Final Results
London Stock Exchange Plc
19 May 2005
19 May 2005
LONDON STOCK EXCHANGE PLC
ANNOUNCEMENT OF PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 MARCH 2005
Highlights:
• Turnover up four per cent to £259.7 million
• Operating profit before exceptional items and goodwill amortisation down
one per cent to £82.0 million and down ten per cent including exceptional
items and goodwill to £73.2 million
• Profit before tax up slightly to £89.1 million, including profit on
disposal of Tower of £7.2m
• Basic earnings per share up seven per cent to 23.1 pence and adjusted
basic earnings per share up 11 per cent to 23.5 pence
• Final dividend of 5.0 pence per share bringing the total dividend for
the year to 7.0 pence per share, up 46 per cent
Commenting on the results, Chris Gibson-Smith, Chairman of London Stock
Exchange, said:
"The Exchange benefited from successful new initiatives and improving market
conditions, with a four per cent growth in turnover and 11 per cent increase in
adjusted basic earnings per share. We are pleased to raise the final dividend to
5.0 pence per share, which gives a 46 per cent lift in total dividend per share,
reflecting the Board's confidence in the business.
"Although we have been engaged in discussions regarding possible offers for the
Company and await the findings of the Competition Commission, we nevertheless
remain focused on the operational performance of our business and are confident
the Exchange is well placed for the future."
Clara Furse, Chief Executive of the Exchange, said:
"Our performance reflects improvement in each of our core business areas: an
uplift in new issue activity, continued strong trading volumes on the SETS
electronic order book and an increase in the number of professional terminals
taking Exchange data. The continuation of these positive trends in our business
provides encouragement for the year ahead."
Further information is available from:
London Stock Exchange John Wallace - Media 020 7797 1222
Paul Froud - Investor 020 7797 3322
Relations
Lyndal Kennedy - Investor 020 7797 3322
Relations
Finsbury James Murgatroyd 020 7251 3801
Melanie Gerlis 020 7251 3801
Financial results
Gross turnover for the year ended 31 March 2005 increased four per cent to
£259.7 million (2004: £250.4 million), while net turnover rose three per cent to
£244.4 million (2004: £237.0 million). All core business areas performed well
though revenue in Issuer Services was affected by reductions in tariffs.
Administrative expenses excluding exceptional items rose six per cent to £164.4
million (2004: £155.8 million) mainly reflecting expected cost increases from
higher depreciation. In addition, exceptional costs of £6.8 million were
incurred for advisors' fees in respect of potential offers for the Company
received in the second half of the year.
Operating profit excluding exceptional costs and goodwill amortisation reduced
one per cent to £82.0 million (2004: £82.9 million) and decreased ten per cent
to £73.2 million including exceptional costs and goodwill amortisation (2004:
£81.3 million).
Net interest receivable during the year was £7.0 million. Following the disposal
of the Tower, an exceptional gain of £7.2 million was recognised, contributing
to an increase in profit before tax to £89.1 million (2004: £88.8 million).
Basic earnings per share increased seven per cent to 23.1 pence per share (2004:
21.6 pence per share). Adjusted basic earnings per share, excluding exceptional
items and goodwill amortisation, rose 11 per cent to 23.5 pence per share (2004:
21.2 pence per share). Following the share consolidation in July 2004 associated
with the special dividend paid in August 2004, the weighted average number of
shares decreased in the year from 293.0 million to 269.0 million.
Cash flows for the year from operating activities, before exceptional items,
were £100.9 million (2004: £105.4 million). Cash outflow of £105.7 million
(2004: inflow £8.7 million) includes payment of the special dividend of £162.5
million and capital expenditure of £40.8 million (2004: £54.2 million), of which
£15.2 million was for completion of the fit out and move to Paternoster Square.
At 31 March 2005, cash balances were £124.4 million (2004: £227.9 million).
Issuer Services
Issuer Services' turnover decreased nine per cent to £35.2 million (2004: £38.5
million), representing 14 per cent of total turnover for the year (2004: 15 per
cent). The decrease reflects the effects of changes to tariffs for both our Main
Market and AIM, partly offset by significantly increased new issue activity on
both markets.
As at 31 March 2005, the total number of companies on our markets increased to
2,916 (2004: 2,693). Annual fee income, the revenue the Exchange receives from
companies on its markets, contributed 49 per cent of Issuer Services' turnover
(2004: 56 per cent).
Total new issues on the Exchange's markets more than doubled to 514 (2004: 236)
including 366 IPOs (2004: 117). Over the year, new and further issues together
raised £18.0 billion (2004: £21.0 billion). The Exchange was once again the
leading European exchange in attracting companies to its markets, accounting for
80 per cent of the IPOs in Western Europe (2004: 85 per cent).
Growth in Main Market new issues was strong, increasing over 90 per cent to 82
(2004: 43), reflecting a pick up in activity in the second half of the year with
52 new issues (H1 2005: 30). The number of international new issues, at 13, was
nearly double the number last year (2004: 7), including high profile listings
from China, Russia, India and Korea. To reinforce its commitment to the region,
the Exchange opened an Asia-Pacific office in Hong Kong in October.
AIM, our international market for smaller, growing companies, enjoyed a record
year. The total number of companies traded on AIM rose 42 per cent during the
year to 1,127 as at 31 March 2005 (2004: 792), including 134 international
companies. New issues on AIM rose by more than 120 per cent to 432 (2004: 193)
of which 74 were overseas listings. To further enhance AIM's profile and
attractiveness, new AIM indices were launched in May 2005 which will help
increase research coverage and institutional investment in this market.
Broker Services
Turnover for the Broker Services division increased six per cent to £99.8
million (2004: £94.1 million), contributing 38 per cent of total turnover (2004:
38 per cent). Another year of strong performance reflects the continued success
of SETS, our electronic order book, which accounted for approximately 66 per
cent of Broker Services' revenue for the year (2004: 64 per cent).
The total number of equity bargains for the year ended 31 March 2005 rose 15 per
cent to 67.9 million (2004: 59.3 million), a daily average of 271,000 (2004:
234,000). Over the same period, the number of SETS bargains rose to a total of
42.8 million (2004: 34.7 million), reflecting a 24 per cent increase to an
average 170,000 bargains per day (2004: 137,000). Performance in the last
quarter of the year was particularly strong, seeing successive record trading
months, with a record daily average 207,000 SETS bargains in March.
The total value of equity bargains for the year increased 15 per cent to £4.7
trillion (2004: £4.1 trillion), attributable to the increase in order book
trading and a rise in number of international bargains which grew to 52,000
bargains per day (2004: 40,000). The total value of off book bargains also
increased although the average number of off book bargains reduced 16 per cent
to 48,000 (2004: 57,000).
The continued strong growth on SETS was partly attributable to the success of
SETSmm which trades mid-cap securities on a hybrid market structure. In its
first full year of operation, SETSmm traded an average 16,000 bargains per day
(five months ended 31 March 2004: 9,000). The success of SETSmm in improving
liquidity and reducing trading costs has led to the next stage of development,
the addition of further securities to the trading platform. The first tranche of
up to 200 Small Cap securities is planned for introduction in July 2005. Also
contributing to the growth of trading on SETS was the introduction, effective
from 1 April 2004, of a new discount scheme which provides progressive discounts
for member firms trading above certain monthly volume levels on SETS.
Partly offsetting the benefit of increased numbers of SETS bargains was a
further decline in the average value of a SETS bargain, down 5 per cent to
£21,000 (2004: £22,000).
The trading service for liquid Dutch securities was launched in May 2004. This
service provides the efficiency and reliability of the UK SETS platform and uses
the existing post trade clearing and settlement infrastructure for the Dutch
market. Although we have received some encouraging feedback, with an average
market share of less than two per cent since launch we will need to see
increased levels of trading to meet our expectations for this service.
Information Services
Information Services' turnover rose nine per cent to £110.3 million (2004:
£101.0 million), accounting for 42 per cent of total turnover (2004: 40 per
cent). This good growth was primarily attributable to the new SEDOL Masterfile
service and rising turnover from Proquote and FTSE International.
As at 31 March 2005, the number of terminals taking the Exchange's real time
market data increased six per cent to 95,000 (2004: 90,000). Of this total,
approximately 83,000 terminals (2004: 80,000) were attributable to professional
users which, as noted at Q3, represents the first increase by this market
segment for over three years. The 2,000 increase in private terminals to 12,000
at the financial year end also provides an encouraging sign of improvement in
this market.
SEDOL Masterfile, which provides unique identification for a range of global
tradable instruments, has enjoyed a good start since launch in March 2004. Over
1,000 licences have been taken for the use of this service and the number of
instruments has grown from 250,000 to 450,000. The success of SEDOL Masterfile
should continue with a further extension of instruments and geographic areas
covered by this service and plans for carrying other security identification
codes to allow easier cross referencing of data.
Proquote, the Exchange's provider of financial market software and data,
continued to make progress, increasing the number of installed screens at year
end by 50 per cent to 2,700 (2004: 1,800). Contributing to this increase has
been the success in signing up new group contracts and the enhancements to
functionality and the range of data.
RNS, the Exchange's financial communications service, achieved another
satisfactory performance, contributing £7.5 million to turnover (2004: £7.2
million). RNS remains the market leader in the highly competitive UK regulatory
news distribution market, with over 90 companies in the FTSE 100 continuing to
use RNS to release regulatory announcements.
FTSE, the joint venture indices business, increased turnover by 15 per cent to
£15.3 million (2004: £13.3 million), continuing an unbroken record of growth
since launch nine years ago. This result reflects continued sales of Global and
UK Equity Index Series products and contributions from new asset classes such as
FTSE Hedge and FTSE Global Bonds.
The Exchange's Technology Roadmap, a programme to fundamentally refresh its
technology systems and operations, has made good progress. Substantial
preparation work has been completed for the next stage of the project -
Infolect, the new delivery system for Information Services. The new Infolect
system will be launched in Q2 financial year 2005/06, providing greater capacity
and faster delivery of real-time market data. When completed by the end of 2006,
with customer deployment of the trading platform in 2007, the Technology Roadmap
will provide a multi-product capable, flexible and scalable technology platform
that will increase current capabilities and capacity, enable new products to be
developed more cost effectively and reduce overall profit and loss technology
costs.
Derivatives Services
Derivatives Services contributed £6.8 million to turnover (2004: £6.1 million
for the nine months ended 31 March 2004), representing three per cent of total
revenue.
EDX London, our 76 per cent owned equity derivatives business, traded a total of
18.3 million contracts (2004: 13.7 million for nine months ended 31 March 2004)
and during the year added Finnish derivatives to the products offered by the
other Scandinavian exchanges linked to EDX. Development of services to improve
efficiencies in over the counter (OTC) derivatives trading took further shape,
with customer testing of our new OTC clearing service taking place.
Trading in the covered warrants market continued to improve over the year, with
an increase in the number of brokers offering to trade these products.
International Financial Reporting Standards (IFRS)
The key changes arising from the introduction of IFRS, which takes effect from
the 2005/06 financial year, are in respect of goodwill amortisation, pensions,
share-based payments, lease rentals, property depreciation and dividends. In
April we disclosed a restatement of our 2003/04 results under IFRS in order to
give an indication of the impact of IFRS on the Exchange.
Alongside the UK GAAP results announced today, we are providing an indication of
the unaudited impact of IFRS on our 2004/05 results, as follows:
• profit before tax under IFRS would have been £92.2 million,
three per cent higher than £89.1 million under UK GAAP;
• IFRS basic earnings per share would have been 24.2 pence,
compared with UK GAAP basic earnings per share of 23.1 pence, five per cent
higher; and
• adjusted basic earnings per share, before goodwill amortisation and
exceptional items, would have been 24.2 pence under IFRS, three per cent
higher than 23.5 pence per share under UK GAAP.
Net assets as at 31 March 2005 would have been £236.3 million under IFRS, six
per cent lower compared with £251.6 million under UK GAAP, in part reflecting
the Company's decision on transition to IFRS to fully recognise the defined
benefit pension deficit in reserves and restate retained freehold properties to
fair value.
A restatement of the 2004/05 results on an IFRS basis will be provided at a
later date, before the Interim Results announcement, in order to provide
comparative financial information for the 2005/06 financial year.
The IFRS financial information provided has been prepared on the basis of
current IFRS standards and interpretations issued by the IASB. These are subject
to ongoing amendment by the IASB and subsequent endorsement by the EU and could
therefore change. As a result, the comparative amounts reported for 2004/05 in
the 2005/06 financial statements may vary from those included above.
Dividend
Following approval at the AGM in July 2004, £162.5 million was returned to
shareholders by way of a special dividend of 55 pence per share, reflecting good
cash flows in recent years and anticipated receipt of proceeds from the disposal
of the Tower. This return was accompanied by a consolidation of six new shares
for every seven shares in issue at that time.
In terms of ordinary dividends, the Board remains committed to a progressive
dividend policy and, reflecting confidence in the business, the Directors
propose a final dividend of 5.0 pence per share to those shareholders on the
register on 22 July 2005, for payment on 15 August 2005. Together with the
interim dividend of 2.0 pence per share paid in January 2005, this takes the
total dividend for the year to 7.0 pence per share (2004: 4.8 pence per share),
an increase of 46 per cent.
Current trading and prospects
Since 31 March 2005, trading conditions have remained positive, with a
continuation of the trends seen particularly in the second half of the last
financial year:
• new issue activity on both the Main Market and AIM remains good;
• trading volumes on SETS have continued strongly, averaging over 200,000
bargains per day in April; and
• professional terminals have increased since the financial year end.
This good momentum in our main business areas gives encouragement for the year
ahead. Although we await the outcome of the current Competition Commission
review of the possible approaches for the Exchange, we nevertheless remain
focused on the operational performance of the business and the Board is
confident the Exchange is well positioned for the future.
Further information
The Exchange will also host a presentation of its Preliminary Results for
analysts and institutional shareholders today at 09:30am at 10 Paternoster
Square, London EC4M 7LS. The presentation will be accessible via live web cast
which can be viewed at www.londonstockexchange-ir.com. For further information,
please call the Exchange's Investor Relations department at 020 7797 3322.
The Exchange will also hold a presentation of its Preliminary Results for
members of the press today at 11:30am at 10 Paternoster Square, London EC4M 7LS.
For further information, please call the Exchange's Press Office at 020 7797 1222.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 March 2005
2005 2004
Notes £m £m
As restated
Continuing operations (see note 1)
____________________________________________________________________________________________________________________
Turnover
Group and share of joint venture 259.7 250.4
Less: share of joint venture's turnover (15.3) (13.3)
____________________________________________________________________________________________________________________
Net turnover 2 244.4 237.1
------------------------------------
Administrative expenses - Operating costs (164.4) (155.8)
- Exceptional items 3 (6.8) -
------------------------------------
(171.2) (155.8)
------------------------------------
Operating profit - Before exceptional items
and goodwill amortisation 82.0 82.9
- Before exceptional items 80.0 81.3
------------------------------------
- After exceptional items
and goodwill amortisation 73.2 81.3
Share of operating profit of joint venture and income
from other fixed asset investments 1.7 1.4
____________________________________________________________________________________________________________________
Total operating profit - Group and share of joint venture 74.9 82.7
Profit on disposal of Stock Exchange Tower 3 7.2 -
Net interest receivable 4 7.0 6.1
____________________________________________________________________________________________________________________
Profit on ordinary activities before taxation 89.1 88.8
Taxation on profit on ordinary activities 5 (27.6) (25.7)
____________________________________________________________________________________________________________________
Profit on ordinary activities after taxation 61.5 63.1
Minority interests 0.7 0.3
____________________________________________________________________________________________________________________
Profit for the financial year 62.2 63.4
Dividends 6 (180.2) (14.1)
____________________________________________________________________________________________________________________
Transfer (from)/to reserves for the financial year (118.0) 49.3
____________________________________________________________________________________________________________________
Basic earnings per share 7 23.1p 21.6p
Diluted earnings per share 7 22.9p 21.4p
Adjusted basic earnings per share 7 23.5p 21.2p
Dividend per share (excludes special dividend) 7.0p 4.8p
____________________________________________________________________________________________________________________
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
____________________________________________________________________________________________________________________
Profit for the financial year 62.2 63.4
Other recognised gains and losses for the financial year
Prior year adjustment (see note 1) (0.6) -
____________________________________________________________________________________________________________________
Total gains and losses recognised since last Annual Report 61.6 63.4
____________________________________________________________________________________________________________________
BALANCE SHEET
31 March 2005
Group
------------------------------------
2005 2004
Notes £m £m
As restated
(see note 1)
____________________________________________________________________________________________________________________
Fixed assets
Intangible assets 8 27.5 24.3
Tangible assets 9 114.9 168.3
____________________________________________________________________________________________________________________
142.4 192.6
Investments
Investments in joint venture:
------------------------------------
Share of gross assets 12.6 10.5
Share of gross liabilities (11.0) (9.0)
------------------------------------
1.6 1.5
Other investments 0.4 0.4
------------------------------------
2.0 1.9
____________________________________________________________________________________________________________________
144.4 194.5
Current assets
------------------------------------
Debtors 10 98.4 61.1
Investments - term deposits 119.5 223.0
Cash at bank 4.9 4.9
------------------------------------
222.8 289.0
Creditors - amounts falling due within one year 75.1 78.9
------------------------------------
Net current assets 147.7 210.1
____________________________________________________________________________________________________________________
Total assets less current liabilities 292.1 404.6
Creditors - amounts falling due after more than one year 0.5 0.5
Provisions for liabilities and charges 11 40.0 38.4
____________________________________________________________________________________________________________________
Net assets 251.6 365.7
____________________________________________________________________________________________________________________
Capital and reserves
Called up share capital 14.9 14.9
Reserves
Revaluation reserve 2.2 42.1
Profit and loss account 233.6 307.7
____________________________________________________________________________________________________________________
Equity shareholders' funds 12 250.7 364.7
Equity minority interest 0.9 1.0
____________________________________________________________________________________________________________________
Total shareholders' funds 251.6 365.7
____________________________________________________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 March 2005
2005 2004
Notes £m £m
As restated
(see note 1)
____________________________________________________________________________________________________________________
Net cash inflow from operating activities:
- Ongoing operating activities 13(i) 100.9 105.4
- Exceptional items 13(i) (5.5) -
____________________________________________________________________________________________________________________
Net cash inflow from operating activities 95.4 105.4
Dividends from joint venture 1.3 0.7
Returns on investments and servicing of finance
------------------------------------
Interest received 8.1 7.5
Interest paid (0.2) (0.2)
Dividends received 0.1 0.1
------------------------------------
Net cash inflow from returns on investments and servicing of finance 8.0 7.4
Taxation
Corporation tax paid (24.3) (22.2)
Capital expenditure and financial investments
------------------------------------
Payments to acquire tangible fixed assets (40.8) (54.2)
Receipts from disposal of Stock Exchange Tower 32.3 -
------------------------------------
Net cash outflow from capital expenditure and financial investments (8.5) (54.2)
Acquisitions
Acquisition of subsidiary undertaking - (15.5)
Dividends paid (177.6) (12.9)
____________________________________________________________________________________________________________________
Net cash (outflow)/inflow before use of liquid resources and financing (105.7) 8.7
Management of liquid resources
Decrease/(increase) in term deposits 103.5 (16.0)
Financing
Issue of ordinary share capital to minority interest 0.2 1.1
Loans received from minority shareholder
- due within one year 0.3 2.9
- due after one year - 0.5
(Redemption)/issue of loan notes (1.5) 1.5
Purchase of own shares (2.5) -
Own shares on exercise of employee share options 5.7 2.2
____________________________________________________________________________________________________________________
Increase in cash in the year - 0.9
____________________________________________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
Basis of accounting and consolidation
The financial information is prepared in accordance with applicable UK
accounting standards, applied on a consistent basis, under the historical cost
convention modified by the revaluation of certain fixed assets.
Change in accounting policy
The Company has adopted UITF Abstract 38 Accounting for ESOP trusts and UITF 17
(revised December 2003) Employee share schemes. Under UITF 38 the Company's own
shares held by the ESOP trust are deducted from shareholders' funds until they
vest unconditionally in employees. Prior to the adoption of UITF 38, the
Company's own shares held by the ESOP trust were recognised as an asset on the
balance sheet at the lower of cost and net realisable value. Under UITF 17
(revised December 2003) the profit and loss charge for share options and awards
is determined with reference to the fair value of the shares at the date of
grant. Prior to the adoption of the revised UITF 17 the profit and loss charge
was determined by reference to the cost of shares purchased by the ESOP trust.
Prior year adjustment
The change in accounting policy outlined above results in a reduction to
investments and equity shareholders' funds at 31 March 2004 of £6.4m. Profit for
the financial year ended 31 March 2004 is reduced by £0.3m. Profit for earlier
financial years is reduced by £0.3m resulting in a total adjustment to the
profit and loss account of £0.6m, which is recorded in the statement of total
recognised gains and losses. Profit for the year ended 31 March 2005 is reduced
by £0.7m. The cash flow statement has been restated to show the exercise of
share options within Financing.
2. Turnover
2005 2004
£m £m
____________________________________________________________________________________________________________________
Continuing operations
Issuer Services 35.2 38.5
Broker Services 99.8 94.1
Information Services 110.3 101.0
Derivatives Services 6.8 6.1
Other income 7.6 10.7
____________________________________________________________________________________________________________________
Gross turnover 259.7 250.4
Less: share of joint venture's turnover (15.3) (13.3)
____________________________________________________________________________________________________________________
Net turnover 244.4 237.1
____________________________________________________________________________________________________________________
For the purposes of Segmental Reporting, the directors consider that the Company has one
class of business with the four principal revenue streams noted above derived from that
business, with principal operations of the Group being in the United Kingdom.
3. Exceptional items
2005 2004
£m £m
____________________________________________________________________________________________________________________
Fees in respect of potential offers for the Company (6.8) -
____________________________________________________________________________________________________________________
Exceptional items included within operating profit (6.8) -
Profit on disposal of Stock Exchange Tower (see below) 7.2 -
____________________________________________________________________________________________________________________
Total exceptional items 0.4 -
____________________________________________________________________________________________________________________
Profit on disposal of Stock Exchange Tower
Proceeds receivable from disposal 64.2 -
Book value and disposal costs 57.0 -
____________________________________________________________________________________________________________________
Profit on disposal 7.2 -
____________________________________________________________________________________________________________________
No taxation is payable on the disposal as indexed base cost for tax purposes exceeds disposal
proceeds; accordingly, a nil effect on the Company's tax provision has been assumed.
4. Net interest receivable
2005 2004
£m £m
____________________________________________________________________________________________________________________
Interest receivable
Bank deposit and other interest 9.0 8.0
____________________________________________________________________________________________________________________
Interest payable
Interest on discounted provision for leasehold properties (see note 11) (1.7) (1.7)
Interest payable on other loans (0.3) (0.2)
____________________________________________________________________________________________________________________
Total (2.0) (1.9)
____________________________________________________________________________________________________________________
Net interest receivable 7.0 6.1
____________________________________________________________________________________________________________________
5. Taxation
2005 2004
£m £m
____________________________________________________________________________________________________________________
Current tax:
Corporation tax for the year at 30% (2004: 30%) 25.1 25.7
Adjustments in respect of previous years - (3.6)
Joint venture 0.5 0.4
____________________________________________________________________________________________________________________
25.6 22.5
Deferred taxation 2.0 3.2
____________________________________________________________________________________________________________________
Taxation charge 27.6 25.7
____________________________________________________________________________________________________________________
The adjustments in respect of previous years for corporation tax were for tax assessments now agreed with the Inland
Revenue, including, in 2004, £2.7m for the allowance of expenditure reported as exceptional items in prior years.
Factors affecting the current tax charge for the year
The current tax assessed for the year is lower than the standard rate of corporation tax in the UK of 30% (2004: 30%).
The variations are explained below:
2005 2004
£m £m
____________________________________________________________________________________________________________________
Profit on ordinary activities before tax 89.1 88.8
____________________________________________________________________________________________________________________
Profit on ordinary activities multiplied by standard rate of
corporation tax in the UK of 30% 26.7 26.6
Items disallowed for the purpose of tax provision (primarily
professional fees, depreciation on expenditure not subject to
capital allowances and profit on disposal of Stock Exchange Tower) 0.9 2.9
Accounting deduction less than taxation allowance - timing differences (2.0) (3.4)
Adjustments to tax charge in respect of previous years - (3.6)
____________________________________________________________________________________________________________________
Corporation tax charge 25.6 22.5
____________________________________________________________________________________________________________________
Factors that may affect future tax charges
The disposal of properties at their revalued amount would not give rise to a tax liability.
6. Dividends
2005 2004
£m £m
____________________________________________________________________________________________________________________
Special interim dividend paid - 55p per Ordinary share 162.5 -
Interim paid: 2.0p (2004: 1.4p) per Ordinary share 5.1 4.1
Final proposed: 5.0p (2004: 3.4p) per Ordinary share 12.6 10.0
____________________________________________________________________________________________________________________
180.2 14.1
____________________________________________________________________________________________________________________
Following shareholder approval at the AGM in July 2004, a special interim dividend of 55p per share was paid to all
shareholders on 16 August 2004.
7. Earnings per share
Earnings per share is presented on three bases: basic earnings per share; diluted earnings per share; and adjusted
basic earnings per share. Basic earnings per share is in respect of all activities and diluted earnings per share
takes into account the dilution effects of share options and share awards under the Employee Share Ownership Plan
(ESOP). Adjusted basic earnings per share excludes exceptional items and amortisation of goodwill to enable comparison
of the underlying earnings of the business with prior periods.
2005 2004
As restated
____________________________________________________________________________________________________________________
Basic earnings per share 23.1p 21.6p
Diluted earnings per share 22.9p 21.4p
Adjusted basic earnings per share 23.5p 21.2p
£m £m
____________________________________________________________________________________________________________________
Profit for the financial year 62.2 63.4
Adjustments:
Exceptional items within Operating profit 6.8 -
Amortisation of goodwill 2.0 1.6
Profit on disposal of Stock Exchange Tower (7.2) -
Tax effect of exceptional items and amortisation of goodwill (0.3) (2.9)
Minority interest of exceptional items, goodwill and taxation (0.2) (0.1)
____________________________________________________________________________________________________________________
Adjusted profit for the financial year 63.3 62.0
____________________________________________________________________________________________________________________
Weighted average number of shares - million 269.0 293.0
Effect of dilutive share options and awards - million 2.9 2.7
____________________________________________________________________________________________________________________
Diluted weighted average number of shares - million 271.9 295.7
____________________________________________________________________________________________________________________
The weighted average number of shares excludes those held in the ESOP, reducing the weighted average number of shares
to 269.0 million (2004: 293.0 million). The tax effect of exceptional items and amortisation of goodwill for 2004
includes an exceptional tax credit of £2.7m in respect of previous years (see note 5). During the year the Company
paid a special interim dividend of 55p per share and at the same time carried out a consolidation of its share capital.
These transactions have the same overall effect on the Company's capital structure as a buyback of shares and, in
accordance with FRS 14 Earnings Per Share, earnings per share for prior years has not been restated, other than for
the change in accounting policy described in note 1.
8. Intangible assets Group
Goodwill
£m
____________________________________________________________________________________________________________________
Cost:
1 April 2004 26.0
Recognition of deferred consideration (see note 11) 5.2
____________________________________________________________________________________________________________________
31 March 2005 31.2
____________________________________________________________________________________________________________________
Amortisation:
1 April 2004 1.7
Charge for the year 2.0
____________________________________________________________________________________________________________________
31 March 2005 3.7
____________________________________________________________________________________________________________________
Net book values:
____________________________________________________________________________________________________________________
31 March 2005 27.5
____________________________________________________________________________________________________________________
1 April 2004 24.3
____________________________________________________________________________________________________________________
Goodwill arising on the acquisition of subsidiaries is being amortised on a straight line basis over 15 years from date
of acquisition.
9. Tangible Assets
£m
____________________________________________________________________________________________________________________
Cost or valuation:
1 April 2004 315.7
Additions 33.0
Disposals (112.9)
____________________________________________________________________________________________________________________
31 March 2005 235.8
____________________________________________________________________________________________________________________
Depreciation:
1 April 2004 147.4
Provision for the year 30.9
Disposals (57.4)
____________________________________________________________________________________________________________________
31 March 2005 120.9
____________________________________________________________________________________________________________________
Net book values
31 March 2005 114.9
____________________________________________________________________________________________________________________
1 April 2004 168.3
____________________________________________________________________________________________________________________
10. Debtors 2005 2004
£m £m
____________________________________________________________________________________________________________________
Trade debtors 17.2 16.4
Amounts owed by joint venture 0.6 0.9
Deferred consideration on disposal of Stock Exchange Tower - due December 2005 31.8 -
Other debtors 5.5 1.9
Prepayments and accrued income 41.9 38.5
Deferred taxation 1.4 3.4
____________________________________________________________________________________________________________________
98.4 61.1
____________________________________________________________________________________________________________________
11. Provisions for liabilities and charges Deferred
Property consideration Total
£m £m £m
____________________________________________________________________________________________________________________
1 April 2004 38.4 - 38.4
Utilised during the year (5.3) - (5.3)
Interest on discounted provision 1.7 - 1.7
Deferred consideration recognised - 5.2 5.2
____________________________________________________________________________________________________________________
31 March 2005 34.8 5.2 40.0
____________________________________________________________________________________________________________________
Property
The property provision represents the estimated net present value of future costs for lease rentals and dilapidation
costs less the expected receipts from sub-letting space which is surplus to business requirements. The leases have
between nine and 23 years to expiry.
Deferred consideration
Deferred consideration relates to the equity derivatives business acquired from OM London Exchange. The deferred
consideration has been estimated at £5.2m and can be up to a maximum of £11.2m, payable by March 2006.
12. Reconciliation of movements in shareholders' funds
2005 2004
£m £m
As restated
____________________________________________________________________________________________________________________
Profit for the financial year 62.2 63.4
Dividends (180.2) (14.1)
____________________________________________________________________________________________________________________
(118.0) 49.3
Movement in respect of employee share schemes and own shares 4.0 3.6
____________________________________________________________________________________________________________________
Net (reduction)/addition to shareholders' funds (114.0) 52.9
Opening equity shareholders' funds (as restated) 364.7 311.8
____________________________________________________________________________________________________________________
Closing equity shareholders' funds 250.7 364.7
____________________________________________________________________________________________________________________
13. Notes to the consolidated cash flow statement
2005 2004
£m £m
As restated
____________________________________________________________________________________________________________________
i) Reconciliation of operating profit to net cash inflow from operating activities
Operating profit 73.2 81.3
Depreciation of tangible assets 30.9 21.9
Amortisation of goodwill 2.0 1.6
(Increase)/decrease in debtors (8.3) 0.7
Increase in creditors 2.1 0.4
Provisions utilised during the year (5.3) (1.3)
Share scheme expense 0.8 0.8
____________________________________________________________________________________________________________________
Net cash inflow from operating activities 95.4 105.4
____________________________________________________________________________________________________________________
Comprising:
Ongoing operating activities 100.9 105.4
Exceptional items (see note 3) (5.5) -
____________________________________________________________________________________________________________________
Net cash inflow 95.4 105.4
____________________________________________________________________________________________________________________
At 1 April Cash Other non- At 31 March
2004 flows cash changes 2005
£m £m £m £m
____________________________________________________________________________________________________________________
ii) Analysis of changes in net funds
Cash in hand and at bank 4.9 - - 4.9
Debt due within one year (4.4) 1.2 0.4 (2.8)
Debt due after more than one year (0.5) - - (0.5)
Current asset investments 223.0 (103.5) - 119.5
____________________________________________________________________________________________________________________
Total net funds 223.0 (102.3) 0.4 121.1
____________________________________________________________________________________________________________________
14. Pension costs
The Company operates one pension plan which includes separate defined benefit and defined contribution schemes. The
assets of the defined benefit and defined contribution schemes are held separately from those of the Company and the
funds are managed by Schroder Investment Management Limited and Legal & General Investment Management Limited
respectively. In addition to the normal contributions to the defined benefit scheme, the Company made additional
contributions of £3.2m (2004: £3.2m) during the year. These additional contributions are treated as a prepayment in
the accounts and are charged to the profit and loss account over the expected remaining service lives of scheme
members. The Company continues to account for pension costs in accordance with SSAP 24 - Accounting for Pension Costs.
The following information is provided under the disclosure requirements of FRS 17 - Retirement Benefits. The
Accounting Standards Board has deferred the full adoption of FRS 17 until implementation of International Accounting
Standards in 2005.
The fair value of the assets and net position in the defined benefit scheme, with the assumed expected rates of return
at 31 March 2005 and 2004 are as follows:
Long Term
31 March expected 31 March Long term
2005 rate 2004 expected
£m of return £m rate of return
____________________________________________________________________________________________________________________
Equities 52.4 7.90% 47.1 8.20%
Bonds 139.1 4.81% 130.7 4.86%
____________________________________________________________________________________________________________________
Total market value of assets 191.5 177.8
Present value of liabilities 210.0 196.0
____________________________________________________________________________________________________________________
Deficit in the plan (18.5) (18.2)
Related deferred tax asset 5.6 5.5
____________________________________________________________________________________________________________________
Net pension liability (12.9) (12.7)
____________________________________________________________________________________________________________________
If the above amounts had been recognised in the financial statements, the Group's net assets and profit and loss
reserve at 31 March 2005 would have been reduced by £23.1m (2004: £22.8m) being the deficit of the pension scheme based
on assumptions at that date of £12.9m (2004: £12.7m) plus the prepaid pension contribution of £14.5m (2004: £14.4m) and
related deferred tax adjustment of £4.3m (2004: £4.3m). The plan's assets are invested approximately 27 per cent in
equities and 73 per cent in bonds at 31 March 2005 and the trustees of the plan intend to move gradually to 100 per
cent investment in bonds over the longer term. Under SSAP 24, the charge to the profit and loss relating to the defined
benefit scheme was £4.2m (2004: £4.4m). Under FRS17, the profit and loss charge comprising service and finance costs
would be £2.0m (2004: £2.9m).
15. Abridged accounts
These abridged accounts do not constitute, but have been extracted from, the Company's statutory financial statements.
The statutory financial statements, which include an unqualified audit report, will be delivered to the Registrar of
Companies in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
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