the September 2022 valuation, resulting in an annual growth rate of 8.7%. The September 2022 valuation now includes revenue growth on the roll-out of the Credit platform, resulting in an annual growth rate of 61% to 2027. As at December 2021, the valuation did not reflect the projected development of the new Credit business. The calculations have been subject to stress tests reflecting reasonably possible changes in key assumptions. Under this approach the recoverable amount for the Liquidnet acquired business exceeded its carrying value, but is sensitive to reasonably possible changes in the growth rates and the discount rate as indicated in the table above. The most sensitive valuation assumption relates to the growth in cash flows arising on new Credit business lines. The impact on future cash flows resulting from falling growth rates does not reflect any management actions that would be taken under such circumstances. The Income Approach valuation is based on management forecasts which are unobservable and is therefore a Level 3 fair value. #### Impairment assessment as at 31 December 2022 As at 31 December 2022, the review of the indicators of impairment did not require any further testing. #### Other intangible assets Other intangible assets at 31 December 2022 represent customer relationships, E$46m (2021: E$80m) and business brands and trademarks, E2m (2021: E2m) that arise through business combinations. Customer relationships are being amortised between 10 and 20 years. Other intangible assets, along with other finite life assets, are subject to impairment trigger assessment at least annually. As at 30 September 2022, as a result of difficult equity market conditions and subdued larger block trading, the Liquidnet customer relationships were subject to a full impairment review. As a result of this testing, the value of customer relationships has been reduced by E20m. The valuation of customer lists is based on the 'Multi-period Excess Earnings Methodology' or 'MEEM'. MEEM is a version of the Income Approach which seeks to estimate the value by determining the net present value of the forecast, past-tax profits generated by the asset as of the valuation date, and reflects assumptions regarding customer chart, operating profits and margins, contributory asset charges, tax rates and discount rates. As these inputs are unobservable, this is a Level 3 valuation. Following the adjustment to the customer relationship's carrying value, the asset will continue to be amortised over its remaining useful life, but remains sensitive to reasonable possible changes in the assumptions. A reduction in annual operating profits of E3m from 2023 would impair the asset by E19m, and a 1% increase in the discount rate would impair the asset by E8m. 174 TP/ICAP GROUP PLC Annual Report and Accounts 2022 #### 14. Other intangible assets | | Purchased software £m | Developed software £m | Total £m | | --- | --- | --- | --- | | **Cost** | | | | | At 1 January 2022 | 52 | 190 | 242 | | Additions | 8 | 27 | 35 | | Amounts derecognised | (1) | (5) | (6) | | Effect of movements in exchange rates | 4 | 5 | 9 | | At 31 December 2022 | 63 | 217 | 280 | | **Accumulated amortisation** | | | | | At 1 January 2022 | (41) | (110) | (151) | | Charge for the year | (12) | (21) | (33) | | Amounts derecognised | 1 | 5 | 6 | | Effect of movements in exchange rates | (2) | (3) | (5) | | At 31 December 2022 | (54) | (129) | (183) | | **Carrying amount** | | | | | At 31 December 2022 | 9 | 88 | 97 | | | Purchased software £m | Developed software £m | Total £m | | --- | --- | --- | --- | | **Cost** | | | | | At 1 January 2021 | 23 | 149 | 172 | | Additions^{1} | 17 | 20 | 37 | | Recognised with acquisitions | 11 | 22 | 33 | | Amounts derecognised | (1) | (2) | (3) | | Effect of movements in exchange rates | 2 | 1 | 3 | | At 31 December 2021 | 52 | 190 | 242 | | **Accumulated amortisation** | | | | | At 1 January 2021 | (20) | (94) | (114) | | Charge for the year | (13) | (17) | (30) | | Impairment | (6) | - | (6) | | Amounts derecognised | 1 | 2 | 3 | | Effect of movements in exchange rates | (3) | (1) | (4) | | At 31 December 2020 | (41) | (110) | (151) | | **Carrying amount** | | | | | At 31 December 2021 | 11 | 80 | 91 | 1 includes £2m non-cash additions. Financial Accounting 175 TP (CAP GROUP PLC Annual Report and Accounts 2022 Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 # 15 Property, plant and equipment | | Land, buildings and leasehold improvements bn | Furniture, fixtures, equipment and motor vehicles^{1} bn | Total bn | | --- | --- | --- | --- | | **Cost** | | | | | At 1 January 2022 | 127 | 100 | 227 | | Reclassification of work-in-progress brought into use | 1 | (1) | – | | Additions | 2 | 16 | 18 | | Disposals | (3) | (15) | (18) | | Effect of movements in exchange rates | 3 | 17 | 20 | | At 31 December 2022 | 130 | 117 | 247 | | **Accumulated depreciation** | | | | | At 1 January 2022 | (41) | (63) | (104) | | Charge for the year | (20) | (5) | (23) | | Impairment | – | (5) | (5) | | Disposals | 1 | 8 | 9 | | Effect of movements in exchange rates | – | (14) | (14) | | At 31 December 2022 | (60) | (77) | (137) | | **Carrying amount** | | | | | At 31 December 2022 | 70 | 40 | 110 | | | Land, buildings and leasehold improvements bn | Furniture, fixtures, equipment and motor vehicles^{1} bn | Total bn | | --- | --- | --- | --- | | **Cost** | | | | | At 1 January 2021 | 74 | 101 | 175 | | Reclassification of work-in-progress brought into use | 27 | (27) | – | | Additions | 2 | 21 | 23 | | Interest capitalised as leasehold improvements^{2} | 1 | – | 1 | | Depreciation capitalised as leasehold improvements^{2} | 2 | – | 2 | | Recognised with acquisitions | 22 | 6 | 28 | | Disposals | (2) | (2) | (4) | | Effect of movements in exchange rates | 1 | 1 | 2 | | At 31 December 2021 | 127 | 100 | 227 | | **Accumulated depreciation** | | | | | At 1 January 2021 | (22) | (52) | (74) | | Charge for the year | (13) | (10) | (23) | | Impairment | (8) | (2) | (10) | | Disposals | 1 | 2 | 3 | | Effect of movements in exchange rates | 1 | (1) | – | | At 31 December 2021 | (41) | (63) | (104) | | **Carrying amount** | | | | | At 31 December 2021 | 86 | 37 | 123 | 1 Includes work-in-progress until brought into use. 2 In 2021 the development of the leased space for the Group's London-based headquarters and building operations was completed. During the development phase depreciation and lease interest expense was capitalised as a direct cost of the leasehold improvements being undertaken. During the period to 31 December 2021 £3m has been capitalised, of which £3m relates to depreciation and £3m to interest in lease liabilities. 176 TPJCAP GROUP PLC Annual Report and Accounts 2022 ## 16. Right-of-use assets | | Land, buildings and leasehold improvements £m | Furniture, fixtures, equipment and motor vehicles £m | Total £m | | --- | --- | --- | --- | | At 1 January 2022 | 187 | – | 187 | | Additions | 22 | – | 22 | | Amounts derecognised | (9) | – | (9) | | Depreciation | (26) | – | (26) | | Impairment | (4) | – | (4) | | Transfer to finance lease receivables | (15) | – | (15) | | Effect of movements in exchange rates | 10 | – | 10 | | At 31 December 2022 | 165 | – | 165 | | | Land, buildings and leasehold improvements £m | Furniture, fixtures, equipment and motor vehicles £m | Total £m | | --- | --- | --- | --- | | At 1 January 2021 | 162 | 1 | 163 | | Additions | 11 | – | 11 | | Acquired with acquisitions^{1} | 70 | – | 70 | | Modifications | 4 | – | 4 | | Depreciation | (29) | – | (29) | | Depreciation capitalised as leasehold improvements (Note 15) | (2) | – | (2) | | Impairment | (6) | – | (6) | | Transfer to finance lease receivables | (23) | – | (23) | | Effect of movements in exchange rates | – | (1) | (1) | | At 31 December 2021 | 187 | – | 187 | 1 The acquired right-of-use asset was measured at the value of the lease liability, reduced by £21m to reflect market values as at the date of acquisition. The Group leases several buildings which have an average lease term of 10 years (2021: 11 years). Where the Group sub-lets a property, and that sub-let qualifies as a finance lease, the right-of-use asset is written down to the net investment value of the sub-lease, and that value transferred to finance lease receivables. The maturity analysis of lease liabilities is presented in Note 26. ### Amounts recognised in profit and loss | | 2022 £m | 2021 £m | | --- | --- | --- | | Depreciation expense on right-of-use assets | 26 | 29 | | Impairment of right-of-use assets | 4 | 6 | | Interest on lease liabilities | 17 | 14 | | Expense relating to short term leases | 1 | 1 | | Interest income from sub-leasing right-of-use assets | (2) | (1) | The total cash outflow for leases amounts to £46m (2021: £43m) (representing principal repayment of £29m (2021: £28m) and interest of £17m (2021: £14m). In 2021 £1m of interest was capitalised. 177**TP ICAP GROUP PLC**^{}[] Annual Report and Accounts 2022 Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 # **17. Investment in associates** | | 2022 £m | 2021 £m | | --- | --- | --- | | At 1 January | 51 | 61 | | Additions | - | 1 | | Disposals | - | (2) | | Impairments | - | (11) | | Share of profit for the year | 23 | 14 | | Dividends received | (13) | (10) | | Effect of movements in exchange rates | 2 | (2) | | At 31 December | 63 | 51 | | **Summary financial information for associates** | | | | Aggregated amounts (for associates at the year end): | | | | Total assets | 404 | 451 | | Total liabilities | (182) | (243) | | Net assets | 222 | 188 | | Proportion of Group's ownership interest | 63 | 51 | | Goodwill | - | - | | Carrying amount of Group's ownership interest | 63 | 51 | | Aggregated amounts (for associates during the year): | | | | Revenue | 268 | 220 | | Profit for the year | 67 | 42 | | Group's share of profit for the year | 23 | 14 | | Impairment | - | (11) | | Dividends received from associates during the year | (13) | (10) | Interests in associates are measured using the equity method. All associates are involved in braking activities and have either a 31 December or 31 March year end. The results and assets and liabilities of associates are incorporated in these Financial Statements based on financial information made up to 31 December each year. | Country of incorporation and operation | Associated undertakings | Percentage total | | --- | --- | --- | | Bahrain | ICAP (Middle East) W.L.L. | 49% | | China | Tullett Prebon SITICO (Chind) Limited | 33% | | | Ermont Commodity Brokers (Shanghai) Limited | 49% | | India | ICAP IL India Private Limited^{1} | 40% | | Japan | Tosan ICAP Co., Ltd^{1} | 40% | | | Central Tosan Securities Co. Ltd^{1} | 20% | | Spain | Cometaje e Información Monetaria y de Divisas SA | 21.5% | | United States | First Brokers Securities LLC^{1} | 40% | $^{1}$ 31 March year end. 178 TP/ICAP GROUP PLC Annual Report and Accounts 2022 Financial statements TP ICAP GROUP PLC Annual Report and Account s 2022179 18. Investment in joint ventures 2022 £m 2021 £m At 1 January 28 29 Disposals (1) – Share of result for the year 6 4 Dividends received (2) (5) Effect of movements in exchange rates 3 – At 31 December 34 28 Summary financial information for joint ventures Aggregated amounts (for joint ventures at the year end): Total assets 30 22 Total liabilities (4) (3) Net assets 26 19 Proportion of Group’s ownership interest 13 9 Goodwill 21 19 Carrying amount of Group’s ownership interest 34 28 Aggregated amounts (for joint ventures during the year): Revenue 16 14 Result for the year 12 8 Group’s share of result for the year 6 4 Dividends received from joint ventures during the year (2) (5) Interests in joint ventures are measured using the equity method. All joint ventures are involved in broking activities and have a 31 December year end. No individual joint venture is material to the Group. Country of incorporation and operation Joint ventures Percentage held Colombia SET-ICAP FX SA 47.9% SET-ICAP Securities S.A. 47.4% Indonesia PT Electronic IDR Exchange 49% Mexico SIF ICAP, S.A. de C.V. 50% 19. Other investments 2022 £m 2021 £m At 1 January 21 18 Acquired with acquisitions – 3 Revaluation of equity instruments at FVTOCI – 1 Effect of movements in exchange rates 2 (1) At 31 December 23 21 Categorisation of other investments: Debt instruments at FVTOCI – corporate debt securities 2 2 Equity instruments at FVTOCI 21 19 23 21 The fair values are based on valuations as disclosed in Note 29(h). Equity instruments comprise of securities that do not qualify as associates or joint ventures. Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 ### 20. Financial Investments | | 2022 £m | 2021 £m | | --- | --- | --- | | Debt instruments at FVTOCI – Government debt securities | 81 | 81 | | Investments at amortised cost – Term deposits and restricted funds | 93 | 34 | | | **174** | **115** | Debt instruments, term deposits and restricted funds are liquid instruments held with financial institutions and central counterparty clearing houses providing the Group with access to clearing services. ### 21. Deferred tax | | 2022 £m | 2021 £m | | --- | --- | --- | | Deferred tax assets | 15 | 17 | | Deferred tax liabilities | (85) | (107) | | | **(70)** | **(90)** | The movement for the year in the Group’s net deferred tax position was as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | At 1 January | (90) | (75) | | Credit to income for the year | 23 | 10 | | Charge to other comprehensive income for the year | – | (1) | | Recognised with acquisitions | – | (27) | | Effect of movements in exchange rates | (3) | 3 | | At 31 December | **(70)** | **(90)** | Deferred tax balances and movements thereon are analysed as: | | At 1 January £m | Recognised in equity £m | Recognised to profit at loss £m | Recognised in other comprehensive income £m | Recognised with acquisitions £m | Effect of movements in exchange rates £m | At 31 December £m | | --- | --- | --- | --- | --- | --- | --- | --- | | **2022** | | | | | | | | | Share-based payment awards | 4 | – | – | – | – | – | 4 | | Tax losses | 12 | – | 10 | – | – | 1 | 23 | | Bonuses | 9 | – | – | – | – | 2 | 11 | | Intangible assets arising on consolidation | (145) | – | 15 | – | – | (8) | (138) | | Other timing differences | 30 | – | (2) | – | – | 2 | 30 | | | **(90)** | – | **23** | – | – | **(3)** | **(70)** | | **2021** | | | | | | | | | Share-based payment awards | 3 | – | – | – | – | 1 | 4 | | Tax losses | 5 | – | (3) | – | 9 | 1 | 12 | | Bonuses | 9 | – | (1) | – | – | 1 | 9 | | Intangible assets arising on consolidation | (101) | – | (5) | – | (38) | (1) | (145) | | Other timing differences | 9 | – | 19 | (1) | 2 | 1 | 30 | | | **(75)** | – | **10** | **(1)** | **(27)** | **3** | **(90)** | At the balance sheet date, the Group has gross unrecognised temporary differences of £153m with the unrecognised net tax amount being £33m (2021: gross £146m and net tax £30m respectively). This includes gross tax losses of £141m with the net tax amount being £30m (2021: gross £140m and net tax £29m respectively), which are potentially available for offset against future profits. Of the unrecognised gross losses £38m (2021: £33m) are expected to expire within 20 years and £105m (2021: £107m) have no expiry date. Deferred tax assets have not been recognised in respect of these items since it is not probable that future taxable profits will arise against which the temporary differences may be utilised. A deferred tax asset of £23m (2021: £9m) in respect of losses has been recognised at 31 December 2022 as it was considered probable that future taxable profits will arise. No deferred tax has been recognised on temporary differences associated with unremitted earnings of subsidiaries as the Group is able to control the timing of distributions and overseas dividends are largely exempt from UK tax. As at the balance sheet date, the Group had unrecognised deferred tax liabilities of £3m (2021: £4m) in respect of unremitted earnings of subsidiaries of £22m (2021: £29m). 180 TP/ICAP GROUP PLC Annual Report and Accounts 2022 ### 23. Trade and other receivables | | 2022 £m | 2021 (restated) £m | | --- | --- | --- | | **Non-current receivables** | | | | Finance lease receivables | 38 | 30 | | Other receivables | 13 | 14 | | | **51** | **44** | | **Current receivables** | | | | Trade receivables^{1} | 382 | 336 | | Amounts due from clearing organisations | 77 | 73 | | Deposits paid for securities borrowed | 1,575 | 1,595 | | Finance lease receivables | 2 | 1 | | Other debtors^{1} | 30 | 34 | | Accrued income | 15 | 14 | | Owed by associates and joint ventures | 4 | 5 | | Prepayments | 109 | 86 | | Corporation tax | 4 | 3 | | | **2,198** | **2,068** | $^{1}$ Trade receivables have been reduced by £15m and other debtors increased by £15m from that reported in 2021 as a result of a reclassification of certain non-trading balances due from brokers. The Directors consider the carrying amount of trade and other receivables which are not held at fair value through profit or loss approximate to their fair values as they are short term in nature. No interest is charged on outstanding trade receivables. 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. | Trade receivables | Total £m | Net past due £m | Less than 30 days past due £m | 31-60 days past due £m | 61-90 days past due £m | Greater than 91 days past due £m | | --- | --- | --- | --- | --- | --- | --- | | **2022** | | | | | | | | EMEA | 221 | 56 | 36 | 25 | 15 | 89 | | Americas | 125 | 48 | 26 | 15 | 8 | 28 | | Asia Pacific | 42 | 16 | 11 | 4 | 3 | 8 | | Gross balances outstanding | 388 | 120 | 73 | 44 | 26 | 125 | | **Effective expected credit loss rate** | | % | % | % | % | % | | Lifetime ECL | (6) | 0.15% | 0.25% | 0.42% | 0.65% | 4.56% | | | **382** | | | | | | | Trade receivables | Total £m | Net past due £m | Less than 30 days past due £m | 31-60 days past due £m | 61-90 days past due £m | Greater than 91 days past due £m | | **2021 (restated)** | | | | | | | | EMEA | 207 | 62 | 48 | 28 | 18 | 91 | | Americas | 99 | 42 | 21 | 10 | 9 | 17 | | Asia Pacific | 35 | 20 | 7 | 4 | 1 | 3 | | Gross balances outstanding^{1} | 341 | 124 | 76 | 42 | 28 | 71 | | **Effective expected credit loss rate^{1}** | | % | % | % | % | % | | Lifetime ECL | (5) | 0.14% | 0.22% | 0.38% | 0.65% | 4.06% | | | **356** | | | | | | $^{1}$ Gross balances outstanding have been reduced by £15m from that reported in 2021 as a result of certain balances due from brokers being reclassified to other debtors. Effective expected credit loss rates have been recalculated following this adjustment. 181 TIP ICAP GROUP PLC Annual Report and Accounts 2022 TIP ICAP GROUP PLC 182 Notes to the Consolidated Financial Statements continued for this year ended 31 December 2022 ## 22. Trade and other receivables continued Amounts due from clearing organisations represents balances owed to the Group as a result of client transactions undertaken through the clearer. 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 31 December 2022, the provision for expected credit losses amounted to less than £1m (2021: less than £1m). 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 Note 23. 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 31 December 2022, the provision for expected credit losses amounted to less than £1m (2021: less than £1m). Amounts (payable)/receivable under finance leases: | | 2022 £m | 2021 £m | | --- | --- | --- | | Year 1 | 4 | (1) | | Year 2 | 3 | 3 | | Year 3 | 5 | 4 | | Year 4 | 6 | 5 | | Year 5 | 4 | 4 | | Onwards | 29 | 23 | | Undiscounted lease payments | 51 | 38 | | Less unearned finance income | (11) | (9) | | Present value of lease payments receivable | 40 | 29 | | **Net investment in the lease** | **40** | **29** | Undiscounted lease payments analysed as: | | 2022 £m | 2021 £m | | --- | --- | --- | | Recoverable after 12 months | 47 | 39 | | Recoverable/(payable) within 12 months | 4 | (1) | Net investment in the lease analysed as: | | 2022 £m | 2021 £m | | --- | --- | --- | | Recoverable after 12 months | 38 | 30 | | Recoverable/(payable) within 12 months | 2 | (1) | The Group is not exposed to foreign currency risk as a result of the lease arrangements, as all leases are denominated in the respective functional currencies of the recording entities. The following table presents the amounts included in profit or loss. | | 2022 £m | 2021 £m | | --- | --- | --- | | Impairment of finance lease receivables | - | - | | Interest on the net investment in finance leases | 2 | 1 | The Group's finance lease arrangements do not include variable payments. The average effective interest rate contracted approximates to 6.44% (2021: 7.78%) per annum. The Directors estimated the loss allowance on finance lease receivables at the end of the reporting year at an amount equal to lifetime ECL. None of the finance lease receivables at the end of the reporting year is past due, and taking into account the historical default experience and the future prospects of the industries in which the lessees operate, the Directors consider that no finance lease receivable is impaired. 182 TPJCAP GROUP PLC Annual Report and Accounts 2022 ### 23. Trade and other payables | | 2022 £m | 2021 (recalled) £m | | --- | --- | --- | | Trade payables^{1} | 24 | 17 | | Amounts due to clearing organisations | 46 | 47 | | Finance lease payable | - | 2 | | Deposits received for securities loaned | 1,573 | 1,504 | | Deferred consideration (Note 33) | 1 | 7 | | Other creditors^{2} | 108 | 91 | | Accruals | 369 | 283 | | Owed to associates and joint ventures | 3 | 2 | | Tax and social security | 22 | 22 | | Deferred income | 3 | 2 | | | **2,149** | **1,977** | $^{1}$ Trade payables have been reduced by £72m and other creditors increased by £72m from that reported in 2021 as a result of certain non-trading balances due to customers being reclassified. The Directors consider that the carrying amount of trade and other payables which are not held at fair value through profit or loss approximate to their fair values. ### 24. Financial assets and financial liabilities at fair value through profit or loss | | 2022 £m | 2021 £m | | --- | --- | --- | | **Financial assets at fair value through profit or loss** | | | | Matched Principal financial assets | 9 | 37 | | Fair value gains on unsettled Matched Principal transactions | 255 | 121 | | | **264** | **158** | | **Financial liabilities at fair value through profit or loss** | | | | Matched Principal financial liabilities | - | (1) | | Fair value losses on unsettled Matched Principal transactions | (255) | (119) | | | **(255)** | **(120)** | | **National contract amounts of unsettled Matched Principal transactions** | | | | Unsettled Matched Principal transactions | **209,762** | **65,968** | Fair value gains and losses on unsettled Matched Principal transactions represent the price movement between trade date and the reporting date on regular way transactions prior to settlement. Matched Principal transactions arise where securities are bought from one counterparty and simultaneously sold to another counterparty. Settlement of such transactions is primarily on a delivery vs. payment basis and typically take place within a few business days of the transaction date according to the relevant market rules and conventions. The national contract amounts of unsettled Matched Principal transactions indicate the aggregate value of buy and sell transactions outstanding at the balance sheet date. They do not represent amounts at risk. ### 25. Loans and borrowings | | Less than one year £m | Greater than one year £m | Total £m | | --- | --- | --- | --- | | **2022** | | | | | Sterling Notes January 2024 | 6 | 247 | 253 | | Sterling Notes May 2026 | 1 | 249 | 250 | | Sterling Notes November 2028 | 1 | 247 | 248 | | Liquidnet Vendor Loan Notes March 2024 | 1 | 42 | 43 | | | **9** | **785** | **794** | | **2021** | | | | | Overdrafts | 17 | - | 17 | | Loans from related party | 51 | - | 51 | | Sterling Notes January 2024 | 6 | 246 | 252 | | Sterling Notes May 2026 | 1 | 249 | 250 | | Sterling Notes November 2028 | 1 | 247 | 248 | | Liquidnet Vendor Loan Notes March 2024 | 1 | 37 | 38 | | | **77** | **779** | **856** | All amounts are stated after unamortised transaction costs. An analysis of borrowings by maturity has been disclosed in Note 29(e). 183. TP ICAP GROUP PLC Annual Report and Accounts 2022 Notes to the Consolidated Financial Statements continued for this year ended 31 December 2022 ### 25. Loans and borrowings continued #### Settlement facilities and overdrafts Where the Group purchases securities under Matched Principal trades but is unable to complete the sale immediately, the Group's settlement agent finances the purchase through the provision of an overdraft secured against the securities and any collateral placed at the settlement agent. As at 31 December 2022, overdrafts for the provision of settlement finance amounted to £1m (December 2021: £17m). #### Bank credit facilities and bank loans The Group has a £350m committed revolving facility that matures in May 2025. Facility commitment fees of 0.7% on the undrawn balance are payable on the facility. Arrangement fees of £5m were paid in 2022 and are being amortised over the maturity of the facility. As at 31 December 2022, the revolving credit facility was undrawn. Amounts drawn down are reported as bank loans in the above table. Bank loans are denominated in Sterling. During the year, the maximum amount drawn was £140m (2021: £150m), and the average amount drawn was £50m (2021: £60m). The Group utilises the credit facility throughout the year, entering into numerous short-term bank loans where maturities are less than three months. The turnover is quick and the volume is large and resultant flows are presented net in the Group's cash flow statement in accordance with IAS 7 'Cash Flow'. Interest and facility fees of £5m were incurred in 2022 (2021: £3m). #### Loans from related parties In August 2020, the Group entered into a Yen 10bn committed facility with The Tokyo Tanshi Co., Ltd, a related party, that matures in February 2025. As at 31 December, the Yen 10bn committed facility equated to £65m. Facility commitment fees of 0.64% on the undrawn balance are payable on the facility. Arrangement fees of less than £1m are being amortised over the maturity of the facility. As at 31 December 2022, the facility was undrawn (2021: Yen 8bn (£31m)). The Directors consider that the carrying amount of the loan which is not held at fair value through profit or loss approximates to its fair value. During the year, the maximum amount drawn was Yen 10bn, £60m at year end rates (2021: Yen 10bn, £64m at 2021 year end rates), and the average amount drawn was Yen 9bn, £57m at year end rates (2021: Yen 8bn, £51m at 2021 year end rates). The Group utilises the credit facility throughout the year, entering into numerous short-term bank loans where maturities are less than three months. The turnover is quick and the volume is large and resultant flows are presented net in the Group's cash flow statement in accordance with IAS 7 'Cash Flow'. Interest and facility fees of £1m were incurred in 2022 (2021: £1m). Amounts drawn down are reported as loans from related parties in the above table. #### Sterling Notes: Due January 2024 In January 2017 the Group issued £500m 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 £69m of the Notes and a further £184m were repurchased in November 2021. Repurchases have been accounted for as extinguishment of the Notes. The repurchase in 2021 was at a £16m premium to the Note's carrying value, which has been reported as part of finance costs in the Income Statement. At 31 December 2022, the fair value of the Notes (Level 1) was £241m (2021: £264m). Accrued interest at 31 December 2022 amounted to £6m (2021: £6m). Unamortised issue costs were less than £1m as at 31 December 2022 (2021: £1m). Interest of £13m was incurred in 2022 (2021: £22m). The amortisation expense of issue costs in 2022 and 2021 was less than £1m. #### Sterling Notes: Due May 2026 In May 2019 the Group issued £250m unsecured Sterling Notes due May 2026. The Notes have a fixed coupon of 5.25% paid semi-annually, subject to compliance with the terms of the Notes. At 31 December 2022 the fair value of the Notes (Level 1) was £232m (2021: £278m). Accrued interest at 31 December 2022 amounted to £1m (2021: £1m). Unamortised issue costs were £1m as at 31 December 2022 (2021: £1m). Interest of £13m was incurred in 2022 (2021: £13m). The amortisation expense of issue costs in 2022 and 2021 was less than £1m. #### Sterling Notes: Due November 2028 In November 2021 the Group issued £250m unsecured Sterling Notes due November 2028. The Notes were issued at a discount of £1m, raising £249m before issue costs. The Notes have a fixed coupon of 2.625% paid semi-annually, subject to compliance with the terms of the Notes. At 31 December 2022 the fair value of the Notes (Level 1) was £184m (2021: £249m). Accrued interest at 31 December 2022 amounted to £1m (2021: £1m). Unamortised discount and issue costs were £3m (2021: £3m). Interest of £7m was incurred in 2022 (2021: £1m). The amortisation expense of discount and issue costs in 2022 and 2021 was less than £1m. #### Liquidnet Vendor Loan Notes Due March 2024 In March 2021, as part of the purchase consideration of Liquidnet, the Group issued $50m (£42m at year end exchange rates (2021: £37m)) unsecured Loan Notes due March 2024. The Notes have a fixed coupon of 3.2% paid annually. At 31 December 2022 the fair value of the Notes (Level 2) was $44m (£37m) (2021: $49m (£36m)). Accrued interest at 31 December 2022 was £1m (2021: £1m). 184 TP/ICAP GROUP PLC Annual Report and Accounts 2022 ## 26. Lease liabilities | | 2022 £m | 2021 £m | | --- | --- | --- | | Year 1 | 46 | 41 | | Year 2 | 40 | 40 | | Year 3 | 37 | 34 | | Year 4 | 35 | 39 | | Year 5 | 30 | 31 | | Onwards | 172 | 189 | | | 360 | 374 | | Less: future interest expense | (81) | (88) | | | 279 | 286 | Analysed as: | | 2022 £m | 2021 £m | | --- | --- | --- | | Included in current liabilities | 29 | 34 | | Included in non-current liabilities | 250 | 252 | | | 279 | 286 | At 31 December 2022, the Group is committed to £1m (2021: £1m) for short-term leases. ## 27. Provisions | | Property £m | Restructuring £m | Legal and other £m | Total £m | | --- | --- | --- | --- | --- | | **2022** | | | | | | At 1 January 2022 | 16 | 5 | 22 | 43 | | Charge to income statement | – | 3 | 2 | 5 | | Utilisation of provision | (3) | (1) | (5) | (9) | | Effect of movements in exchange rates | – | – | 1 | 1 | | At 31 December 2022 | 13 | 7 | 20 | 40 | | | Property £m | Restructuring £m | Legal and other £m | Total £m | | --- | --- | --- | --- | --- | | **2021** | | | | | | At 1 January 2021 | 7 | 9 | 24 | 40 | | Charge to income statement | 6 | 6 | 6 | 18 | | Acquired with acquisitions | 4 | – | – | 4 | | Utilisation of provision | (1) | (10) | (6) | (17) | | Effect of movements in exchange rates | – | – | (2) | (2) | | At 31 December 2021 | 16 | 5 | 22 | 43 | | | 2022 £m | 2021 £m | | --- | --- | --- | | Included in current liabilities | 9 | 5 | | Included in non-current liabilities | 31 | 38 | | | 40 | 43 | Property provisions outstanding as at 31 December 2022 relate to provisions in respect of building dilapidations, representing the estimated cost of making good dilapidations and disrepair on various leasehold buildings. Restructuring provisions outstanding as at 31 December 2022 relate to termination and other employee related costs. The movement during the year reflects the actions taken under the Group's cost improvement and restructuring initiatives. It is expected that the remaining obligations will be discharged during 2023. 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 arenas 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. 183 TP ICAP GROUP PLC Annual Report and Accounts 2022 Financial Statements Note s to the Consolidated Financial Statements continued for the year ended 31 December 2022 TP ICAP GROUP PLC Annual Report and Accounts 2022186 27. Provisions continued Yen LIBOR Class Actions The Group has entered into settlement agreements with the plaintiffs in Laydon v. Mizuho Bank, Ltd. et al. and Sonterra Capital Master Fund, Ltd. et al. in order to settle these class actions relating to the alleged manipulation of Yen LIBOR and Euroyen TIBOR benchmark interest rates. The United States District Court for the Southern District of New York granted preliminary approval of the settlements on 4 October 2022. Pending final approval from the class, which the Group believes to be probable, the Group has paid US$2.4 million (c.£2.0 million) into escrow having provided for this amount. Separately, pursuant to these settlements and consistent with its indemnity obligations, NEX International Limited (formerly known as ICAP plc) has paid US$2.4 million (c.£2.0 million) into escrow pending final class approval in order to resolve claims against ICAP plc and ICAP Europe Limited. This has been recorded as a provision and settlement, together with the receipt of an indemnification asset from NEX. 28. Other long-term payables 2022 £m 2021 £m Accruals and deferred income 5 2 Deferred consideration (Note 33) 55 51 60 53 29. Financial instruments (a) Financial and liquidity risk The Group does not take trading risk and does not seek to hold proprietary trading positions. Consequently, the Group is exposed to trading book market risk only in relation to incidental positions in financial instruments arising as a result of the Group’s failure to match clients’ orders precisely. The Group has limited exposure to non-trading book market risk, specifically to interest rate risk and currency risk. Thus the overall approach to the planning and management of the Group’s capital and liquidity is to ensure the Group’s solvency, i.e. its continued ability to conduct business, deliver returns to shareholders, and support growth and strategic initiatives. The Group is not subject to consolidated capital adequacy requirements following its redomiciliation to Jersey in 2021. The Group seeks to ensure that it has access to an appropriate level of cash, other forms of marketable securities and liquidity facilities to enable it to finance its ongoing operations on cost effective terms. Cash and cash equivalent balances are held with the primary objective of capital security and availability, with a secondary objective of generating returns. Funding requirements are monitored by the Group’s Finance and Treasury functions. As a normal part of its operations, the Group faces liquidity risk through the risk of being required to fund transactions that do not settle on the due date. From a risk perspective, the most problematic scenario concerns ‘fail to deliver’ transactions, where the business has received, and recognised, a security from the selling counterparty (and has paid cash in settlement of the same) but is unable to effect onward delivery of the security to the buying counterparty. Such settlement delays give rise to a funding requirement, reflecting the value of the security which the Group has been unable to deliver until such time as the delivery leg is finally settled, or the security sold, and the business has received the associated cash. The Group has addressed this funding risk by arranging overdraft facilities to cover ‘failed to deliver’ trades, either with the relevant settlement agent/depository or with a clearing bank. Under such arrangements, the facility provider will fund the value of any ‘failed to deliver’ trades until delivery of the security is effected. Certain facility providers require collateral (such as a cash deposit or parent company guarantee) to protect them from any adverse mark-to-market movement and some also charge a funding fee for providing the facility. The Group is also exposed to potential margin calls. Margin calls can be made by central counterparties under the Matched Principal broking model when not all legs of a matched principal trade are settled at the central counterparty or when there is a residual balance or confirmation error. Margin calls can be made by the Group’s clearers or correspondent clearers under the Executing Broker broking model or the Introducing Broker broking model when there is a trade error or a counterparty is slow to confirm their trade. These margin calls occur mainly in the United States and the United Kingdom. In the event of a short-term liquidity requirement, the firm has recourse to existing global cash resources, after which it could draw down on its £350m committed revolving credit facility and Yen 10bn (£63m at year end rates) committed facility with The Tokyo Tanshi Co., Ltd as additional contingency funding, less any amounts earmarked to fund acquisitions. Derivative financial instruments, such as foreign currency contracts and interest rate swaps, are entered into by the Group in order to manage its exposure to interest rate and foreign currency fluctuations or as simultaneous back-to-back transactions with counterparties. The Group does not use derivative financial instruments for speculative purposes. As at 31 December 2022, the fair value of outstanding derivatives was less than £1m (2021: liability of £1m). # **(b) Capital management** The Group's policy is to maintain a capital base and funding structure that maintains creditor, regulator and market confidence and provides flexibility for business development while also optimising returns to shareholders. The capital structure of the Group consists of debt, as set out in Note 25, cash and cash equivalents, other current financial assets and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in Notes 30 and 31. Dividends paid during the year are disclosed in Note 12 and the dividend policy is discussed in the Strategic Report. A number of the Company's subsidiaries and sub-groups are individually or collectively regulated and are required to maintain capital that is appropriate to the risks entailed in their businesses according to definitions that vary according to each jurisdiction. In addition to subsidiaries and sub-groups fulfilling their regulatory obligations, the Group undertakes periodic reviews of the current and projected regulatory requirements of each of these entities and sub-groups. # **(c) Categorisation of financial assets and liabilities** | Financial assets | FYTDL trading instruments bn | FYTDL date instruments bn | FYTDL equity instruments bn | Amortised unit bn | Total consign annual bn | | --- | --- | --- | --- | --- | --- | | **2022** | | | | | | | **Non-current financial assets measured at fair value** | | | | | | | Equity securities | – | – | 21 | – | 21 | | Corporate debt securities | – | 2 | – | – | 2 | | **Non-current financial assets not measured at fair value** | | | | | | | Other receivables | – | – | – | 13 | 13 | | Finance lease receivables | – | – | – | 38 | 38 | | | – | 2 | 21 | 51 | 74 | | **Current financial assets measured at fair value** | | | | | | | Matched Principal financial assets | 9 | – | – | – | 9 | | Fair value gains on unsettled Matched Principal transactions | 255 | – | – | – | 255 | | Government debt securities | – | 81 | – | – | 81 | | **Current financial assets not measured at fair value^{1}** | | | | | | | Term deposits | – | – | – | 93 | 93 | | Other debtors | – | – | – | 30 | 30 | | Accrued income | – | – | – | 15 | 15 | | Owned by associates and joint ventures | – | – | – | 4 | 4 | | Trade receivables | – | – | – | 382 | 382 | | Amounts due from clearing organisations | – | – | – | 77 | 77 | | Deposits paid for securities borrowed | – | – | – | 1,575 | 1,575 | | Finance lease receivables | – | – | – | 2 | 2 | | Cash and cash equivalents | – | – | – | 888 | 888 | | | 264 | 81 | – | 3,066 | 3,411 | | **Total financial assets** | **264** | **83** | **21** | **3,117** | **3,485** | 187 TP (CAP GROUP PLC Annual Report and Accounts 2022 Financial Assets Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 # **29. Financial instruments continued** # **(c) Categorisation of financial assets and liabilities continued** | Financial assets | FVTPL trading instruments Inc. | FVTOO debt instruments Inc. | FVTOO equity instruments Inc. | Amortised cap Inc. | Total carrying amount Inc. | | --- | --- | --- | --- | --- | --- | | **2021** | | | | | | | **Non-current financial assets measured at fair value** | | | | | | | Equity securities | – | – | 19 | – | 19 | | Corporate debt securities | – | 2 | – | – | 2 | | **Non-current financial assets not measured at fair value** | | | | | | | Other receivables | – | – | – | 14 | 14 | | Finance lease receivables | – | – | – | 30 | 30 | | | – | 2 | 19 | 44 | 65 | | **Current financial assets measured at fair value** | | | | | | | Matched Principal financial assets | 37 | – | – | – | 37 | | Fair value gains on unsettled Matched Principal transactions | 121 | – | – | – | 121 | | Government debt securities | – | 81 | – | – | 81 | | **Current financial assets not measured at fair value^{1}** | | | | | | | Term deposits | – | – | – | 34 | 34 | | Other debtors^{2} | – | – | – | 34 | 34 | | Accrued income | – | – | – | 14 | 14 | | Owned by associates and joint ventures | – | – | – | 5 | 5 | | Trade receivables^{2} | – | – | – | 336 | 336 | | Amounts due from clearing organisations | – | – | – | 73 | 73 | | Deposits paid for securities borrowed | – | – | – | 1,516 | 1,516 | | Finance lease receivables | – | – | – | 1 | 1 | | Cash and cash equivalents | – | – | – | 784 | 784 | | | 158 | 81 | – | 2,797 | 3,036 | | **Total financial assets** | **158** | **83** | **19** | **2,841** | **3,101** | 1 Financial assets are initially measured at fair value 2 Trade receivables have been reduced by £13m and other debtors increased by £13m from that reported in 2021 as a result of a red qualification of certain non-reading bottoms due from brokers 188 TP/ICAP GROUP PLC Annual Report and Accounts 2022 | Financial liabilities | Mandatorily at FVTPL | | Other financial liabilities | | Total scoring amount bn | | --- | --- | --- | --- | --- | --- | | | Non-current bn | Current bn | Non-current bn | Current bn | | | **2022** | | | | | | | **Financial liabilities measured at fair value** | | | | | | | Fair value losses on unsettled Matched Principal transactions | - | 255 | - | - | 255 | | Deferred consideration | 55 | 1 | - | - | 56 | | | 55 | 256 | - | - | 311 | | **Financial liabilities not measured at fair value^{1}** | | | | | | | Sterling Notes January 2024 | - | - | 247 | 6 | 253 | | Sterling Notes May 2026 | - | - | 249 | 1 | 250 | | Sterling Notes November 2028 | - | - | 247 | 1 | 248 | | Liquidnet Vendor Loan Notes March 2024 | - | - | 42 | 1 | 43 | | Other creditors | - | - | - | 108 | 108 | | Accruals^{2} | - | - | - | 113 | 113 | | Owed to associates and joint ventures | - | - | - | 3 | 3 | | Trade payables | - | - | - | 24 | 24 | | Amounts due to clearing organisations | - | - | - | 46 | 46 | | Deposits received for securities loaned | - | - | - | 1,573 | 1,573 | | Lease liabilities | - | - | 250 | 29 | 279 | | | - | - | 1,035 | 1,905 | 2,940 | | **Total financial liabilities** | **55** | **256** | **1,035** | **1,905** | **3,251** | | Financial liabilities | Mandatorily at FVTPL | | Other financial liabilities | | Total scoring amount bn | | --- | --- | --- | --- | --- | --- | | | Non-current bn | Current bn | Non-current bn | Current bn | | | **2021** | | | | | | | **Financial liabilities measured at fair value** | | | | | | | Matched Principal financial liabilities | - | 1 | - | - | 1 | | Fair value losses on unsettled Matched Principal transactions | - | 119 | - | - | 119 | | Derivatives | - | 1 | - | - | 1 | | Deferred consideration | 51 | 7 | - | - | 58 | | | 51 | 128 | - | - | 179 | | **Financial liabilities not measured at fair value^{1}** | | | | | | | Overdraft | - | - | - | 17 | 17 | | Loans with related parties | - | - | - | 51 | 51 | | Sterling Notes January 2024 | - | - | 246 | 6 | 252 | | Sterling Notes May 2026 | - | - | 249 | 1 | 250 | | Sterling Notes November 2028 | - | - | 247 | 1 | 248 | | Liquidnet Vendor Loan Notes March 2024 | - | - | 37 | 1 | 38 | | Other creditors^{3} | - | - | - | 91 | 91 | | Accruals^{2} | - | - | - | 83 | 83 | | Owed to associates and joint ventures | - | - | - | 2 | 2 | | Finance lease payable | - | - | - | 2 | 2 | | Trade payables^{3} | - | - | - | 17 | 17 | | Amounts due to clearing organisations | - | - | - | 47 | 47 | | Deposits received for securities loaned | - | - | - | 1,504 | 1,504 | | Lease liabilities | - | - | 252 | 34 | 286 | | | - | - | 1,031 | 1,857 | 2,888 | | **Total financial liabilities** | **51** | **128** | **1,031** | **1,857** | **3,067** | 1 Financial liabilities are measured at fair value on initial recognition. 2 Accruals of £200m (2021: £200m) are not recorded as financial liabilities. 3 Trade payables have been reduced by £72m and other creditors increased by £72m from that reported in 2021 as a result of certain non-trading balances due to customers being reclassified. 189 TIP ICAP GROUP PLC Annual Report and Accounts 2022 Financial liabilities Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 TP ICAP GROUP PLC Annual Report and Accounts 2022190 29. Financial instruments continued (d) Credit and market risk The Group is exposed to credit risk in the event of default by counterparties in respect of its Name Passing, Executing Broker, Introducing Broker and corporate treasury operations. The Group does not bear any significant concentration risk to either counterparties or markets. The credit risk in respect of the Name Passing business, Introducing Broker and the information sales and risk management services is limited to the collection of outstanding commission and transaction fees and this is managed proactively by the Group’s accounts receivable function. As at the year end, 56% of the Group’s trade receivables is to investment grade counterparts (rated BBB-/Baa3 or above). 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. As at the year end, 84% of the Group’s counterparty exposure is to investment grade counterparts. The credit risk on cash, cash equivalents, and financial assets at amortised cost, FVTOCI or FVTPL, is subject to frequent monitoring. All financial institutions that are transacted with are approved and internal limits are assigned to each one based on a combination of factors including external credit ratings. As at the year end, 97% of cash and cash equivalents is deposited with investment grade rated financial institutions. The ‘maximum exposure to credit risk’ is the maximum exposure before taking account of any securities or collateral held, or other credit enhancements, unless such enhancements meet accounting offsetting requirements. For financial assets recognised on the balance sheet, excluding equity instruments as they are not subject to credit risk, the maximum exposure to credit risk equals their carrying amount The Matched Principal business involves the Group acting as a counterparty on trades which are undertaken on a delivery versus payment basis. The Group manages its market risk in these transactions through appropriate policies and procedures in order to mitigate this risk including stringent on-boarding requirements, and setting appropriate limits for all counterparties which are closely monitored by the regional risk teams to restrict any potential loss through counterparty default. Settlement of these transactions takes place according to the relevant market rules and conventions and the credit risk is considered to be minimal. # **(e) Maturity profile of financial liabilities, lease liabilities and off-balance sheet items** The table below reflects the contractual maturities, including future interest obligations, of the Group's financial and lease liabilities as at 31 December. Matched Principal financial liabilities are included in the 'Due within 3 months' time bucket, and not by contractual maturity because such balances are typically held for short periods of time. The settlement amount of open Matched Principal purchases as at the reporting date are included in the 'Due within 3 months' time bucket reflecting their expected settlement amount and date. | | Due within 3 months bn | Due between 3 months and 12 months bn | Due between 1 year and 3 years bn | Due after 3 years bn | Total bn | | --- | --- | --- | --- | --- | --- | | **2022** | | | | | | | Settlement of open Matched Principal purchases^{1} | **104,876** | – | – | – | **104,876** | | Deposits received for securities loaned | **1,573** | – | – | – | **1,573** | | Trade payables | **24** | – | – | – | **24** | | Amounts due to clearing organisations | **46** | – | – | – | **46** | | Other creditors | **108** | – | – | – | **108** | | Accruals | **113** | – | – | – | **113** | | Owed to associate and joint ventures | **3** | – | – | – | **3** | | Lease liabilities | **11** | **35** | **142** | **172** | **360** | | Sterling Notes January 2024 | **6** | **6** | **253** | – | **265** | | Sterling Notes May 2026 | – | **13** | **283** | – | **296** | | Sterling Notes November 2028 | – | **7** | **26** | **257** | **290** | | Liquidnet Vendor Loan Notes March 2024 | **1** | – | **43** | – | **44** | | Deferred consideration | **1** | – | **55** | – | **56** | | | **106,762** | **61** | **802** | **429** | **108,054** | | | Due within 3 months bn | Due between 3 months and 12 months bn | Due between 1 year and 3 years bn | Due after 3 years bn | Total bn | | --- | --- | --- | --- | --- | --- | | **2021** | | | | | | | Matched Principal financial liabilities | 1 | – | – | – | 1 | | Settlement of open Matched Principal purchases^{1} | 32,984 | – | – | – | 32,984 | | Deposits received for securities loaned | 1,504 | – | – | – | 1,504 | | Trade payables^{2} | 17 | – | – | – | 17 | | Amounts due to clearing organisations | 47 | – | – | – | 47 | | Other creditors^{2} | 91 | – | – | – | 91 | | Finance lease payable | 2 | – | – | – | 2 | | Accruals | 83 | – | – | – | 83 | | Owed to associate and joint ventures | 2 | – | – | – | 2 | | Lease liabilities | 10 | 31 | 144 | 189 | 374 | | Derivatives | 1 | – | – | – | 1 | | Overdraft | 17 | – | – | – | 17 | | Related party loan | 51 | – | – | – | 51 | | Sterling Notes January 2024 | 6 | 6 | 267 | – | 279 | | Sterling Notes May 2026 | – | 13 | 296 | – | 309 | | Sterling Notes November 2028 | – | 7 | 26 | 263 | 296 | | Liquidnet Vendor Loan Notes March 2024 | 1 | – | 39 | – | 40 | | Deferred consideration | 5 | 3 | 50 | – | 58 | | | **54,822** | **60** | **822** | **452** | **56,156** | 1 Settlement of open Matched Principal purchases represents the payment in exchange for Matched Principal financial assets pending their onward sale. The onward sale results in offices from the settlement of related open Matched principal sales. 2 Trade payables have been reduced by 67.3m and other creditors increased by 67.7m from that reported in 2021 as a result of certain non-trading balances due to customers being reclassified. 191 TIP ICAP GROUP PLC Annual Report and Accounts 2022 TIP ICAP GROUP PLC Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 # **29. Financial instruments continued** # **(f) Foreign currency sensitivity analysis** The table below illustrates the sensitivity of the profit for the year with regard to currency movements on financial assets and liabilities denominated in foreign currencies as at the year end. The sensitivity of the Group's equity with regard to its net foreign currency investments at the year end is also shown below. Based on a 10% weakening in the following exchange rates against Sterling, the effects would be as follows: | | Change in foreign currency financial assets and liabilities – profit or loss | | Change in translation of foreign operations – equity | | | --- | --- | --- | --- | --- | | | 2022 £m | 2021 £m | 2022 £m | 2021 £m | | Currency: | | | | | | > USD | (7) | (3) | (112) | (95) | | > EUR | (7) | (5) | (10) | (10) | | > SGD | – | – | (10) | (9) | | > HKD | – | – | (10) | (8) | | > JPY | – | – | (8) | (8) | | > AUD | – | – | (4) | (5) | Unless specifically hedged, the Group would experience equal and opposite foreign exchange movements should the currencies strengthen against Sterling. As at 31 December 2022 and 2021 the Group had no outstanding net investment hedges. # **(g) Interest rate sensitivity analysis** Interest on floating rate financial instruments is reset at intervals of less than one year. The Group's exposure to interest rates arises on cash and cash equivalents and money market instruments, including drawdowns on the revolving credit and Tokyo Tanshi committed facilities. The Sterling Notes are fixed rate financial instruments. A 100 basis point change in interest rates, applied to average floating rate financial instrument assets and liabilities during the year, would result in the following impact on profit or loss. | | 2022 | | 2021 (revised) | | | --- | --- | --- | --- | --- | | | < 100bps £m | 100bps £m | < 100bps £m | 100bps £m | | Income/(expense) arising on: | | | | | | > floating rate assets | 4 | (4) | 1 | (1) | | > floating rate liabilities | (1) | – | (1) | – | | Net income/(expense) for the year | 3 | (4) | – | (1) | 1 2021 comparative has been revisited to reflect the calculation methodology used in 2022. # **(h) Fair value measurements recognised in the statement of financial position** The following table provides an analysis of 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: - Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; - 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 - 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). 192 TPJCAP GROUP PLC Annual Report and Accounts 2022 | | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | | --- | --- | --- | --- | --- | | **2022** | | | | | | **Financial assets measured at fair value** | | | | | | Matched Principal financial assets | 9 | - | - | 9 | | Fair value gain on unsettled Matched Principal transactions | 255 | - | - | 255 | | Equity instruments | - | 11 | 10 | 21 | | Corporate debt securities | - | - | 2 | 2 | | Government debt securities | 81 | - | - | 81 | | **Financial liabilities measured at fair value** | | | | | | Fair value losses on unsettled Matched Principal transactions | (255) | - | - | (255) | | Deferred consideration | - | - | (56) | (56) | | | **90** | **11** | **(44)** | **57** | | | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | | --- | --- | --- | --- | --- | | **2021** | | | | | | **Financial assets measured at fair value** | | | | | | Matched Principal financial assets | 37 | - | - | 37 | | Fair value gain on unsettled Matched Principal transactions | 121 | - | - | 121 | | Equity instruments | - | 10 | 9 | 19 | | Corporate debt securities | - | - | 2 | 2 | | Government debt securities | 81 | - | - | 81 | | **Financial liabilities measured at fair value** | | | | | | Matched Principal financial liabilities | (1) | - | - | (1) | | Fair value losses on unsettled Matched Principal transactions | (119) | - | - | (119) | | Derivatives | (1) | - | - | (1) | | Deferred consideration | - | (5) | (53) | (58) | | | **118** | **5** | **(42)** | **81** | In deriving the fair value of equity and derivative instruments valuation models were used which incorporated observable market data. There were no significant inputs used in these models that were unobservable. There is no material sensitivity to unobservable inputs used in these models. The fair value of deferred consideration is based on valuation models incorporating unobservable inputs reflecting the estimated performance conditions specific to each acquisition. Inputs are based on management's financial forecasts for the relevant performance condition and relevant duration. As inputs are acquisition specific outcomes can vary from that used to estimate fair values at a reporting date. Where deferred consideration is non-contingent, or where conditions have been met but unsettled at the year end, such amounts are included as Level 2. There were no transfers between Level 1 and 2 during the year. Reconciliation of Level 3 fair value measurements of financial assets | | Equity instruments (as FV10C2) £m | Debt securities (as FV10C2) £m | Deferred consideration (as FVTPL) £m | 2022 Total £m | 2021 Total £m | | --- | --- | --- | --- | --- | --- | | Balance as at 1 January | 9 | 2 | (53) | (42) | (15) | | Net change in fair value - included in 'administrative expenses' | - | - | (8) | (8) | (2) | | Acquisitions during the year | - | - | - | - | (39) | | Amounts settled during the year | - | - | 5 | 5 | 11 | | Transfer of liabilities to Level 2 | - | - | - | - | 5 | | Effect of movements in exchange rates | 1 | - | - | 1 | - | | Balance as at 31 December | **10** | **2** | **(56)** | **(44)** | **(42)** | 195 TIP/CAP GROUP PLC Annual Report and Accounts 2022 Financial Assets Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 # **30. Share capital** | | 2022 Rs. | 2021 Rs. | | --- | --- | --- | | **Allotted, issued and fully paid** | | | | Ordinary shares of 25p | | | | As at 1 January (2021: TP ICAP plc) | **788,670,932** | 563,336,380 | | Issue of ordinary shares - Rights Issue | - | 225,334,552 | | Scheme of Arrangement: Cancellation of TP ICAP plc shares | - | (788,670,932) | | Scheme of Arrangement: Issue of TP ICAP Group plc ordinary shares | - | 788,670,932 | | As at 31 December (2022 and 2021: TP ICAP Group plc) | **788,670,932** | 788,670,932 | # **31. Reconciliation of shareholders' funds** (a) Share capital, Share premium account, Merger reserve | | Share capital £m | Share premium account £m | Merger reserve £m | Total £m | | --- | --- | --- | --- | --- | | **2022** | | | | | | As at 1 January 2022 and 31 December 2022 | **197** | - | - | **197** | | **2021** | | | | | | As at 1 January 2021 | 141 | 17 | 1,384 | 1,542 | | Rights Issue^{1} | 56 | 259 | - | 315 | | Rights issue costs^{1} | - | (6) | - | (6) | | Scheme of Arrangement: Cancellation of existing shares and reserves^{2} | (197) | (270) | (1,384) | (1,851) | | Scheme of Arrangement: Issue of ordinary shares^{2} | 197 | 1,418 | - | 1,615 | | Capital reduction^{3} | - | (1,418) | - | (1,418) | | As at 31 December 2021 | 197 | - | - | 197 | 1 On 16 February 2021, TP ICAP plc raised £3.8bn in cash, with issue costs of £6m, from a two for five share rights issue. The funds issued were to part fund the acquisition of Liap other. 2 See Note 31 (b) Other reserves. Reorganization reserve. 3 On 26 February 2021, TP ICAP Group plc effected a reduction of its share capital by cancelling its share premium and recognizing an equivalent increase in the profits and loss account in reserves. # **Merger reserve** The merger reserve related to prior share-based acquisitions and represented the difference between the value of those acquisitions and the amount required to be recorded in share capital. As part of the Scheme of Arrangement in 2021, the merger reserve was transferred to the reorganisation reserve. 194 TP ICAP GROUP PLC Annual Report and Accounts 2022 # (b) Other reserves | | Reverse acquisition reserve £m | Reorganisation reserve £m | Revaluation reserve £m | Hedging and translation £m | Own shares £m | Other reserves £m | | --- | --- | --- | --- | --- | --- | --- | | **2022** | | | | | | | | As at 1 January 2022 | - | (946) | 5 | (38) | (26) | (1,005) | | Exchange differences on translation of foreign operations | - | - | - | 152 | - | 152 | | Taxation on components of other comprehensive income | - | - | - | (5) | - | (5) | | Total comprehensive income | - | - | - | 147 | - | 147 | | Share settlement of share-based payment awards | - | - | - | - | 7 | 7 | | Own shares acquired for employee trusts | - | - | - | - | (3) | (3) | | As at 31 December 2022 | - | (946) | 5 | 109 | (22) | (854) | | **2021** | | | | | | | | As at 1 January 2021 | (1,182) | - | 4 | (41) | (27) | (1,246) | | Fair value movement on net investment hedge | - | - | - | 5 | - | 5 | | Exchange differences on translation of foreign operations | - | - | 1 | 1 | - | 2 | | Taxation on components of other comprehensive income | - | - | - | (1) | - | (1) | | Total comprehensive income | - | - | 1 | 5 | - | 4 | | Scheme of Arrangement: Cancellation of existing shares and reserves^{1} | 1,182 | 669 | - | - | - | 1,851 | | Scheme of Arrangement: Issue of ordinary shares^{1} | - | (1,615) | - | - | - | (1,615) | | Share settlement of share-based payment awards | - | - | - | - | 3 | 3 | | Own shares acquired for employee trusts | - | - | - | - | (2) | (2) | | As at 31 December 2021 | - | (946) | 5 | (38) | (26) | (1,005) | 1 See Note: (1)(b) Other reserves. Reorganisation reserve. # **Reverse acquisition reserve** The acquisition of Collins Stewart Tullett plc by Tullett Prebon plc in 2006 was accounted for as a reverse acquisition. Under IFRS, the consolidated accounts of Tullett Prebon plc are prepared as if they were a continuation of the consolidated accounts of Collins Stewart Tullett plc. The reverse acquisition reserve represents the difference between the initial equity share capital of Tullett Prebon plc and the share capital and share premium of Collins Stewart Tullett plc at the time of the acquisition. This resulted in the consolidated net assets before and after the acquisition remaining unchanged. As part of the Scheme of Arrangement in 2021 the reverse acquisition reserve was transferred to the reorganisation reserve. # **Reorganisation reserve** On 26 February 2021 the Group adjusted its corporate structure. TP ICAP Group plc was incorporated in Jersey on 23 December 2019 and became the new listed holding company of the Group on 26 February 2021 via a court-approved scheme of arrangement under Part 26 of the UK Companies Act 2006, with the former holding company, TP ICAP plc subsequently being renamed TP ICAP Limited. Under the scheme of arrangement, shares in the former holding company of the Group were cancelled and the same number of new ordinary shares were issued to the new holding company in consideration for the allotment to shareholders of one ordinary share of 25 pence in the new holding company for each ordinary share of 25 pence they held in the former holding company. The share for share exchange between TP ICAP plc and TP ICAP Group plc was a common control transaction has been accounted for using merger accounting principles. Under these principles the results and cash flows of all the combining entities are brought into the consolidated financial statements from the beginning of the financial year in which the combination occurs and comparative figures also reflect the combination of the entities. The Group's equity is adjusted to reflect that of the new holding company, but in all other aspects the Group results and financial position are unaffected by the change and reflect the continuation of the Group. In adjusting the Group's equity to reflect that of the new holding company, the sum of share capital, share premium, merger reserve and reverse acquisition reserves under the former holding company are replaced by the share capital and share premium of the new holding company together with a reorganisation reserve. # **Revaluation reserve** The revaluation reserve represents the remeasurement of assets in accordance with IFRS that have been recorded in other comprehensive income. # **Hedging and translation** The hedging and translation reserve records revaluation gains and losses arising on net investment hedges and the effect of changes in exchange rates on translation of foreign operations recorded in other comprehensive income. As at 31 December 2022, £11m relates to amounts arising on previous net investment hedges (2021: £11m). # **Own shares** As at 31 December 2022, the TP ICAP plc EBT held 8,803,320 ordinary shares (2021: 9,100,625 ordinary shares) with a fair value of £15m (2021: £14m). During the year the Trust delivered 2,454,633 shares in satisfaction of vesting share-based awards and purchased 2,157,328 ordinary shares under the rights issue and in the open market at a cost of £3m. In 2021 the Trust delivered 1,525,505 shares in satisfaction of vesting share-based awards and purchased 1,995,379 ordinary shares in the open market at a cost of £2m. 195 TP ICAP GROUP PLC Annual Report and Accounts 2022 Notes to the Consolidated Financial Statements continued for this year ended 31 December 2022 # **31. Reconciliation of shareholders' funds continued** (c) Total equity | | Equity attributable to equity holders of the parent | | | | Non-controlling interests £m | Total equity £m | | --- | --- | --- | --- | --- | --- | --- | | | Total from Note 31(a) £m | Total from Note 31(b) £m | Retained earnings £m | Total £m | | | | **2022** | | | | | | | | As at 1 January 2022 | 197 | (1,005) | 2,769 | 1,961 | 17 | 1,978 | | Profit for the year | - | - | 103 | 103 | 3 | 106 | | Exchange differences on translation of foreign operations | - | 152 | - | 152 | 1 | 153 | | Taxation on components of other comprehensive income | - | (3) | - | (3) | - | (3) | | Total comprehensive income | - | 147 | 103 | 250 | 4 | 254 | | Dividends paid | - | - | (78) | (78) | (3) | (81) | | Share settlement of share-based payment awards | - | 7 | (7) | - | - | - | | Own shares acquired for employee trusts | - | (3) | - | (3) | - | (3) | | Credit arising on share-based payment awards (Note 32) | - | - | 13 | 13 | - | 13 | | As at 31 December 2022 | 197 | (854) | 2,800 | 2,143 | 18 | 2,161 | | | Equity attributable to equity holders of the parent | | | | Non-controlling interests £m | Total equity £m | | --- | --- | --- | --- | --- | --- | --- | | | Total from Note 31(a) £m | Total from Note 31(b) £m | Retained earnings £m | Total £m | | | | **2021** | | | | | | | | As at 1 January 2021 | 1,542 | (1,246) | 1,385 | 1,679 | 19 | 1,698 | | Profit for the year | - | - | 5 | 5 | 3 | 8 | | Fair value movement on net investment hedge | - | 3 | - | 3 | - | 3 | | Exchange differences on translation of foreign operations | - | 2 | - | 2 | - | 2 | | Remeasurement of defined benefit pension schemes | - | - | 3 | 3 | - | 3 | | Taxation on components of other comprehensive income | - | (1) | - | (1) | - | (1) | | Total comprehensive income | - | 4 | 8 | 12 | 3 | 15 | | Rights issue | 315 | - | - | 315 | - | 315 | | Rights issue costs | (6) | - | - | (6) | - | (6) | | Scheme of Arrangement: Cancellation of existing shares and reserves | (1,851) | 1,851 | - | - | - | - | | Scheme of Arrangement: Issue of ordinary shares | 1,615 | (1,615) | - | - | - | - | | Capital reduction | (1,418) | - | 1,418 | - | - | - | | Dividends paid | - | - | (47) | (47) | (2) | (49) | | Share settlement of share-based payment awards | - | 3 | (3) | - | - | - | | Own shares acquired for employee trusts | - | (2) | - | (2) | - | (2) | | Decrease in non-controlling interests | - | - | - | - | (3) | (3) | | Credit arising on share-based payment awards (Note 32) | - | - | 10 | 10 | - | 10 | | As at 31 December 2021 | 197 | (1,005) | 2,769 | 1,961 | 17 | 1,978 | 196 TPJCAP GROUP PLC Annual Report and Accounts 2022 ### 33. Share-based awards #### Deferred Bonus Plan Annual awards are made to Executive Directors and the Group's Senior Managers under the Group's Deferred Bonus Plan. Under this Plan, the Group's Executive Directors have 50% of their annual discretionary bonus awarded in deferred shares, and employees identified as senior managers have up to 50% (2021: 35%) of their annual discretionary bonus awarded in deferred shares. These awards will be settled with TP ICAP Group plc shares and are subject to the completion of service conditions and the fulfilment of other conduct requirements. The number of shares in respect of a bonus year is determined after the close period for that year at the then market price, and the awards vest over three years from the grant. The fair value of the shares equates to the monetary value of the awards at grant date and includes the value of expected dividends that will accrue to the beneficiaries. Awards will be settled by the TP ICAP plc EBT from shares purchased by it in the open market. | | Executive Directors No. | Senior Managers No. | Total No. | | --- | --- | --- | --- | | **2022** | | | | | Outstanding at the beginning of the year | 1,180,363 | 5,056,460 | 6,236,823 | | Granted during the year | 630,005 | 1,913,555 | 2,543,560 | | Forfeited during the year | - | (408,051) | (408,051) | | Settled during the year | (155,408) | (1,879,522) | (2,034,930) | | **Outstanding at the end of the year** | **1,654,960** | **4,682,442** | **6,337,402** | | **2021** | | | | | Outstanding at the beginning of the year | 666,772 | 4,419,705 | 5,086,477 | | Impact of bonus element of the 2021 Rights Issue | 81,346 | 539,142 | 620,488 | | Granted during the year | 524,249 | 1,580,764 | 2,105,013 | | Forfeited during the year | - | (46,494) | (46,494) | | Settled during the year | (92,004) | (1,436,657) | (1,528,663) | | **Outstanding at the end of the year** | **1,180,363** | **5,056,460** | **6,236,823** | At the year end closing share price of 174.50p the estimated total number of deferred shares for the 2022 bonus year was 5,430,847. #### Long Term Incentive Plan The Long Term Incentive Plan ("LTIP") is for Executive Directors and other senior employees. Awards made to Executive Directors are up to a maximum of 2.5x base salary. Awards made to senior employees, based on the recommendation of the Chief Executive Officer and subject to approval by the Remuneration Committee, are up to a maximum of 2x base salary. All awards are subject to agreed performance conditions applicable to each grant. | | 2022 No. | 2021 No. | | --- | --- | --- | | Outstanding at the beginning of the year | 7,929,908 | 4,051,329 | | Impact of bonus element of the 2021 Rights Issue | - | 491,825 | | Granted during the year | - | 3,612,668 | | Forfeited during the year | (1,804,936) | (205,912) | | **Outstanding at the end of the year** | **6,124,972** | **7,929,908** | In 2021, shares to a maximum of 1,665,842 were awarded to the Executive Directors. This award is subject to performance conditions measured over the three-year period 2021 to 2023 with 65% subject to relative total shareholder return targets and 35% subject to new business growth targets. A separate award of 1,946,826 shares was made to senior employees which is subject to the completion of service conditions and the fulfilment of other conduct requirements, vesting three years from the date of grant. Of this award, 205,912 shares were forfeited during the year. At the end of each performance period, the number of shares vesting will be determined based on the application of the relevant performance conditions and will be subject to a two-year holding period. During the holding period, the shares cannot be sold (other than to cover the cost of any applicable taxes) and will be eligible for dividend equivalence. Under the Scheme Rules awards may be settled through the issue of new shares, release of treasury shares or using shares purchased in the market. 197 TP ICAP GROUP PLC Annual Report and Accounts 2022 TIP ICAP GROUP PLC Notes to the Consolidated Financial Statements continued for this year ended 31 December 2022 # 32. Share-based awards continued # Restricted Share Plan The Restricted Share Plan ("RSP"), introduced in 2022, is for Executive Directors and other senior employees. Awards made to Executive Directors are up to a maximum of 1.25x base salary. Awards made to senior employees are based on the recommendation of the Chief Executive Officer and subject to approval by the Remuneration Committee. All awards are subject to agreed performance conditions applicable to each grant. | | 2022 No. | 2021 No. | | --- | --- | --- | | Granted during the year | 3,400,957 | - | | Forfeited during the year | - | - | | Outstanding at the end of the year | 3,400,957 | - | In 2022, shares to a maximum of 1,688,467 were awarded to the Executive Directors. This award is subject to performance conditions measured over the three-year period 2021 to 2023. Details of the financial targets applicable to this award are set out in the Report of the Remuneration Committee on page 155. Separate awards amounting to 1,712,490 shares were made to senior employees which are subject to the completion of performance conditions and the fulfilment of other conduct requirements, vesting three years from the date of grant. Under the Scheme Rules awards may be settled through the issue of new shares, release of treasury shares or using shares purchased in the market. # Special Equity Award Plan The Special Equity Award Plan ("SEAP") is for eligible employees. The Executive Directors are not eligible for awards under this plan. Awards are made to eligible employees based on the recommendation of the Chief Executive Officer and subject to approval by the Remuneration Committee. Awards are subject to the completion of service conditions and the fulfilment of other conduct requirements and vest three years from the date of grant. The fair value of the shares equates to the monetary value of the awards at grant date and includes the value of expected dividends that will accrue to the beneficiaries. | | 2022 No. | 2021 No. | | --- | --- | --- | | Outstanding at the beginning of the year | 2,251,932 | 665,671 | | Impact of bonus element of the 2021 Rights Issue | - | 81,212 | | Granted during the year | 6,268,163 | 1,573,193 | | Forfeited during the year | (849,134) | (68,144) | | Settled during the year | (424,758) | - | | Outstanding at the end of the year | 7,446,203 | 2,251,932 | Awards will be settled by the TP ICAP plc EBT from shares purchased by it in the open market. # Save As You Earn share option plan The Group has two Save As You Earn ("SAYE") share option plans in operation as at 31 December 2022. Eligible employees can save up to £500 per month with the option to use the savings to acquire shares. Options are exercisable within six months following the third anniversary of the commencement of a three-year savings contract, or in the case of redundancy, injury, disability or retirement, a reduced number of options are exercisable within six months of ceasing employment. The exercise price of the award granted in 2022 was 1199.1p and was set at a 20% discount to the market value immediately preceding the date of invitation. The exercise price of the award granted in 2021 was 1929.4p and was set at a 20% discount to the market value immediately preceding the date of invitation. The fair values of share options are calculated using a Black-Scholes model. The 2022 grant has a 28.1p fair value, based on the share price at the date of the grant of 151.8p, estimated volatility of 36%, estimated dividend yield of 4.65% and a risk free rate of 1.62%. The 2021 grant has a 68.5p fair value, based on the share price at the date of the grant of 241.1p, estimated volatility of 39%, estimated dividend yield of 3.20% and a risk free rate of 0.11%. | 2022 | No. of options | Weight £ | | --- | --- | --- | | Outstanding at the beginning of the year | 5,425,567 | 1.9294 | | Granted during the year | 7,673,726 | 1.1997 | | Lapsed during the year | (3,395,643) | 1.8360 | | Outstanding at the end of the year | 7,803,650 | 1.2752 | | 2021 | No. of options | Weight £ | | Granted during the year | 7,059,105 | 19294 | | Lapsed during the year | (1,633,538) | 19294 | | Outstanding at the end of the year | 5,425,567 | 19294 | 1 Weighted average exercise price. 198 TP ICAP GROUP PLC Annual Report and Accounts 2022 Under the Scheme Rules awards may be settled through the issue of new shares, release of treasury shares or using shares purchased in the market. #### Global Equity Linked Plan The Global Equity Linked Plan is for eligible brokers. Under this Plan, eligible brokers with performance bonuses and initial contract payments over agreed financial values receive a proportion of their payment in deferred shares. The deferred shares will be settled in cash by reference to the TP ICAP Group plc share price at vesting and are subject to the completion of service conditions of between three to five years, and the fulfilment of other conduct requirements. The fair value of the shares equates to the monetary value of the awards at grant date and includes the value of dividends that will accrue to the beneficiaries. | | 2022 £m | 2021 £m | | --- | --- | --- | | Outstanding at the beginning of the year | **2,595,853** | 419,004 | | Impact of bonus element of the 2021 Rights Issue | – | 51,119 | | Granted during the year | **6,905,424** | 2,168,730 | | Forfeited during the year | **(2,617)** | – | | Settled during the year | **(931,019)** | (43,000) | | Outstanding at the end of the year | **8,567,641** | 2,595,853 | Under the Scheme Rules awards are cash settled on vesting. | | 2022 £m | 2021 £m | | --- | --- | --- | | Charge arising from the Deferred Bonus Plan | **5** | 6 | | Charge arising from the Long Term Incentive Plan | **1** | 1 | | Charge arising from the Special Equity Award Plan | **3** | 1 | | Charge arising from the SAYE Plan | **3** | 2 | | Charge arising from the Restricted Share Plan | **1** | – | | Charge arising from the Global Equity Linked Plan | **7** | 2 | | | **20** | 12 | #### 33. Acquisitions ##### Analysis of deferred consideration in respect of acquisitions Certain acquisitions made by the Group are satisfied in part by deferred consideration, comprising contingent and non-contingent amounts, depending on the terms of each acquisition. The amount of contingent consideration payable is dependent upon the performance of each acquisition relative to the performance conditions applicable to that acquisition. The Group has re-estimated the amounts due where necessary, with any corresponding adjustments being made to profit or loss. The actual outcome may differ from these estimates. | | 2022 £m | 2021 £m | | --- | --- | --- | | At 1 January | **58** | 31 | | Acquisitions during the year | – | 59 | | Adjustments to deferred consideration charged to the Income Statement | **8** | 2 | | Cash settled | **(10)** | (14) | | Effect of movements in exchange rates | – | – | | At 31 December | **56** | 58 | | Amounts falling due within one year | **1** | 7 | | Amounts falling due after one year | **55** | 51 | | At 31 December | **56** | 58 | 199 TP ICAP GROUP PLC Annual Report and Accounts 2022 T E A C A B C A B C A B C A B C A B C A B C A B C A B C A B C A B C A B C A B C A B C A B C A B C Notes to the Consolidated Financial Statements continued for this year ended 31 December 2022 # 34. Reconciliation of operating result to net cash flow from operating activities | | 2022 £m | 2021 £m | | --- | --- | --- | | **Operating profit** | **163** | **97** | | Adjustments for | | | | > Share-based payment charge | 13 | 10 | | > Pension scheme administration costs^{1} | 1 | 1 | | > Pension scheme post service and settlement costs | 1 | 1 | | > Depreciation of property, plant and equipment | 23 | 23 | | > (Gain)/loss on disposal of property, plant and equipment | (3) | 1 | | > Impairment of property, plant and equipment | 5 | 10 | | > Gain on derecognition of right-of-use assets/lease liability | (3) | - | | > Depreciation of right-of-use assets | 26 | 29 | | > Impairment of right-of-use assets | 4 | 6 | | > Amortisation of intangible assets | 33 | 30 | | > Impairment of intangible assets | - | 6 | | > Amortisation of intangible assets arising on consolidation | 45 | 46 | | > Impairment of intangible assets arising on consolidation | 20 | - | | > Remeasurement of deferred consideration | 8 | 2 | | > Unrealised foreign exchange loss on Vendor Loan Notes | 5 | - | | **Net operating cash flow before movement in working capital** | **341** | **262** | | Increase in trade and other receivables | (24) | (16) | | Decrease/(increase) in net Matched/Principal related balances^{1} | 27 | (36) | | (Increase)/decrease in net balances with Clearing Organisations | (1) | 12 | | Decrease in net stock lending balances | 12 | 6 | | Increase/(decrease) in trade and other payables | 76 | (14) | | Decrease in provisions | (4) | (2) | | Increase/(decrease) in non-current liabilities | 3 | (3) | | **Net cash generated from operations** | **430** | **209** | | Income taxes paid | (51) | (39) | | Fees paid on bank and other loan facilities | (2) | (2) | | Interest paid | (36) | (42) | | Interest paid – finance leases | (17) | (15) | | **Net cash flow from operating activities** | **324** | **111** | $^{1}$ Included within Other administrative costs (Note 5) 290 TP/ICAP GROUP PLC Annual Report and Accounts 2022 ### 35. Analysis of net debt including lease liabilities | | At 1 January £m | Cash flow £m | Non-cash items £m | Acquired with acquisitions £m | Exchange rate movements £m | At 31 December £m | | --- | --- | --- | --- | --- | --- | --- | | **2022** | | | | | | | | Cash and cash equivalents | 784 | 66 | – | – | 38 | 888 | | Overdrafts | (17) | 17 | – | – | – | – | | | 767 | 83 | – | – | 38 | 888 | | Financial investments | 115 | 50 | – | – | 9 | 174 | | Bank loan due within one year | – | – | – | – | – | – | | Loans from related parties | (51) | 47^{1} | – | – | 4 | – | | Sterling Notes January 2024 | (252) | 13^{2} | (14) | – | – | (253) | | Sterling Notes May 2026 | (250) | 13^{2} | (13) | – | – | (250) | | Sterling Notes November 2028 | (248) | 7^{3} | (7) | – | – | (248) | | Liquidnet Vendor Loan Notes | (38) | 1^{4} | (1) | – | (5) | (43) | | Total debt excluding lease liabilities | (839) | 81 | (35) | – | (1) | (794) | | Lease liabilities | (286) | 46^{5} | (18) | – | (21) | (279) | | Total financing liabilities | (1,125) | 127 | (53) | – | (22) | (1,073) | | Net debt | (243) | 260 | (53) | – | 25 | (11) | | | At 1 January £m | Cash flow £m | Non-cash items £m | Acquired with acquisitions £m | Exchange rate movements £m | At 31 December £m | | --- | --- | --- | --- | --- | --- | --- | | **2021** | | | | | | | | Cash and cash equivalents | 656 | 129 | – | – | (1) | 784 | | Overdrafts | (7) | (11) | – | – | 1 | (17) | | | 649 | 118 | – | – | – | 767 | | Financial investments | 127 | (11) | – | – | (1) | 115 | | Bank loan due within one year | – | 5^{6} | – | – | (5) | – | | Loans from related parties | (28) | (27) | – | – | 4 | (51) | | Sterling Notes January 2024 | (440) | 210^{7} | (22) | – | – | (253) | | Sterling Notes May 2026 | (250) | 13^{2} | (13) | – | – | (250) | | Sterling Notes November 2028 | – | (247)^{8} | (1) | – | – | (248) | | Liquidnet Vendor Loan Notes | – | – | (37) | – | (1) | (38) | | Total debt excluding lease liabilities | (718) | 146 | (73) | – | (2) | (839) | | Lease liabilities | (212) | 43^{9} | (26) | (91) | – | (286) | | Total financing liabilities | (930) | (3) | (99) | (91) | (2) | (1,125) | | Net debt | (154) | 104 | (99) | (91) | (3) | (243) | 1. Relates to Totam loan repayment. 2. Relates to interest paid reported as a cash outflow from operating activities. 3. Relates to principal repurchased of £18/m reported as a cash outflow from financing activities plus £2bn of interest paid reported as a cash outflow from operating activities. 4. Relates to principal received of £250m (rev £3m of discount) and debt issue costs reported as a cash outflow from financing activities. 5. Relates to interest paid of £17m (2021: £15m) reported as a cash outflow from operating activities and principal paid of £24m (2021: £24m) reported as a cash outflow from financing activities. 6. Relates to currency differences arising on foreign currency drawdowns and repayments. Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments with an original maturity of three months or less. As at 31 December 2022 cash and cash equivalents, net of overdrafts, amounted to £888m (2021: £767m) of which £104m (2021: £77m) represent amounts subject to regulatory restrictions and are not readily available to be used for other purposes within the Group. Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. Financial investments comprise short-term government securities, term deposits and restricted funds held with banks and clearing organisations. Non-cash items represent interest expense, the amortisation of debt issue costs and recognition/derecognition of lease liabilities. 201 TP ICAP GROUP PLC Annual Report and Accounts 2022 Financial Summary Notes to the Consolidated Financial Statements continued for this year ended 31 December 2022 ### 36. Contingent liabilities #### Bank Bill Swap Reference Rate case On 16 August 2016, a complaint was filed in the United States District Court for the Southern District of New York naming Tullett Prebon plc, ICAP plc, ICAP Australia Pty Ltd and Tullett Prebon (Australia) Pty. Limited as defendants together with various Bank Bill Swap Reference Rate ('BBSW') setting banks. The complaint alleges collusion by the defendants to fix BBSW-based derivatives prices through manipulative trading during the fixing window and false BBSW rate submissions. On 26 November 2018, the Court dismissed all of the claims against the TP ICAP defendants and certain other defendants. On 28 January 2019, the Court ordered that a stipulation signed by the plaintiffs and the TP ICAP defendants meant that the TP ICAP defendants were not required to respond to any Proposed Second Amended Class Action Complaint ('PSAC') that the plaintiffs were seeking to file. On 3 April 2019 the plaintiffs filed a PSAC, however the TP ICAP defendants have no obligation to respond. The plaintiffs have reserved the right to appeal the dismissal of the TP ICAP defendants but have not as yet done so. It is not possible to predict the ultimate outcome of the litigation or to provide an estimate of any potential financial impact. #### Labour claims – ICAP Brazil ICAP do Brasil Corretora De Títulos e Valores Mobiliários Ltda ('ICAP Brazil') is a defendant in 7 (31 December 2021: 8) 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 32m (55m) (31 December 2021: BRL 47m (65m)). The Group is the beneficiary of an indemnity from NEX in relation to any liabilities in respect of four of the 7 Labour Claims insofar as they relate to periods prior to completion of the Group's acquisition of ICAP. This includes a claim that is indemnified by a predecessor to ICAP Brazil by way of escrowed funds in the amount of BRL 28m (64m). Apart from an estimated loss of £0.1m which has been provided for, the Labour Claims are at various stages of their respective proceedings and are pending an initial witness hearing, the court's decision on appeal or a ruling on a motion for clarification. The Group intends to contest liability in each of these matters and to vigorously defend itself. Unless otherwise noted, 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 obtaining 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 55.4m (155m) (31 December 2021: BRL 295m (139m)). The Group intends to vigorously defend itself but there is no certainty as to the outcome of these claims. Currently, the case is in an early evidentiary phase and awaiting the commencement of expert testimony. #### LIBOR Class actions The Group is currently defending the following LIBOR related actions: ##### (i) Stichting LIBOR Class Action On 15 December 2017, the Stichting Elco Foundation, a Netherlands-based claim foundation, filed a writ initiating litigation in the Dutch court in Amsterdam on behalf of institutional investors against ICAP Europe Limited ('IEL'), ICAP plc, Cooperative Rabobank U.A., UBS AG, UBS Securities Japan Co. Ltd, Lloyds Banking Group plc, and Lloyds Bank plc. The litigation alleges manipulation by the defendants of the JPY LIBOR, GBP LIBOR, CHF LIBOR, USD LIBOR, EURIBOR, TIBOR, SDR, BBSW and HIBOR benchmark rates, and seeks a declaratory judgment that the defendants acted unlawfully and complied 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 the Defendants' motions to dismiss the proceedings. On 14 August 2019 the Dutch Court issued a ruling dismissing ICAP plc from the case entirely but keeping certain claims against IEL relating solely to JPY LIBOR. On 9 December 2020, the Dutch Court issued a final judgement dismissing the Foundation's claims in their entirety. In March 2021, the Foundation filed a writ to appeal this final judgement which remains pending. 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. 252 TP ICAP GROUP PLC Annual Report and Accounts 2022 # **(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 prizes 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 appealed the dismissal to the United States Court of Appeals for the Second Circuit. Based upon a Second Circuit ruling in an unrelated case, the parties have jointly moved to remand the case to the United States District Court for the Southern District of New York for further proceedings. The case is now remanded to the S.D.N.Y. where the plaintiffs on 23 November 2022, filed a third amended complaint. In October 2022, the four ICAP broker defendants (ICAP Europe Limited, ICAP Securities USA LLC, NEX Group plc and Intercapital Capital Markets LLC) reached a settlement in principle with the plaintiffs which has been approved on a preliminary basis by the Court. On 27 January 2023, the remaining 'Tullett' defendants (TP ICAP plc, Tullett Prebon Americas Corp., Tullett Prebon (USA) Inc., Tullett Prebon Financial Services LLC, Tullett Prebon (Europe) Limited and Cosmorex AG) filed a motion to dismiss the third amended complaint on various grounds including statute of limitations and failure to state a claim upon which relief can be granted. 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) Euribor Class Action** On 15 August 2015, the ICAP Europe Limited, along with ICAP plc, was named as a defendant in a Fourth Amended Class Action Complaint filed in the United States District Court by lead plaintiff Stephen Sullivan asserting claims of Euribor manipulation. Defendants briefed motions to dismiss for failure to state a claim and lack of jurisdiction, which were fully submitted as of 23 December 2015. On 21 February 2017, the Court issued a decision dismissing a number of foreign defendants, including ICAP Europe Limited and ICAP plc, out of the lawsuit on the grounds of lack of personal jurisdiction. Because the action continued as to other defendants, the dismissed decision for lack of personal jurisdiction has not yet been appealed. However, the plaintiffs announced on 21 November 2017 that they had reached a settlement with the two remaining defendants in the case. As a part of their settlement, the two bank defendants have agreed to turn over materials to the plaintiffs that may be probative of personal jurisdiction over the previously dismissed foreign defendants. The remaining claims in the litigation were resolved by a settlement which the Court gave final approval to on 17 May 2019. Plaintiffs filed a notice of appeal on 14 June 2019, appealing the prior decisions on the motion to dismiss and the denial of leave to amend. Defendants filed a cross notice of appeal on 28 June 2019 appealing aspects of the Court's prior rulings on the motion to dismiss that were decided in the Plaintiffs' favour. These appeals have been stayed since August 2019 pending a ruling in an unrelated appellate matter involving similar issues. In December 2021, the unrelated appeal was decided and the stay of the appeal and cross appeal was lifted and commencing in May 2022 a briefing schedule was implemented. The motions have been fully briefed but the appeal and cross appeal are not anticipated to be ruled upon until some time in 2023. It is not possible to predict the ultimate outcome of this action 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 the ICAP entities with regard to these matters. # **ICAP Securities Limited, Frankfurt branch - Frankfurt Attorney General administrative proceedings** On 19 December 2018, ICAP Securities Limited, Frankfurt branch ('ISL') (now TP ICAP Markets Limited) was notified by the Attorney General's office in Frankfurt that it had commenced administrative proceedings against ISL and criminal proceedings against former employees and a former director of ISL in respect of aiding and abetting tax evasion by Rafael Roth Financial Enterprises GmbH ('RRFE'). It is possible that a corporate administrative fine may be imposed on ISL and earnings derived from the criminal offence confiscated. ISL has appointed external counsel and is in the process of investigating the activities of the relevant desk from 2006-2009. This investigation is complicated as the majority of relevant records are held by NEX and NEX failed to disclose its engagement with the relevant authorities prior to the sale of ICAP to Tullett Prebon in 2016. The Group has issued proceedings against NEX in respect of (i) breach of warranties under the sale and purchase agreement, and (ii) an indemnity claim under the tax deed entered into in connection with the IGBB acquisition in relation to these matters. Since the proceedings are at an early stage, details of the alleged wrongdoing or case against ISL are not yet available, and it is not possible at present to provide a reliable estimate of any potential financial impact on the Group. # **ICAP Securities Limited and The Link Asset and Securities Company Limited - Proceedings by the Cologne Public Prosecutor** On 11 May 2020, TP ICAP learned that proceedings have been commenced by the Cologne Public prosecutor against ICAP Securities Limited ('ISL') (now TP ICAP Markets Limited) and The Link Asset and Securities Company Ltd ('Link') in connection with criminal investigations into individuals suspected of aiding and abetting tax evasion between 2004 and 2012. It is possible that the Cologne Public Prosecutor may seek to impose an administrative fine against ISL or Link and confiscate the earnings that ISL or Link allegedly derived from the underlying alleged criminal conduct by the relevant individuals. ISL and Link have appointed external lawyers to advise them. The Group has issued proceedings against NEX in respect of (i) breach of warranties under the sale and purchase agreement, and (ii) an indemnity claim under the tax deed entered into in connection with the IGBB acquisition in relation to these matters. Since the proceedings are at an early stage, details of the alleged wrongdoing or case against ISL and Link are not yet available, and it is not possible at present to provide a reliable estimate of any potential financial impact on the Group. 383 TP ICAP GROUP PLC Annual Report and Accounts 2022 Notes to the Consolidated Financial Statements continued for this year ended 31 December 2022 ### 36. Contingent liabilities continued #### Portigan AG and others v. TP ICAP Markets Limited and others TP ICAP plc (now TP ICAP Finance plc) is a defendant in an action filed by Portigan AG in July 2021 in the Supreme Court of the State of New York County of Nassau alleging losses relating to certain so called 'cum-ex' transactions allegedly arranged by the Group between 2005 and 2007. In June 2022, the Court dismissed the action for lack of personal jurisdiction. In July 2022, the plaintiffs filed a motion with the Court for reconsideration as well as a notice of appeal. Argument on the motion for reconsideration was held in January 2023 and the motion remains pending with the Court. The Group intends to contest liability in the matter and to vigorously defend itself. It is not possible to predict the ultimate outcome of this action or to provide an estimate of any potential financial impact. **M.M. Warburg & CO (AG & Co.) KGaA and others v. TP ICAP Markets Limited, The Link Asset and Securities Company Limited and others** TP ICAP Markets Limited ('TPIM') and Link are defendants in a claim filed in Hamburg by Warburg on 31 December 2020, but which only reached TPM and Link on 26 October 2021. The claim relates to certain German 'cum-ex' transactions that took place between 2007 and 2011. In relation to those transactions Warburg has refunded EUR 185 million to the German tax authorities and is subject to a criminal confiscation order of EUR 176.5 million. It has also been ordered to repay a further EUR 60.8 million to the German tax authorities and is subject to a related civil claim for EUR 48.8 million. Warburg's claims are based primarily on joint and several liability and are for compensation for the amount it has been ordered to pay to the tax authorities, the amount of the criminal confiscation order, the amount claimed against it in the civil claim and further indemnification and interest. TPM and Link are contesting liability in the matter and the Group considers it is able to vigorously defend itself. Whilst it is not possible to predict the ultimate outcome of this action, the Group does not expect a material adverse financial impact on the Group's results or net assets as a result of this case. #### Commodities and Futures Trading Commission-Bond Issuances Investigation ICAP Global Derivatives Limited ('IGDL'), ICAP Energy LLC ('Energy'), ICAP Europe Limited ('IEL'), Tulleit Probon Americas Corp. ('TPAC'), tpSEF Inc. ('tpSEF'), Tulleit Probon Europe Limited ('TPEL'), Tulleit Probon (Japan) Limited ('TPJL') and Tulleit Probon (Australia) Limited ('TPAL') are currently responding to an investigation by the CFTC in relation to the pricing of issuances utilising certain of TP ICAP's indicative broker pricing screens and certain recordkeeping matters including in relation to employee use of personal devices for business communications and other books and records matters. The investigation is still in the fact finding phase and the Group is co-operating with the CFTC in its enquiries. It is not possible to predict the ultimate outcome of the investigation or to provide an estimate of any potential financial impact at this time. As the relevant matters that occurred prior to the Group's acquisition of the ICAP Global Broking Business ('IGBB') from ICAP were not disclosed to the Group prior to completion of the acquisition, the Group has initiated a court action against ICAP's successor company, NEX, for breach of warranty in respect of the ICAP entities. #### Securities Exchange Commission Information Request In October 2022, Liquidnet Inc. ('Liquidnet') received an inquiry from the Securities and Exchange Commission relating to, among other things, compliance with SEC Rule 15c3-5 and audit trail and access permissions to its ATS platforms. Liquidnet is still in the fact finding phase and the Group is co-operating with the SEC in its enquiries. It is not possible to predict the ultimate outcome of the enquiry or to provide an estimate of any potential financial impact at this time. #### General note The Group operates in a wide variety of jurisdictions around the world and uncertainties therefore exist with respect to the interpretation of the complex regulatory, corporate and tax laws and practices of those territories. Accordingly, and as part of its normal course of business, the Group is required to provide information to various authorities as part of informal and formal enquiries, investigations or market reviews. From time to time the Group's subsidiaries are engaged in litigation in relation to a variety of matters. The Group's reputation may also be damaged by any involvement or the involvement of any of its employees or former employees in any regulatory investigation and by any allegations or findings, even where the associated fine or penalty is not material. Save as outlined above in respect of legal matters or disputes for which a provision has not been made, notwithstanding the uncertainties that are inherent in the outcome of such matters, currently there are no individual matters which are considered to pose a significant risk of material adverse financial impact on the Group's results or net assets. The Group establishes provisions for taxes other than current and deferred income taxes, based upon various factors which are continually evaluated. If there is a present obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and is 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. #### Supplier contractual disputes The Group is party to numerous contractual arrangements with its suppliers some of which, in the normal course of business, may become subject to dispute over a party's compliance with the terms of the arrangement. Such disputes tend to be resolved through commercial negotiations but may ultimately result in legal action by either or both parties. The Group is currently in commercially sensitive discussions with a major supplier and until these discussions have been concluded it is not possible to provide an estimate of any potential financial impact. 204 TP ICAP GROUP PLC Annual Report and Accounts 2022 ### 37. Retirement benefits #### (a) Defined benefit schemes The Group has a defined benefit pension scheme in the UK and a small number of schemes operated in other countries. The overseas schemes are not significant in the context of the Group. | Balance sheet | 2022 £m | 2021 £m | | --- | --- | --- | | UK Scheme | – | – | | Overseas schemes – retirement benefit assets | 1 | 1 | | Overseas schemes – retirement benefit obligations | (3) | (1) | | Other comprehensive income | 2022 £m | 2021 £m | | UK Scheme | 1 | 2 | | Overseas schemes | (1) | 1 | #### (b) UK defined benefit scheme The Group's UK defined benefit pension scheme is the defined benefit section of the Tullett Prebon Pension Scheme (the 'Scheme'). The Scheme is a final salary, funded pension scheme that is closed to new members and future accrual. For members still in service there was a continuing link between benefits and pensionable pay, up to the date the Scheme commenced wind-up. The Principal Employer is TP ICAP Group Services Limited. During the year the Trustee completed the 'buy-out' of the Scheme's liabilities. During 2017, the Trustees of the Scheme purchased a bulk annuity policy with Rothesay Life, an insurance company, that covered all of the Scheme's liabilities ('buy-in'). The policy was in the name of the Scheme and was a Scheme asset. Under IAS 19 'Employee Benefits' the accounting value of the purchased policy is set to be equal to the value of the liabilities covered, calculated using the IAS 19 actuarial assumptions for the defined benefit obligation. During 2022, the Trustee completed the arrangements to transfer the Scheme's liabilities to Rothesay Life, with the insurer taking on direct responsibility for the provision of benefits. The contract-based policies of insurance held by the Scheme were cancelled and individual insurance policies issued to each beneficiary by Rothesay Life. The remaining assets of the Scheme are held separately from those of the Group in separate Trustee administered funds. As the Scheme is in the process of being wound up, the latest funding actuarial valuation of the Scheme was carried out as at 30 April 2016 by independent qualified actuaries. The actuarial funding surplus of the Scheme at that date was £61m and under the agreed schedule of contributions the Group will continue not to make any payments into the Scheme. The amounts included in the balance sheet arising from the Group's obligations in respect of the Scheme are as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | Fair value of Scheme assets | 45 | 257 | | Present value of Scheme liabilities | – | (211) | | Defined benefit scheme surplus – UK | 45 | 46 | | Impact of asset ceiling on UK scheme surplus: | | | | At 1 January | (46) | (49) | | Offset against deemed interest income in the Income Statement | (1) | (1) | | Credit to Other Comprehensive Income (application of asset ceiling – see below) | 2 | 4 | | At 31 December | (45) | (46) | | Recognised in the Consolidated Balance Sheet after application of the asset ceiling | – | – | | Application of asset ceiling of defined benefit pension schemes | 1 | 4 | | Remeasurement of the defined benefit pension scheme | – | (2) | | Recognised in Other Comprehensive Income | 1 | 2 | | Deferred tax liability (Note 21) | – | – | 208 TP ICAP GROUP PLC Annual Report and Accounts 2022 Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 # **37. Retirement benefits continued** # **(b) UK defined benefit scheme continued** Under UK legislation, once a Scheme commences wind-up, the assets of the Scheme pass unconditionally to the Trustee to enable it to settle the Scheme's liabilities. As a result, the Group has applied the requirements of IFRIC 14, restricting the Group's recognition of the net surplus by applying an asset recognition ceiling. The asset ceiling is recorded in other comprehensive income. During the wind-up period, the Group will continue to restrict the recognition of the net surplus. Costs associated with the settlement of the Scheme's liabilities are recorded as significant items in the Income Statement. Settlement costs amounted to £1m in 2022 (2021: £1m). 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%. As at 31 December 2022, as a result of the buy-out, the Scheme did not have any pension obligations to value. In 2021, the main financial assumptions used by the independent qualified actuaries of the Scheme to calculate the liabilities under IAS 19 were: | | 2021 % | | --- | --- | | Key assumptions: | | | Discount rate | 1.8% | | Expected rate of salary increases | n/a | | Rate of increase in LPI pensions in payment^{1} | 3.3% | | Inflation assumption | 2.7% | $^{1}$ This applies to pensions accrued from 6 April 1997. The majority of current and future pensions receive fixed increases in payment of either 0% or 2.5%. The mortality assumptions used in 2021 were based on standard mortality tables and allow for future mortality improvements and are the same as those adopted for the 2016 funding valuation. Assumptions for the Scheme are that a member who retires in 15 years' time at age 60 will live an average for a further 51.8 years after retirement if they are male and for a further 53.1 years after retirement if they are female. Current pensioners are assumed to have a generally shorter life expectancy based on their current age. The amounts recognised in the income statement in respect of the Scheme were as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | Deemed interest arising on the defined benefit pension scheme surplus | 1 | 1 | | Impact of asset ceiling on UK scheme surplus | (1) | (1) | | Recognised in the Consolidated Income Statement | - | - | | Past service and settlement costs | (1) | (1) | | Scheme's administrative costs | (1) | (1) | | | (2) | (2) | 206 TPJCAP GROUP PLC Annual Report and Accounts 2022 The amounts recognised in other comprehensive income in respect of the Scheme were as follows: | | 2022 bn | 2021 bn | | --- | --- | --- | | Return on Scheme assets (excluding deemed interest income) – Trustee administered funds | 1 | (1) | | Return on Scheme assets (excluding deemed interest income) – revaluation of insurance policies | (1) | (11) | | Actuarial gains arising from changes in financial assumptions | – | 11 | | Actuarial losses arising from experience adjustments | – | (1) | | Remeasurement of the defined benefit pension scheme | – | (2) | Movements in the present value of the Scheme liabilities were as follows: | | 2022 bn | 2021 bn | | --- | --- | --- | | At 1 January | (211) | (226) | | Deemed interest cost | (3) | (4) | | Liabilities derecognised on buy-out | 209 | – | | Actuarial gains arising from changes in financial assumptions | – | 11 | | Actuarial losses arising from experience adjustments | – | (1) | | Benefits paid/transfers | 5 | 9 | | At 31 December | – | (211) | Movements in the fair value of the Scheme assets were as follows: | | 2022 bn | 2021 bn | | --- | --- | --- | | At 1 January | 257 | 275 | | Deemed interest income | 4 | 5 | | Assets derecognised on buy-out | (209) | – | | Return on Scheme assets (excluding deemed interest income) – Trustee administered funds | 1 | (1) | | Return on Scheme assets (excluding deemed interest income) – revaluation of insurance policies | (1) | (11) | | Benefits paid/transfers | (5) | (9) | | Post service and settlements costs | (1) | (1) | | Scheme's administrative costs | (1) | (1) | | At 31 December | 45 | 257 | The major categories and fair values of the Scheme assets as at 31 December were as follows: | | 2022 bn | 2021 bn | | --- | --- | --- | | Cash and cash equivalents | 45 | 7 | | Government bonds | – | 44 | | Insurance policies | – | 206 | | Other receivables | – | – | | At 31 December | 45 | 257 | The Scheme does not hedge against foreign currency exposures or interest rate risk. The estimated amounts of contributions expected to be paid into the Scheme during 2022 is £nil (2021: £nil). # **(c) Defined contribution pensions** The Group operates a number of defined contribution schemes for qualifying employees. The assets of these schemes are held separately from those of the Group. The defined contribution pension cost for the Group charged to administrative expenses was £16m (2021: £16m), of which £9m (2021: £10m) related to overseas schemes. As at 31 December 2022, there was £1m outstanding in respect of the current reporting year that had not been paid over to the schemes (2021: £1m). 207 TP (CAP GROUP PLC Annual Report and Accounts 2022 Notes to the Consolidated Financial Statements continued for the year ended 31 December 2022 ### 38. Related party transactions Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this Note. The total amounts owed to and from associates and joint ventures at 31 December 2022 also represent the value of transactions during the year. The total amounts owed to and from related parties at 31 December 2022 are set out below: | | Amounts owed by related parties | | Amounts owed to related parties | | | --- | --- | --- | --- | --- | | | 2022 £m | 2021 £m | 2022 £m | 2021 £m | | Associates | 4 | 5 | – | – | | Joint ventures | 1 | – | (3) | (2) | | Loans from related parties | – | – | – | (51) | In August 2020, the Group entered into a Yen 10bn committed facility with the Tokyo Tonshi Co., Ltd, a related party, that matures in February 2025. The loan for related parties is conducted on an arm's length basis. At 31 December 2022, the facility was undrawn. The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been made for doubtful debts in respect of the amounts owed by related parties. During the year, £1m (2021: £1m) of interest and fees was paid on loans from related parties. #### Directors Costs in respect of the Directors who were the key management personnel of the Group during the year are set out below in aggregate for each of the categories specified in IAS 24 'Related Party Disclosures'. Further information about the Individual Directors is provided in the audited part of the 'Report on Directors' Remuneration on pages 116 to 135. | | 2022 £m | 2021 £m | | --- | --- | --- | | Short-term benefits | 5 | 4 | | Social security costs | 1 | 1 | | | 6 | 5 | 208 TP/ICAP GROUP PLC Annual Report and Accounts 2022 Financial statements TP ICAP GROUP PLC Annual Report and Accounts 2022209 39. Principal subsidiaries At 31 December 2022, the following companies were the Group’s principal subsidiary undertakings. A full list of the Group’s undertakings, the country of incorporation and the Group’s effective percentage of equity owned is set out in the listing on pages 212 to 217. All subsidiaries are involved in broking or information sales activities and have a 31 December year end. Country of incorporation and operation Principal subsidiary undertakings Issued ordinary shares, all voting Australia Tullett Prebon (Australia) Pty Ltd 100% Bermuda (operating in England) PVM Oil Associates Limited 100% Brazil ICAP do Brasil Corretora de Títulos e Valores Mobiliários Ltda 100% Tullett Prebon Brasil Corretora de Valores e Cambio Ltda 100% England ICAP Energy Limited 100% ICAP Global Derivatives Limited 100% ICAP Information Services Limited 100% TP ICAP Markets Limited 100% Tullett Prebon (Europe) Limited 100% TP ICAP Group Services Limited 100% Liquidnet Europe Limited 100% France TP ICAP (Europe) S.A. 100% Guernsey (operating in England) Tullett Prebon Information Limited 100% Hong Kong Tullett Prebon (Hong Kong) Limited 100% Liquidnet Asia Limited 100% Ireland Liquidnet EU Limited 100% Japan Tullett Prebon (Japan) Limited 80% Singapore ICAP (Singapore) Pte Limited 100% TP ICAP Management Services (Singapore) Pte. Ltd. 100% Tullett Prebon (Singapore) Limited 100% PVM (Singapore) Pte. Ltd. (formerly PVM Oil Associates Pte. Ltd.) 100% United States TP ICAP Global Markets Americas LLC (formerly ICAP Corporates LLC) 100% ICAP Energy LLC 100% ICAP Information Services Inc. 100% ICAP Securities USA LLC 100% Tullett Prebon Americas Corp. 100% Tullett Prebon Financial Services LLC 100% Tullett Prebon Information Inc 100% Liquidnet Holdings Inc. 100% Liquidnet Inc. 100% As at 31 December 2022, £18m (2021: £17m) is due to non-controlling interests relating to those subsidiaries that are not wholly owned. Movements in non-controlling interests are set out in Note 31(c). No individual non-controlling interest is material to the Group. There are no significant restrictions on the ability of the Group to access or use assets and settle liabilities relating to these subsidiaries. # TP ICAP Group plc Shareholder Information Financial calendar TP ICAP Group plc Preliminary Results – 14 March 2023 Ex-dividend date for final dividend – 13 April 2023 Record date for final dividend – 14 April 2023 Final date for Dividend Reinvestment Plan election – 28 April 2023 Annual General Meeting – Wednesday 17 May 2023 at 2.15pm BST Final dividend payment date (if dividend approved at AGM) – 23 May 2023 Dividends A final dividend of 7.9p per ordinary share will be recommended to shareholders at the 2023 AGM. Dividend mandate Shareholders who wish their dividends to be paid directly into a bank or building society account should register their mandate via the shareholder portal at www.signalshares.com. You will need your investor code which can be found on your share certificate or dividend confirmation. Alternatively, contact Link Group (see below) for a dividend mandate form. This method of payment removes the risk of delay or loss of dividend cheques in the post and ensures that shareholders' accounts are credited on the dividend payment date. For future dividends, the Company has in place a facility for payments to be made via CREST. Dividend Reinvestment Plan ("DRIP") The Company offers a DRIP, where your dividend can be reinvested in further TP ICAP Group plc shares through a specially arranged share dealing service. For further information contact Link Group whose contact details are set out below. Shareholder information on the internet The Company maintains an investor relations page on its website, www.tpicap.com, which allows access to both current and historic share price information. Directors' biographies, copies of Company reports, selected press releases and other useful investor information. Registrar Link Group act as the Company's registrars. As such administrative queries regarding your shareholding (including notifying a change of name or address, queries regarding dividend payments and the DRIP scheme, etc) are best directed to Link Group who can be contacted at: Link Group 10th Floor Central Square 29 Wellington Street Leeds LS1 4DL United Kingdom Email: shareholderenquiries@linkgroup.co.uk Telephone: 0371 664 0300 1 Call a site charged on the standard geographic note and will vary by provider. Calls outside the United Kingdom will be charged at the applicable International note. Lines are open 9.00am – 3.30pm, Monday to Friday excluding public holidays in England and Wales. Many of our shareholders find that the easiest way to manage their shareholdings is online, using the free, simple and secure service provided by the Company's registrar, Link Group. To access and maintain your shareholding online, please register at www.signalshares.com Shareholder security TP ICAP encourages all shareholders to be wary of any unsolicited advice, offers to buy shares at a discount or offers of free company annual reports. If you receive any unsolicited investment advice, whether over the telephone, through the post or by email, you should: - Make sure you note the name of the organisation and, if possible, the name of the individual contacting you. - Check they are properly authorised by the FCA by visiting https://register.fca.org.uk/ and www.fca.org.uk/zonsumers/report-scam-unauthorised-form. Any details of share dealing facilities that TP ICAP endorses will be included in the Company's mailings. 210 TP ICAP GROUP PLC Annual Report and Accounts 2022 Auditor Deloitte LLP Chartered Accountants and Statutory Auditor 1 New Street Square London EC4A 3HQ United Kingdom www.deloitte.com Registered office TP ICAP Group plc 22 Grenville Street St Helier Jersey JE4 8PX Telephone: +44 (0)1534 676720 Website: www.tpicap.com TP ICAP Group plc is a company registered in Jersey with registered number 130617. Additional information TP ICAP GROUP PLC Annual Report and Accounts 2022211 ## Group undertakings Details of the Group’s subsidiaries, which have been consolidated into the Group’s results, and details of investments in associates are provided below. Unless otherwise stated, the undertakings below are wholly owned and the Group interest represents both the percentage held and voting rights, which are indirectly held by the Company. Country of Company name incorporation Interest Registered office address ICAP Brokers Pty Limited Australia Level 27, 9 Castlereagh Street, Sydney, New South Wales, 2000, Australia ICAP Futures (Australia) Pty Ltd Australia Level 27, 9 Castlereagh Street, Sydney, New South Wales, 2000, Australia Liquidnet Australia Pty Ltd Australia Suite 2, Level 29, 9 Castlereagh Street, Sydney, New South Wales, 2000, Australia TP ICAP Management Services Australia Level 27, 9 Castlereagh Street, Sydney, New South Wales, 2000, (Australia) Pty Limited Australia Tullett Prebon (Australia) Pty Limited Australia Level 29, 9 Castlereagh Street, Sydney, New South Wales, 2000, Australia PVM Data Services GmbH Austria Euro Plaza - Building G, Am Euro Platz 2, 1120 Vienna, Austria ICAP (Middle East) W.L.L. Bahrain 49% PO Box 5488, 43rd Floor, 4301, West Tower, Bahrain Financial Harbour, Bahrain Tullett Liberty (Bahrain) Co. W.L.L. Bahrain 82.70% PO Box 20526, Flat No.11, Building 104, 383 Road 2831, Manama 316, Bahrain Liquidnet Bermuda Limited Bermuda Park Place, 55 Par-la-Ville Road, Hamilton HM11, Bermuda PVM Oil Associates Ltd Bermuda Coson Corporate Services Limited, Cedar House, 3rd Floor, 41 Cedar Avenue, Hamilton HM12, Bermuda ICAP do Brasil Corretora de Títulos e Brazil Avenida das Américas, 3.500, Ed. Londres, 2º andar, Barra da Tijuca, Valores Mobiliários Ltda Rio de Janeiro-RJ, CEP 22640-102, Brazil Tullett Prebon Brasil Corretora de Brazil Rua São Tomé, 86, 21º andar, Vila Olímpia, São Paulo-SP, CEP Valores e Câmbio Ltda. 04551-030, Brazil Tullett Prebon Holdings Do Brasil Brazil Rua São Tomé, 86, 21º andar, Vila Olímpia, São Paulo-SP, CEP | Ltda. | | 04551-030, Brazil | | --- | --- | --- | | Catrex Limited British Virgin | | Vistra Corporate Services Centre, Wickhams Cay II, Road Town, | | | Islands | Tortola, VG1110, British Virgin Islands | | LCM D Limited British Virgin | | Citco B.V.I Limited, Fleming House, Wickhams Cay, PO Box 662, Road | | | Islands | Town, Tortola, British Virgin Islands | Liquidnet Canada Inc. Canada 79 Wellington Street West, TD South Tower, 24th Floor, Toronto, ON M5K 1K7 Tullett Prebon Americas Corp., Operating in 1 Toronto Street, Suite 301, PO Box 20, Toronto, Ontario, M5C 2V6, Toronto Branch Canada Canada Tullett Prebon Canada Limited Canada 1 Toronto Street, Suite 308, PO Box 20, Toronto, Ontario, M5C 2V6, Canada SIF ICAP Chile Holdings Ltda Chile 50% Magdalena 181 Piso 14 Las Condes, Santiago, Chile 7550055 SIF ICAP Chile SpA Chile 40% Magdalena 181 Piso 14 Las Condes, Santiago, Chile 7550055 Enmore Commodity Brokers China 49% Room 720, Building 3, No. 999 Jinzhong Road, Changning District, (Shanghai) Co. Ltd. Shanghai, China ICAP Shipping (Shanghai) Co,. Ltd. China Room 4169, 4th Floor, No. 4 Building, No.173 Handan Road, Hongkou District, Shanghai, China Prebon Yamane International Limited, Operating in Room 302, DBS Tower, No.1318, Lujiazui Ring Road, Shanghai, Shanghai Representative Office China 200120, China Tullett Prebon SITICO (China) Limited China 33% Room 1001, DBS Tower, No.1318, Lujiazui Ring Road, Shanghai, 200120, China ICAP Colombia Holdings S.A.S. Colombia 94.24% Km 33 Via Sopo Aposentos C-64 Municipio Sopó, Cundinamarca, Colombia SET-ICAP FX S.A. Colombia 47.94% Carrera 11 No. 93-46 - Oficina 403, Bogotá, Colombia SET-ICAP Securities S.A. Colombia 47.41% Carrera 11 No. 93-46 - Oficina 403, Bogotá, Colombia Vega-Chi Financial Technologies Cyprus 35, Le Corbusier, North side, 1st Floor, 3075 Limassol, Cyprus Limited ICAP Scandinavia, filial af TP ICAP Operating in Rentemestervej 14, Copenhagen NV, DK-2400, Denmark (Europe) SA, Frankrig Denmark ICAP del Ecuador S.A. Ecuador Eloy Alfaro 2515 y Catalina Aldáz, N34-189, Quito, Ecuador TP ICAP GROUP PLC Annual Report and Accounts 2022212 Country of Company name incorporation Interest Registered office address TP ICAP (Europe) SA France 42, rue Washington, 75008 Paris, France Astley & Pearce Deutschland GmbH Germany Stephanstrasse 14-16, 60313 Frankfurt am Main, Germany ICAP Ltd. & Co. OHG Germany Stephanstrasse 14-16, 60313 Frankfurt am Main, Germany Intermoney AP & Co. Geld-und Germany 74.67% Stephanstrasse 3, 60313 Frankfurt am Main, Germany Eurodepotmakler OHG TP ICAP (Europe) S.A., Frankfurt Operating in Mainzer Landstrasse 1, Frankfurt, 60329, Germany Branch Germany ICAP US Holdings No 1 Limited Gibraltar Suite 1, Burns House, 19 Town Range, Gibraltar ICAP US Holdings No 2 Limited Gibraltar Suite 1, Burns House, 19 Town Range, Gibraltar Tullett Prebon Information Limited Guernsey, Third floor, Cambridge House, Le Truchot, St Peter Port, GY1 1WD, Operating in UK Guernsey ICAP (Hong Kong) Limited Hong Kong 20/F, One Hennessy, No. 1 Hennessy Road, Wan Chai, Hong Kong ICAP Securities Hong Kong Limited Hong Kong 20/F, One Hennessy, No. 1 Hennessy Road, Wan Chai, Hong Kong Liquidnet Asia Limited Hong Kong 24th Floor, 28 Hennessy Road, Wanchai, Hong Kong TP ICAP Management Services (Hong Hong Kong 21/F, One Hennessy, No. 1 Hennessy Road, Wan Chai, Hong Kong Kong) Limited Tullett Prebon (Hong Kong) Limited Hong Kong 21/F, One Hennessy, No. 1 Hennessy Road, Wan Chai, Hong Kong ICAP IL India Private Limited India 40% Office No. 6, 3rd Floor, C Wing, Laxmi Towers, Bandra Kurla Complex, Bandra (E), Mumbai, 400051, Maharashtra, India P.T. Inti Tullett Prebon Indonesia Indonesia 57.52% Menara Dea, Tower 2, 12th floor - Suite 1202, Mega Kuningan area, Jalan Mega Kuningan Barat Kav. E4.3 No. 1-2, Jakarta 12950, Indonesia PT Electronic IDR Exchange (In Indonesia 49% Menara Dea, Tower 2, 12th floor - Suite 1202, Mega Kuningan area, liquidation) Jalan Mega Kuningan Barat Kav. E4.3 No. 1-2, Jakarta 12950, Indonesia Liquidnet EU Limited Ireland Digital Office Centre, 12 Camden Row, Dublin 8, D08 R9CN Ireland Louis Capital Markets Israel Limited Israel 45 Rothschild Boulevard, 6578403 Tel-Aviv, Israel Central Totan Securities Co. Ltd Japan 20% 4-4-10, Nihonbashi Muromachi, Chuo-ku, Tokyo 103-0022 Japan ICAP Energy (Japan) Limited Japan Akasaka Tameike Tower 4th Floor, 2-17-7 Akasaka Minato-ku, Tokyo 107-0052, Japan Liquidnet Japan, Inc. Japan Akasaka Tameike Tower 4th Floor, 2-17-7 Akasaka Minato-ku, Tokyo 107-0052, Japan Totan ICAP Co., Ltd. Japan 40% 7th Floor, Totan Muromachi Building, 4-4-10 Nihonbashi Muromachi, Chuo-ku, Tokyo, 103-0022, Japan TP ICAP (Japan) Co., Ltd. (in Japan Akasaka Tameike Tower 4th Floor, 2-17-7 Akasaka Minato-ku, Tokyo | liquidation) | | 107-0052, Japan | | --- | --- | --- | | tpSEF Inc., Tokyo Branch Operating in | | Akasaka Tameike Tower 4th Floor, 2-17-7 Akasaka Minato-ku, Tokyo | | | Japan | 107-0052, Japan | Additional information Tullett Prebon (Japan) Limited Japan 80% Akasaka Tameike Tower 4th Floor, 2-17-7 Akasaka Minato-ku, Tokyo 107-0052, Japan Tullett Prebon Energy (Japan) Limited Japan Akasaka Tameike Tower 4th Floor, 2-17-7 Akasaka Minato-ku, Tokyo 107-0052, Japan Tullett Prebon ETP (Japan) Ltd Japan 80% Akasaka Tameike Tower 4th Floor, 2-17-7 Akasaka Minato-ku, Tokyo 107-0052, Japan TP ICAP Holdings Ltd * Jersey 22 Grenville Street, St Helier, Jersey, JE4 8PX, Channel Islands Tullett Prebon Money Brokerage Korea, 6th Floor, Douzone Eulji Tower, 29 Eulji-ro, Jung-gu, Seoul, Korea (Korea) Limited Republic of ICAP (Malaysia) Sdn. Bhd Malaysia 58.30% 802, 8th Floor, Block C, Kelana Square, 17 Jalan SS7/26, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia ICAP Bio Organic S. de RL de CV Mexico 50% Paseo de la Reforma No 255, Piso 7, Colonia Cuauhtemoc, 06500 D F Mexico, Mexico Plataforma Mexicana de Carbono S. Mexico 50% Paseo de la Reforma No 255, Piso 7, Colonia Cuauhtemoc, 06500 D F de R.L. de C.V. Mexico, Mexico SIF Agro S.A. De C.V. Mexico 50% Paseo de la Reforma No 255, Piso 7, Colonia Cuauhtemoc, 06500 D F Mexico, Mexico TP ICAP GROUP PLC Annual Report and Accounts 2022213 Group undertakings continued Country of Company name incorporation Interest Registered office address SIF ICAP Derivados, S.A. DE C.V. Mexico 50% Paseo de la Reforma No 255, Piso 7, Colonia Cuauhtemoc, 06500 D F Mexico, Mexico SIF ICAP Servicios, S.A. de C.V. Mexico 50% Paseo de la Reforma No 255, Piso 7, Colonia Cuauhtemoc, 06500 D F Mexico, Mexico SIF ICAP, S.A. de C.V. Mexico 50% Paseo de la Reforma No 255, Piso 7, Colonia Cuauhtemoc, 06500 D F Mexico, Mexico ICAP Energy AS, Netherlands Branch Operating in Vijzelstraat 68, office 109, 1017HL Amsterdam, the Netherlands the Netherlands ICAP Holdings (Nederland) B.V. Netherlands Coengebouw - Suite 8.02, Kabelweg 37, Amsterdam, 1014 BA, Netherlands ICAP Latin American Holdings B.V. Netherlands Coengebouw - Suite 8.02, Kabelweg 37, Amsterdam, 1014 BA, Netherlands iSwap Euro B.V. Netherlands 50.10% Vijzelstraat 68, office 109, 1017HL Amsterdam, the Netherlands Prebon Holdings B.V. Netherlands Coengebouw - Suite 8.02, Kabelweg 37, Amsterdam, 1014 BA, Netherlands TP ICAP (Europe) S.A., Netherlands Operating in Vijzelstraat 68, office 109, 1017HL Amsterdam, the Netherlands Branch the Netherlands ICAP New Zealand Limited New Zealand Level 12, 36 Customhouse Quay, Wellington, 6000, New Zealand ICAP African Brokers Limited Nigeria 66.30% Plot 1679, 4th Floor, African Re-Insurance Building, Karimu Kotun Street, Victoria Island, Lagos State, Nigeria ICAP Energy AS Norway Fantoftvegen 2, 5072 Bergen, Norway TP ICAP (Europe) S.A., Norway Branch Operating in Fantoftvegen 2, 5072 Bergen, Norway Norway Datos Técnicos, S.A. Peru 50% Pasaje Acuña 106 - Lima, Peru ICAP Management Services Limited, Operating in 14th Floor, A.T. Yuchengco Centre, 26th and 25th Sts., Bonifacio South, Philippine Branch Philippines Bonifacio Global City, Fort Bonifacio, Taguig City, 1634, Philippines ICAP Philippines Inc. (In liquidation) Philippines 99.90% 14th Floor, A.T. Yuchengco Centre, 26th and 25th Sts., Bonifacio South, Bonifacio Global City, Fort Bonifacio, Taguig City, 1634, Philippines Tullett Prebon (Philippines) Inc. Philippines 51% 14th Floor, A.T. Yuchengco Centre, 26th and 25th Sts., Bonifacio South, Bonifacio Global City, Fort Bonifacio, Taguig City, 1634, Philippines Tullett Prebon (Polska) S.A. Poland 00-684 Warszawa, ul. Wspólna 47/49, Poland ICAP (Singapore) Pte. Ltd. Singapore 50 Raffles Place, #41-00, Singapore Land Tower, 048623, Singapore ICAP Energy (Singapore) Pte Ltd Singapore 50 Raffles Place, #41-00, Singapore Land Tower, 048623, Singapore Liquidnet Singapore Pte. Ltd. Singapore 50 Raffles Place, #41-00, Singapore Land Tower, 048623, Singapore Noranda Investments Pte Ltd Singapore 50 Raffles Place, #41-00, Singapore Land Tower, 048623, Singapore PVM (Singapore) Pte. Ltd. Singapore 50 Raffles Place, #41-00, Singapore Land Tower, 048623, Singapore TP ICAP Holdings (Singapore) Pte. Ltd Singapore 50 Raffles Place, #41-00, Singapore Land Tower, 048623, Singapore TP ICAP Management Services Singapore 50 Raffles Place, #41-00, Singapore Land Tower, 048623, Singapore (Singapore) Pte. Ltd Tullett Prebon (Singapore) Limited Singapore 50 Raffles Place, #39-00, Singapore Land Tower, 048623, Singapore Tullett Prebon Energy (Singapore) Pte. Singapore 50 Raffles Place, #41-00, Singapore Land Tower, 048623, Singapore Ltd. Garban South Africa (Pty) Limited South Africa 66.30% 19 Impala Road, Block A GF, Chislehurston, Sandton, 2196, South Africa ICAP Broking Services South Africa South Africa 66.30% 19 Impala Road, Block A GF, Chislehurston, Sandton, 2196, South (Pty) Ltd Africa ICAP Holdings South Africa (Pty) South Africa 66.30% 19 Impala Road, Block A GF, Chislehurston, Sandton, 2196, South Limited Africa ICAP Securities South Africa South Africa 66.30% 19 Impala Road, Block A GF, Chislehurston, Sandton, 2196, South (Proprietary) Limited Africa Tullett Prebon South Africa (Pty) South Africa 19 Impala Road, Block A GF, Chislehurston, Sandton, 2196, South Limited Africa Corretaje e Informacion Monetaria y Spain 21.47% Principe de Vergara nº 131, 3rd floor, 28002 Madrid, Spain. de Divisas SA TP ICAP GROUP PLC Annual Report and Accounts 2022214 Country of Company name incorporation Interest Registered office address ICAP Energy AS, Spain Branch Operating in Avenida de la vega 1 Edificio Veganova 2 Planta 5 Oficina Este 28108 Spain Madrid TP ICAP (Europe) S.A., Madrid Branch Operating in Paseo de la Castellana, 95 Torre Europa Pl 10B, 28046 Madrid, Spain Spain Tullett Prebon (Europe) Limited, Operating in Paseo de la Castellana, 95 Torre Europa Pl 10B, 28046 Madrid, Spain Spanish Branch Spain Cosmorex AG, in Liquidation Switzerland C/o Afrag AG, Dufourstrasse 58, Zweigniederlassung in Zollikon, 8702 Zollikon, Switzerland TP ICAP Broking Limited, Geneva Operating in Quai de I’lle 13, Level 3, Geneva, CH-1204, Switzerland Branch Switzerland ICAP Securities Co., Ltd. Thailand No. 55 Wave Place Building, 13th Floor, Wireless Road, Khwaeng Lumpini, Khet Patumwan, Bangkok, 10330, Thailand ICAP-AP (Thailand) Co., Ltd. Thailand No. 55 Wave Place Building, 13th Floor, Wireless Road, Khwaeng Lumpini, Khet Patumwan, Bangkok, 10330, Thailand Nextgen Holding Co., Ltd. Thailand 99.96% No. 55 Wave Place Building, 13th Floor, Wireless Road, Khwaeng Lumpini, Khet Patumwan, Bangkok, 10330, Thailand Altex-ATS Limited UK 135 Bishopsgate, London, EC2M 3TP, England ClearCompress Limited UK 10 Fleet Place, London, EC4M 7QS, England Cleverpride Limited UK 135 Bishopsgate, London, EC2M 3TP, England Coex Partners Limited UK 10 Fleet Place, London, EC4M 7QS, England Emsurge Limited UK 20% 1 Garrick Close, Hersham, Walton-On-Thames, KT12 5NY, England Exco Bierbaum AP Limited UK 135 Bishopsgate, London, EC2M 3TP, England Exco International Limited UK 135 Bishopsgate, London, EC2M 3TP, England Exco Nominees Limited UK 135 Bishopsgate, London, EC2M 3TP, England Exco Overseas Limited UK 135 Bishopsgate, London, EC2M 3TP, England Garban Group Holdings Limited UK 135 Bishopsgate, London, EC2M 3TP, England Garban International UK 135 Bishopsgate, London, EC2M 3TP, England Garban-Intercapital (2001) Limited UK 135 Bishopsgate, London, EC2M 3TP, England Garban-Intercapital US Investments UK 135 Bishopsgate, London, EC2M 3TP, England (Holdings) Limited Garban-Intercapital US Investments UK 135 Bishopsgate, London, EC2M 3TP, England (No 1) Limited Harlow (London) Limited UK 135 Bishopsgate, London, EC2M 3TP, England ICAP America Investments Limited UK 135 Bishopsgate, London, EC2M 3TP, England ICAP Energy Limited UK 135 Bishopsgate, London, EC2M 3TP, England ICAP Europe Limited UK 135 Bishopsgate, London, EC2M 3TP, England ICAP Global Broking Finance Limited UK 135 Bishopsgate, London, EC2M 3TP, England Additional information ICAP Global Broking Investments UK 135 Bishopsgate, London, EC2M 3TP, England ICAP Global Derivatives Limited UK 135 Bishopsgate, London, EC2M 3TP, England ICAP Holdings (Asia Pacific) Limited UK 135 Bishopsgate, London, EC2M 3TP, England ICAP Holdings (EMEA) Limited UK 135 Bishopsgate, London, EC2M 3TP, England ICAP Holdings (UK) Limited UK 135 Bishopsgate, London, EC2M 3TP, England ICAP Holdings Limited UK 135 Bishopsgate, London, EC2M 3TP, England ICAP Information Services Limited UK 135 Bishopsgate, London, EC2M 3TP, England ICAP Management Services Limited UK 135 Bishopsgate, London, EC2M 3TP, England ICAP UK Investments No. 1 UK 135 Bishopsgate, London, EC2M 3TP, England ICAP UK Investments No. 2 UK 135 Bishopsgate, London, EC2M 3TP, England ICAP Securities USA LLC, UK Branch Operating in UK 135 Bishopsgate, London, EC2M 3TP, England ICAP WCLK Limited UK 135 Bishopsgate, London, EC2M 3TP, England iSwap Euro Limited UK 50.10% 135 Bishopsgate, London, EC2M 3TP, England iSwap Euro B.V., UK Branch Operating in UK 50.10% 135 Bishopsgate, London, EC2M 3TP, England iSwap Limited UK 50.10% 135 Bishopsgate, London, EC2M 3TP, England TP ICAP GROUP PLC Annual Report and Accounts 2022215 Group undertakings continued | Company name | Country of incorporation | Interest | Registered office address | | --- | --- | --- | --- | | LCM Europe Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | LiquidityChain Limited | UK | 85% | 10 Fleet Place, London, EC4M 7QS, England | | Liquidnet Europe Ltd | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Liquidnet Technologies Europe Ltd | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Louis Capital Markets UK LLP | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Midosys Partners Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | OTAS Technologies Holdings Ltd | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Pathare Limited | UK | 50% | 135 Bishopsgate, London, EC2M 3TP, England | | Preban Group Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Preban Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Preban Yomone International Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | PVM Oil Associates Ltd, UK Branch | Operating in UK | | 135 Bishopsgate, London, EC2M 3TP, England | | PVM Oil Futures Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | PVM Smart Learning Limited | UK | 50% | 1 The Lockers, Bury Hill, Hemel Hempstead, HP1 1SR, England | | Research Exchange Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Research Supply Co. Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | The Link Asset and Securities Company Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | TP Holdings Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | TP ICAP (Europe) S.A., UK Branch | Operating in UK | | 135 Bishopsgate, London, EC2M 3TP, England | | TP ICAP Asia Pacific Holdings Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | TP ICAP Braking Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | TP ICAP Dormont Co Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | TP ICAP EMEA Investments Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | TP ICAP Finance plc * | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | TP ICAP Global Markets Americas LLC, UK Branch | Operating in UK | | 135 Bishopsgate, London, EC2M 3TP, England | | TP ICAP Group Services Limited | | | 135 Bishopsgate, London, EC2M 3TP, England | | TP ICAP Latin America Holdings Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | TP ICAP Markets Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Tullett Preban (Equities) Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Tullett Preban (Europe) Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Tullett Preban (No. 3) Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Tullett Preban (UK) Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Tullett Preban Administration Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Tullett Preban Group Holdings Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Tullett Preban Latin America Holdings Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Tullett Preban Pension Trustee Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | Zooloc Seven Limited | UK | | 135 Bishopsgate, London, EC2M 3TP, England | | TP ICAP (Dubai) Limited | United Arab Emirates | | Unit 107 & 108, Level 1, Gate Village Building 1, DIFC, PO Box 506787, Dubai, UAE | | Atlas Physical Grains, LLC | US | | 211 E. 7th Street, Suite 620, Austin, Texas, 78701-3218, United States | | Coex Partners Inc. | US | | 251 Little Falls Drive, Wilmington, Delaware, 19808, United States | | Exco Noonan Pension LLC | US | | 251 Little Falls Drive, Wilmington, Delaware, 19808, United States | | First Brokers Securities LLC | US | 40% | 1209 Orange Street, Wilmington, Delaware, 19801, United States | | ICAP Energy LLC | US | | 421 West Main Street, Frankfort, Kentucky, 40601 | | ICAP Global Braking Inc. | US | | 251 Little Falls Drive, Wilmington, Delaware, 19808, United States | | ICAP Information Services Inc. | US | | 251 Little Falls Drive, Wilmington, Delaware, 19808, United States | | ICAP Media LLC | US | | 251 Little Falls Drive, Wilmington, Delaware, 19808, United States | 216 TP ICAP GROUP PLC Annual Report and Accounts 2022 Country of Company name incorporation Interest Registered office address ICAP Merger Company LLC US 80 State Street, Albany, New York, 12207, United States ICAP North America Inc. US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States ICAP Securities USA LLC US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States ICAP SEF (US) LLC US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States ICAP Services North America LLC US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States iSwap US Inc. US 50.10% 251 Little Falls Drive, Wilmington, Delaware, 19808, United States Liquidnet Holdings, Inc. US 1209 Orange Street, Wilmington, Delaware, 19801, Kent County Liquidnet, Inc. US 1209 Orange Street, Wilmington, Delaware, 19801, Kent County Liquidnet, LLC US 1209 Orange Street, Wilmington, Delaware, 19801, Kent County Louis Capital Markets LLC US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States M.W. Marshall Inc. US 80 State Street, Albany, New York, 12207, United States OTAS Technologies USA, LLC US 1209 Orange Street, Wilmington, Delaware, 19801, Kent County Portend, LLC US 1209 Orange Street, Wilmington, Delaware, 19801, Kent County Prattle Analytics, LLC US 1209 Orange Street, Wilmington, Delaware, 19801, Kent County PVM Futures Inc. US Princeton South Corporate Center, Suite 160, 100 Charles Ewing Blvd, Ewing, New Jersey, 08628, United States PVM Oil Associates Inc. US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States PVM Petroleum Markets LLC US 211 E. 7th Street, Suite 620, Austin, Texas, 78701-3218, United States Quiet Signal, Inc US 1209 Orange Street, Wilmington, Delaware, 19801, Kent County Revelation Holdings, Inc. US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States SCS Energy Corp. US 80 State Street, Albany, New York, 12207, United States TP ICAP Americas Holdings Inc. US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States TP ICAP Global Markets Americas LLC US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States tpSEF Inc. US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States Tullett Prebon Americas Corp. US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States Tullett Prebon Financial Services LLC US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States Tullett Prebon Information Inc. US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States Wrightson ICAP LLC US 251 Little Falls Drive, Wilmington, Delaware, 19808, United States * Directly held. Additional information TP ICAP GROUP PLC Annual Report and Accounts 2022217 ## Appendix – Alternative Performance Measures Alternative performance measures (‘APMs’) are complementary to measures defined within International Financial Reporting Standards (‘IFRS’) and are used by management to explain the Group’s business performance and financial position. They include common industry metrics, as well as measures which management and the Board consider are useful to enhance the understanding of its performance and allow meaningful comparisons between periods and Business Segments. The APMs reported are monitored consistently by the Group to manage performance on a monthly basis. APMs are defined below. Commentary and outlook based on these APMs considered important in measuring the delivery of the Group’s strategic priorities that can be found on pages 20 to 35 of the Annual Report. Detailed reconciliations of APMs to their nearest IFRS Income Statement equivalents and adjusted APMs can be found in this section, if not readily identifiable from the Annual Report. The APMs the Group uses are: Term Definition Adjusted EBIT Earnings before net interest, tax significant items and share of equity accounted investments’ profit after tax. Used interchangeably with adjusted operating profit. Adjusted EBIT margin Adjusted EBIT margin is adjusted EBIT expressed as a percentage of reported revenue and is calculated by dividing adjusted EBIT by reported revenue for the year. Adjusted EBITDA Earnings before net interest, tax, depreciation, amortisation of intangible assets, significant items and share of equity accounted investments’ profit after tax. Adjusted performance Measure of performance excluding the impact of significant items. Constant Currency Comparison of current year results with the prior year will be impacted by movements in foreign exchange rates versus GBP, the Group’s presentation currency. In order to present a better comparison of underlying performance in the period, the Group retranslates foreign denominated prior year results at current year exchange rates. Contribution Contribution represents revenue less the direct costs of generating that revenue. Contribution is calculated as the sum of Broking contribution and Parameta Solutions contribution. Contribution margin Contribution margin is contribution expressed as a percentage of reported revenue and is calculated by dividing contribution by reported revenue. Divisional contribution Represents Divisional revenues less Divisional front office costs, inclusive of the revenue and front office costs internally generated between Global Broking, Energy & Commodities and Parameta Solutions. Divisional contribution margin Divisional contribution margin is Divisional contribution expressed as a percentage of Divisional revenue and is calculated by dividing Divisional contribution by Divisional revenue. Earnings Used interchangeably with Profit for the year. EBIT Earnings before net interest and tax. EBITDA Earnings before net interest, tax, depreciation, amortisation of intangible assets and share of equity accounted investments’ profit after tax. Significant Items Items that distort year-on-year comparisons, which are excluded in order to improve predictability and understanding of the underlying trends of the business, to arrive at adjusted operating and profit measures. TP ICAP GROUP PLC Annual Report and Accounts 2022218 A1. Operating costs by type | | | IFRS | Significant | | | | Allocated as | | Allocated as | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Reported | | | Items | Adjusted | | Front Office | | | Support | | | 2022 | | £m | | £m | | £m | | £m | | | £m | Employment costs 1,320 (24) 1,296 1,028 268 General and administrative expenses 506 (32) 4 74 324 150 1,826 (56) 1,770 1,352 418 Depreciation and impairment of PPE and ROUA 58 (9) 49 – 49 Amortisation and impairment of intangible assets 98 (65) 33 – 33 Impairment of other assets – – – – – 1,982 (130) 1,852 1,352 500 | | | IFRS | Significant | | | | Allocated as Front | | Allocated as | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Reported | | | Items | Adjusted | | | Office | | Support | | | 2021 | | £m | | £m | | £m | | £m | | | £m | Employment costs 1,152 (12) 1,140 914 226 General and administrative expenses 476 (56) 420 249 171 1,628 (68) 1,560 1,163 397 Depreciation and impairment of PPE and ROUA 68 (16) 52 – 52 Amortisation and impairment of intangible assets 82 (52) 30 – 30 Impairment of other assets – – – – – 1,778 (136) 1,642 1,163 479 A2. Adjusted earnings per share The earnings used in the calculation of adjusted earnings per share are set out below: 2022 2021 £m £m Adjusted profit for the year (Note 4) 197 151 Non-controlling interest (3) (3) Adjusted earnings 194 148 Weighted average number of shares for Basic EPS (Note 11) 779.1 759.3 Adjusted Basic EPS 24.9p 19.5p Weighted average number of shares for Diluted EPS (Note 11) 790.6 768.2 Adjusted Diluted EPS 24.5p 19.3p A3. Adjusted EBITDA and Contribution 2022 2021 £m £m Adjusted EBIT (Note 4) 275 233 Add: Depreciation of PPE and ROUA (Note 5 and A1 above) 49 52 Add: Amortisation of intangibles (Note 5 and A1 above) 33 30 Adjusted EBITDA 357 315 Additional information Less: Operating income (Note 6) (30) (10) Add: Operating income reported as significant items (Note 4) 18 – Add: Management and support costs (A1) 418 397 Contribution 763 702 TP ICAP GROUP PLC Annual Report and Accounts 2022219 ## Glossary | AGM | Deloitte | ICAP | Pillar 1 | | --- | --- | --- | --- | | Annual General Meeting | Deloitte LLP | ICAP Global Broking | Minimum capital requirements | | | | and Information Business, | under CRD IV | | AMF | DRIP | acquired by TP ICAP plc | | | Autorité des marchés financiers | Dividend Reinvestment Plan | on 30 December 2016 | Pillar 2 | Supervisory review | APAC | EBITDA | IFR/IFD | requirements under CRD IV | | --- | --- | --- | --- | | Asia Pacific | Earnings before interest, tax, | Investment Firm Regulation | | | | depreciation and amortisation | and Investment Firm Directive | Pillar 3 | | API | | | Disclosure requirements | | Application Programme | EMEA | IFPR | under CRD IV | | Interface | Europe, Middle East and Africa | Investment Firms | | | | | Prudential Regime | PVM | | BEIS | EPS | | PVM Oil Associates Ltd | | UK government Department | Earnings per Share | IFRS | and its subsidiaries | | for Business, Energy & Industrial | | International Financial | | | Strategy | ERMF | Reporting Standard | RCF | | | Enterprise Risk Management | | Revolving Credit Facility | | Board | Framework | IRS | | | The Board of Directors | | Internal Revenue Service | RFQ | | of TP ICAP Group plc | ESG | | Request for Quotes | | | Environmental, Social, | ISDA | | | BRC | and Governance | International Swaps and | RoE | | TP ICAP Group plc Board Risk | | Derivatives Association | Return on Equity | | Committee | EU | | | | | European Union | Jersey | SEF | | CAGR | | Jersey, Channel Islands | Swap Execution Facility | | Compound Annual Growth Rate | FCA | | | | | Financial Conduct Authority | JFSC | TCFD | | CAPEX | | Jersey Financial Services | Task Force on Climate-related | | Capital expenditure | FRC | Commission | Financial Disclosures | Financial Reporting Council CCP KPI TRACE Central counterparty FX Key Performance Indicator Trade Reporting And clearing house Foreign Exchange Compliance Engine Liquidnet CGU Governance Manual Liquidnet Holdings, Inc. TSR Cash-Generating Unit TP ICAP’s Group and subsidiaries Total Shareholder Return Governance Manual CLOB LCM UK Central Limit Order Books GRCGC Louis Capital Markets UK LLP United Kingdom Group Risk, Conduct, and | Code | Governance Committee | LIBOR | US/USA | | --- | --- | --- | --- | | The UK Corporate Governance | | London Inter-Bank Offered Rate | United States of America | | Code 2018 | Group | | | | | From 26 February 2021 TP ICAP | LTIP | USD/US$ | | COEX | Group plc and its subsidiaries | Long-Term Incentive Plan | US Dollars | Coex Partners Limited and its subsidiaries HMRC LTIS US GAAP His Majesty’s Revenue Long-Term Incentive Scheme US Generally Accepted Company & Customs Accounting Principles TP ICAP Group plc MiFID II HR Markets in Financial VAT COO Human Resources Instruments Directive Value Added Tax Chief Operating Officer IAS OPEX VIU CRD IV International Accounting Operating expenditure Value in use Capital Requirements Directive Standards OTC CREST Over the Counter Certificateless Registry for Electronic Share Transfer TP ICAP GROUP PLC Annual Report and Accounts 2022220 Designed and produced by Gather www.gather.london Printed by Perivan The Report was produced on paper that is Carbon Balanced & has been sourced from Sustainable Forests. Printing conforms to ISO14001 environmental standard using vegetable based inks. CBP017873 TP ICAP Group plc Registered office 22 Grenville Street St Helier Jersey JE4 8PX UK and EMEA Headquarters 135 Bishopsgate London EC2M 3TP United Kingdom www.tpicap.com