Final Results
London Stock Exchange Group PLC
16 May 2007
16 May 2007
LONDON STOCK EXCHANGE GROUP PLC
ANNOUNCEMENT OF PRELIMINARY RESULTS OF LONDON STOCK EXCHANGE GROUP PLC FOR THE
YEAR ENDED 31 MARCH 2007
Financial highlights:
• Revenue before exceptional items up 20 per cent to £349.6 million
• Operating profit before exceptional items up 55 per cent to £185.6
million
• Adjusted basic earnings per share up 50 per cent to 56.2 pence
• Operating profit including exceptional items up 104 per cent to £174.2
million and basic earnings per share up 82 per cent to 50.5 pence
• Cash generated from ongoing operating activities up 36 per cent to
£198.6 million
• Total dividend for the year up 50 per cent to 18.0 pence per share
Operational highlights:
• Primary market activity very strong, with 503 new issues and total money
raised by new and further issues up 57 per cent to £53.7 billion
• 58 per cent increase in average daily SETS bargains to 353,000,
reflecting excellent growth throughout the year and new record levels of
trading in the final quarter - including 508,000 average bargains/day in
March
• 38 per cent increase in average daily SETS value traded to £6.5bn
• Total terminals up 12,000 to record 116,000, of which terminals
attributable to professional users up 8,000 to 96,000
• On target to deliver the new trading platform, TradElect, in June 2007
Capital return:
• £512 million returned to shareholders and successful issue of £250
million 10 year corporate bond
• Excellent progress with ongoing share buyback programme, completing
initial £50 million target and £60 million of further £250 million
re-purchase plan
Commenting on the results, Chris Gibson-Smith, Chairman of the London Stock
Exchange, said:
'This has been a year of exceptional achievement, with the Exchange delivering
well beyond expectations on a number of important commitments and once again
highlighting the unique quality of its business.
'Trading volumes on SETS surpassed our target levels by some considerable margin
and operating cost reductions were achieved. We implemented the planned £512
million return of capital to shareholders, made good progress on our share
re-purchase plan, and also increased the ordinary dividend per share by 50 per
cent. In delivering our strategy and creating a more appropriate capital
structure, we have produced excellent returns for shareholders.'
Clara Furse, Chief Executive of the Exchange, said:
'The Exchange has again delivered an outstanding performance reflecting a year
of strong growth in each of our business divisions. Investment in new
technology, market services, and international business development is creating
value for both customers and shareholders.
'Trading remains strong with positive momentum carrying forward into the current
financial year. The proven international success and increasing efficiency of
our market, underline the secular change to equity trading, as TradElect goes
live this summer.
'We are confident of delivering another year of strong growth, as we continue to
evaluate opportunities for strategic development to realise in full our vision
to be the world's capital market.'
Further information is available from:
London Stock Exchange John Wallace - Media 020 7797 1222
Patrick Humphris - Media 020 7797 1222
Paul Froud - Investor Relations 020 7797 3322
Finsbury James Murgatroyd 020 7251 3801
Financial Results
The Exchange delivered another excellent financial performance, once again
delivering strong growth in all major business areas, particularly in Broker
Services where the growth in trading on the electronic order book, SETS, was
outstanding.
Revenue for the year ended 31 March 2007 increased 20 per cent to £349.6
million, up £58.5 million on revenue before exceptional items in the previous
year of £291.1 million.
Administrative expenses, excluding exceptional items, were £7 million lower at
£164.0 million (2006: £171.0 million), in line with target reductions set out
last year, with savings made through business efficiencies, integration of
business processes and IT. Net exceptional items of £11.4 million were incurred,
principally relating to advisors' fees in respect of the Nasdaq bid defence.
Operating profit excluding exceptional items increased 55 per cent to £185.6
million (2006: £120.1 million) and 104 per cent to £174.2 million including
exceptional items (2006: £85.4 million).
Net finance costs for the year were £14.9 million (2006: £6.6 million net
income), reflecting the shift to a net debt position following the return of
capital to shareholders of £512 million, paid in May, and the ongoing share
buyback. After net finance costs, share of profit after tax of FTSE and
investment income, profit before taxation of £161.5 million was 73 per cent
above last year (2006: £93.5 million). After tax and minority interests, profit
attributable to equity holders for the year was £109.6 million, an increase of
55 per cent (2006: £70.7 million).
Adjusted basic earnings per share, before exceptional items, rose 50 per cent to
56.2 pence per share (2006: 37.4 pence per share). Basic earnings per share
increased 82 per cent to 50.5 pence per share (2006: 27.8 pence per share).
Capital return and share buyback programme
In May the Exchange successfully completed a capital return to shareholders of
approximately £512 million, funded partly by the Exchange's existing cash
position and also with available bank facilities. Subsequent to this return, the
Exchange refinanced intermediate bank debt through the successful issue of a
£250 million 10 year corporate bond, our first such issue.
In addition, the Exchange completed a planned ongoing share buyback programme of
£50 million. Good progress was made on a further buyback commitment of up to
£250 million, with purchases amounting to £60m achieved by the end of March,
resulting in the Exchange buying back shares amounting to a total £110 million
by the financial year end.
Dividend
In line with a commitment made by the Board in December 2006, the Directors
propose to pay a final dividend of 12.0 pence per share. This will be paid to
those shareholders on the register on 20 July 2007, for payment on 13 August
2007. Together with the interim dividend of 6.0 pence per share paid in January
2007, this takes the total dividend for the year to 18.0 pence per share (2006:
12.0 pence per share), an increase of 50 per cent.
TRM
The Exchange is nearing completion of its Technology Roadmap (TRM), a four year
programme to move the Exchange's core systems to new, very high speed, flexible
technology. In September 2005, we introduced Infolect, the real time market data
dissemination system. Infolect has cut the broadcast speed for market data from
30 to 2 milliseconds and provided customers with more certainty of order
execution, thereby supporting increased trading volumes.
The focus of technology development over the past year has been on the delivery
of the final major phase of TRM, the introduction of TradElect, the new trading
platform. It was successfully launched for the Johannesburg Securities Exchange
in April 2007 and is on target to go live in London in June 2007. TradElect
reduces end to end trading latency from 140 to around 10 milliseconds, making
SETS one of the fastest, if not the fastest, trading execution engine of any
major exchange.
The increases in speed and system capacity provided by both TradElect and
Infolect will enable customers to deploy new high velocity trading strategies,
thereby accelerating the development of equities trading in London.
Overall capital expenditure for the year was £23.5 million (2006: £25.6
million), principally encompassing spend on TRM.
Revenue
Issuer Services
Issuer Services' revenue increased 11 per cent to £63.2 million (2006: £56.9
million) reflecting increases in both admission and annual fee income. The
Exchange enjoyed another very successful year of primary market activity, with
total money raised on its markets increasing 57 per cent to £53.7 billion (2006:
£34.1 billion). The average money raised by a Main Market new issue increased 66
per cent to £196 million (2006: £118 million).
New issue activity was very strong, with 503 new issues for the year (2006:
622), including 106 new issues on the Main Market, similar to the high levels
seen last year (2006: 107). On AIM, the world's most successful market for
smaller companies, new issues totalled 395, below the record level of the
previous year (2006: 510).
As further confirmation of the Exchange's position as the international listing
venue of choice, the total number of overseas companies joining the Main Market
nearly doubled to 35 (2006: 18). Notable companies joining our markets included
Rosneft, Kazmanay Gas, Samsung, MCB Bank (the first Pakistani company to list in
London), Hochschild Mining (the first Latin American company to IPO on our
markets) and Napo Pharmaceuticals (the first US company to IPO on the Main
Market). Including PSM and AIM, a total of 139 international companies from 25
countries joined the Exchange's markets (2006: 154).
The Exchange attracted more international IPOs than any other major global
exchange, more than double its nearest rival. In total, the number of companies
on our markets at 31 March 2007 was 3,245 (2006: 3,141). Of these, 1,637
companies were traded on AIM, an increase of 11 per cent (2006: 1,473).
Including further issues and debt, total admission fee income increased to £28.2
million representing 45 per cent of Issuer Services' revenue (2006: £25.9
million; 46 per cent). Annual fee income, the revenue the Exchange receives from
companies on its markets, rose 12 per cent to £22.7 million, contributing 36 per
cent of Issuer Services' turnover (2006: £20.3 million; 36 per cent).
The greater number of regulatory announcements released during the year, helped
to deliver a 10 per cent increase in RNS revenue to £10.1 million (2006: £9.2
million). The division also earned £2.2 million in training and consultancy
fees.
Broker Services
Broker Services delivered another excellent performance with revenue rising 31
per cent to £163.8 million (2006: £125.5 million). Once again this growth was
primarily attributable to the substantial uplift in trading on SETS, the
Exchange's electronic order book.
SETS continued to benefit from the structural shift in equities trading,
facilitated by investment in new technology both by the Exchange and by
customers. We are seeing a permanent shift in the nature of order flow as new,
higher velocity electronic (algorithmic/black box) trading strategies are
increasingly deployed by hedge funds, intermediaries and specialist technical
trading firms. In addition, growth is being driven by derivatives-linked
business originating in the UK over the counter market, as trading on SETS
provides an immediate and efficient hedging mechanism.
The total number of SETS bargains increased 57 per cent to 89.0 million (2006:
56.8 million), with a 58 per cent increase in average daily bargains to 353,000
(2006: 223,000). Total value traded on SETS was up 37 per cent to £1,635 billion
(2006: £1,190 billion), representing a daily average of £6.5 billion (2006: £4.7
billion). Trading in the final quarter was particularly strong following
increased market volatility at the end of February and early March, with March
setting a new record of an average of 508,000 bargains per day, an increase of
76 per cent over the same month last year, and registering 14 of the 20 busiest
ever trading days on SETS.
Trading of international depository receipts on the International Order Book
(IOB), a subset of SETS, developed well with an 89 per cent rise in bargains.
SETSmm, the Exchange's hybrid trading platform, also continued to demonstrate
very strong growth, as daily SETSmm bargains averaged 80,000, more than double
the previous year (2006: 36,000). The number of securities traded on SETSmm
increased to 762 during the year (2006: 676), bringing the total number traded
on the electronic order book to 927. SETS continues to significantly improve
liquidity and reduce spreads in the stocks traded.
During the period the Exchange announced a reduction in tick sizes on certain
widely traded FTSE 100 securities to further reduce the cost of trading. Also
announced, for introduction in the new financial year, were new tariff
initiatives to lower trading fees and incentivise more liquidity on SETS.
In a circular to shareholders dated 18 January 2007, the Exchange updated target
SETS trading levels, stating that the average number of bargains per day in
financial year 2008 is expected to grow to at least 480,000, representing an
increase of 36 per cent over daily average bargains in financial year 2007.
Since making this forecast, SETS has continued to deliver strong growth, with
average bargains per day growing 62 per cent to 441,000 (2006: 272,000) in the
final quarter of the year, putting us well on course to achieve this target.
The average value of a SETS bargain reduced during the year to £18,000 (2006:
£21,000) with a reduction in average yield per SETS bargain to £1.32. Overall,
SETS trading (excluding order charges) contributed 72 per cent of Broker
Services revenue (2006: 69 per cent).
Away from the order book, the average number of lower margin off-book bargains
decreased 6 per cent to 44,000 per day (2006: 47,000) while the average daily
number of international bargains increased 24 per cent to 98,000 (2006: 79,000).
Information Services
Information Services delivered a strong performance, with a 13 per cent increase
in revenue to £105.9 million (2006: £94.1 million, excluding exceptional
revenue). The principal driver of growth was a rise in the number of terminals
taking the Exchange's real-time market data to a new record level, with very
good increases in both professional and private terminals, together with strong
performances from Proquote and SEDOL.
Total terminals increased 12 per cent to 116,000 (2006: 104,000), including
96,000 terminals attributable to professional users, up 8,000 on the previous
year (2006: 88,000) and 2,000 since 31 December 2006 (94,000). One of the
drivers of this overall growth was the increase in international terminals, with
the number of users outside the UK increasing to 60,000 (2006: 52,000). Private
terminal numbers also increased, rising by 4,000 following the introduction of
new tariffs for retail investors.
Proquote, the Exchange's provider of financial market software and data,
performed well with an almost 50 per cent increase in revenue. The number of
installed screens at year end increased by 23 per cent to 3,700 (2006: 3,000),
with a greater proportion of higher value Proquote International screens.
SEDOL, the securities numbering service that provides unique identification for
securities on a global basis, delivered a good performance. The service
continues to be developed, with an increase in number of securities covered to
more than 1.8 million (2006: 1.2 million).
Derivatives Services
Derivatives Services performed well, with a 21 per cent increase in revenue to
£9.3 million (2006: £7.7 million). EDX London, the Exchange's 76 per cent owned
equity derivatives business, moved into profit for the year with a strong
increase in activity. A total of 31.4 million contracts (2006: 22.2 million)
were traded, representing an average of 124,000 per day (2006: 86,000), up 44
per cent.
The EDX Russian IOB Equity Derivatives Service was introduced in December 2006
and made an excellent start, with more than US$2 billion in value traded by the
year end. The service has already been extended to add new securities, and now
includes a number of leading Kazakh companies.
Current trading and prospects
The Exchange has made a very good start to the new financial year with positive
momentum in many areas of our business. Primary markets remain active and demand
for real time data remains strong. The introduction of our new trading platform
TradElect by the end of June, together with the continuation of the structural
shift in trading, should ensure further trading growth during the year to
achieve our SETS growth targets. While we expect a modest rise in operating
expenses as the business grows, overall the Exchange is confident of delivering
a strong performance in the year ahead.
Further information
The Group will 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 Group's Investor Relations team at 020 7797 3322.
The Group 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 INCOME STATEMENT
Year ended 31 March 2007
2007 2006
Continuing operations Notes £m £m
_______________________________________________________________________________________________________________________
Revenue
Ongoing revenue 2 349.6 291.1
Exceptional revenue 3 - 6.4
_______________________________________________________________________________________________________________________
Total 349.6 297.5
Expenses
__________________________________
Operating expenses before exceptional items (164.0) (171.0)
Exceptional expenses 3 (11.4) (41.1)
__________________________________
Total (175.4) (212.1)
_______________________________________________________________________________________________________________________
Operating profit 174.2 85.4
_______________________________________________________________________________________________________________________
Analysed as:
__________________________________
Operating profit before exceptional items 185.6 120.1
Exceptional items 3 (11.4) (34.7)
__________________________________
_______________________________________________________________________________________________________________________
Operating profit 174.2 85.4
__________________________________
Finance income 16.6 20.2
Finance costs (31.5) (13.6)
__________________________________
Net finance (costs)/income 4 (14.9) 6.6
Share of profit after tax of joint venture 1.9 1.2
Investment income 0.3 0.3
_______________________________________________________________________________________________________________________
Profit before taxation 161.5 93.5
Taxation 5 (50.9) (26.7)
_______________________________________________________________________________________________________________________
Profit for the financial year 110.6 66.8
_______________________________________________________________________________________________________________________
Profit/(loss) attributable to minority interest 1.0 (3.9)
Profit attributable to equity holders 109.6 70.7
_______________________________________________________________________________________________________________________
110.6 66.8
_______________________________________________________________________________________________________________________
Basic earnings per share 6 50.5p 27.8p
Diluted earnings per share 6 49.4p 27.4p
Dividend per share in respect of the financial year 7
Dividend per share paid during the year 14.0p 9.0p
Dividend per share declared for the year 18.0p 12.0p
_______________________________________________________________________________________________________________________
STATEMENT OF TOTAL RECOGNISED INCOME AND EXPENSE
Year ended 31 March 2007
2007 2006
£m £m
_______________________________________________________________________________________________________________________
Profit for the financial year 110.6 66.8
__________________________________
Defined benefit pension scheme actuarial gain/(loss), net of tax 0.2 (2.8)
Tax allowance on share options/awards in excess of expense recognised 4.9 2.6
__________________________________
5.1 (0.2)
_______________________________________________________________________________________________________________________
Total recognised income and expense for the financial year 115.7 66.6
_______________________________________________________________________________________________________________________
Attributable to minority interest 1.0 (3.9)
Attributable to equity holders 114.7 70.5
_______________________________________________________________________________________________________________________
115.7 66.6
_______________________________________________________________________________________________________________________
CONSOLIDATED BALANCE SHEET
31 March 2007 2007 2006
Notes £m £m
_______________________________________________________________________________________________________________________
Assets
Non-current assets
Property, plant and equipment 8 58.8 64.1
Intangible assets 9 55.8 51.6
Available for sale investments 0.4 0.4
Investment in joint venture 1.9 1.7
Deferred tax assets 15.9 19.8
_______________________________________________________________________________________________________________________
132.8 137.6
_______________________________________________________________________________________________________________________
Current assets
Trade and other receivables 10 61.4 49.3
Cash and cash equivalents 72.9 226.8
_______________________________________________________________________________________________________________________
134.3 276.1
_______________________________________________________________________________________________________________________
Total assets 267.1 413.7
_______________________________________________________________________________________________________________________
Liabilities
Current liabilities
Trade and other payables 11 129.4 51.1
Current tax 20.6 11.9
Borrowings 12 171.4 0.6
Provisions 13 8.0 15.1
_______________________________________________________________________________________________________________________
329.4 78.7
_______________________________________________________________________________________________________________________
Non-current liabilities
Borrowings 12 248.7 0.5
Retirement benefit obligations 14 15.0 20.3
Provisions 13 23.9 25.4
_______________________________________________________________________________________________________________________
287.6 46.2
_______________________________________________________________________________________________________________________
Total liabilities 617.0 124.9
_______________________________________________________________________________________________________________________
Net (liabilities)/assets (349.9) 288.8
_______________________________________________________________________________________________________________________
Equity
Capital and reserves attributable to the Company's equity holders
Ordinary share capital 15 253.0 14.9
Share premium 15 - 4.3
Retained (loss)/earnings 15 (351.7) 268.0
Other reserves 15 (253.8) -
_______________________________________________________________________________________________________________________
(352.5) 287.2
Minority interest in equity 15 2.6 1.6
_______________________________________________________________________________________________________________________
Total equity (349.9) 288.8
_______________________________________________________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 March 2007
2007 2006
Notes £m £m
_______________________________________________________________________________________________________________________
Cash flow from operating activities
Cash generated from operations 16 180.4 140.6
Interest received 6.1 7.4
Interest paid (14.8) (1.5)
Corporation tax paid (33.5) (29.0)
_______________________________________________________________________________________________________________________
Net cash inflow from operating activities 138.2 117.5
_______________________________________________________________________________________________________________________
Cash flow from investing activities
Purchase of property, plant and equipment (6.0) (5.3)
Purchase of intangible assets (13.9) (20.5)
Receipts from disposal of Stock Exchange Tower - 33.2
Further consideration for acquisition of subsidiary undertaking - (6.2)
Dividends received 2.0 2.0
_______________________________________________________________________________________________________________________
Net cash (outflow)/inflow from investing activities (17.9) 3.2
_______________________________________________________________________________________________________________________
Cash flow from financing activities
Dividends paid to shareholders (33.2) (22.8)
Cash impact of capital return (497.9) -
Share buyback (105.3) -
Issue of ordinary share capital - 5.9
Purchase of own shares by ESOP trust (47.8) (4.7)
Proceeds from own shares on exercise of employee share options 5.4 2.7
Proceeds from bond issue - July 2006 249.2 -
Net proceeds from unsecured borrowings 155.4 0.6
_______________________________________________________________________________________________________________________
Net cash outflow from financing activities (274.2) (18.3)
_______________________________________________________________________________________________________________________
(Decrease)/increase in cash and cash equivalents (153.9) 102.4
Cash and cash equivalents at beginning of year 226.8 124.4
_______________________________________________________________________________________________________________________
Cash and cash equivalents at end of year 72.9 226.8
_______________________________________________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The Group's consolidated financial statements are prepared in accordance with International Financial Reporting
Standards ('IFRS') and International Financial Reporting Interpretations Committee ('IFRIC') interpretations endorsed
by the European Union, and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS.
The financial statements are prepared under the historical cost convention and on the basis of the principal accounting
policies set out below. The consolidated financial statements comprise the financial statements of London Stock
Exchange Group plc (the 'Company') and its subsidiaries, all having co-terminous accounting periods, with all
inter-company balances and transactions eliminated.
REVERSE ACQUISITION
On 15 May 2006 the Company became the holding company of London Stock Exchange plc pursuant to a scheme of arrangement
under section 425 of the Companies Act 1985 ('the Scheme').
Under IFRS 3, Business Combinations, this group reconstruction effected by the Scheme has been accounted for as a
reverse acquisition. Although the consolidated financial statements have been prepared in the name of the legal parent,
the Company, they are in substance a continuation of the consolidated financial statements of the legal subsidiary,
London Stock Exchange plc. The following accounting treatment has been applied in respect of the reverse acquisition:
a) the assets and liabilities of the legal subsidiary, London Stock Exchange plc, are recognised and measured in the
consolidated financial statements at the pre-combination carrying amounts, without restatement to fair value;
b) the retained (loss)/earnings and other equity balances recognised in the consolidated financial statements reflect
the retained earnings and other equity balances of London Stock Exchange plc immediately before the business
combination, and the results of the period from 1 April 2006 to the date of the business combination are those of
London Stock Exchange plc as the Company did not trade prior to the Scheme. However, the equity structure appearing
in the consolidated financial statements reflects the equity structure of the legal parent, London Stock Exchange
Group plc, including the equity instruments issued under the Scheme to effect the business combination; and
c) Comparative numbers presented in the consolidated financial statements are those reported in the consolidated
financial statements of the legal subsidiary, London Stock Exchange plc, for the year ended 31 March 2006.
The Company had no significant assets, liabilities or contingent liabilities of its own at the time that the Scheme
took effect and no cash consideration was paid in respect of the business combination. Transaction costs of equity
transactions relating to the issue of the Company's shares are accounted for as a deduction from equity.
ACCOUNTING POLICIES
REVENUE
Revenue represents the total amount receivable for the provision of goods and services, excluding value added tax.
Revenue is recognised in the period when the service or supply is provided:
a) annual fees are recognised over the 12 month period to which the fee relates;
b) admission fees are recognised at the time of admission to trading;
c) data, transaction and Exchange charges are recognised in the month in which the data is provided or the
transaction is effected; and
d) royalties are recognised in the 12 month period to which the royalties relate.
EXCEPTIONAL ITEMS
Items of income and expense that are material by size and/or nature and are non-recurring are classified as
exceptional items on the face of the income statement within their relevant category. The separate reporting of these
items helps give an indication of the Group's underlying performance.
FOREIGN CURRENCIES
The consolidated financial statements are presented in sterling, which is the Company's presentation and functional
currency.
Transactions in foreign currencies and currency balances at the year end are converted at the rate ruling at the
transaction date or the year end date respectively, with any gains or losses recognised in the income statement.
INTANGIBLE ASSETS
a) Goodwill arising on the acquisition of subsidiaries represents the excess of consideration paid over the
identifiable fair value of net assets acquired. It is not amortised but is tested annually for impairment and is
carried at cost less accumulated impairment losses; and
b) Third party software costs for the development and implementation of systems which enhance the services provided
by the Group are capitalised and amortised over their estimated useful lives, which is an average of three years.
PROPERTY, PLANT AND EQUIPMENT
a) Freehold properties, including related fixed plant, are included in the financial statements at cost less
accumulated depreciation and any provision for impairment. Freehold buildings and related fixed plant are
depreciated to residual value, based on cost at the beginning of the year plus subsequent additions, over their
estimated economic lives. The estimated useful lives of properties are approximately 50 years, the estimated
useful lives of fixed plant range from five to 20 years;
b) Leasehold properties and improvements are included at cost and depreciated to residual value over the shorter of
the period of the lease or the economic life of the asset; and
c) Plant and equipment is stated at cost and is depreciated to residual value on a straight line basis over the
estimated useful lives of the assets, which are mainly in the range from three to five years.
The Group selects its depreciation rates based on expected economic lives, taking into account the expected rate of
technological developments, market requirements and expected use of the assets. The selected rates are regularly
reviewed to ensure they remain appropriate to the Group's circumstances. Residual values and economic lives are
reviewed at each balance sheet date.
JOINT VENTURES
Investments in joint ventures are accounted for under the equity method and are initially recognised at cost. The
Group's share of profits or losses after tax from joint ventures is included in the consolidated income statement.
Cumulative post-acquisition movements are adjusted against the carrying amount of the investment in the Group's
balance sheet.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprises cash at bank and term deposits that are readily convertible to known amounts of
cash and are subject to insignificant risk of changes in value.
FINANCIAL INSTRUMENTS
a) Investments (other than fixed deposits and interests in joint ventures and subsidiaries) are designated as
available for sale and are recorded on trade date at fair value with changes in fair value recognised in equity.
Where the fair value is not reliably measurable, the investment is held at cost;
b) Foreign currency derivatives are recorded at fair value. The method of recording gains or losses depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item hedged. Where they
meet the relevant criteria in IAS 39, 'Financial instruments: recognition and measurement', the Group designates
foreign currency derivatives as cash flow hedges with the movement in fair value recognised in equity. Amounts
recognised in equity are transferred to the income statement when the hedged item is recognised in the income
statement. Any movements in fair value in respect of foreign currency derivatives which do not qualify as highly
effective cash flow hedges under IAS 39 are recognised immediately in the income statement;
c) The Company's own shares held by the ESOP trust are deducted from equity until they vest unconditionally in
employees and are held at cost; and
d) Consideration paid in respect of own shares is deducted from equity until the shares are cancelled, reissued or
disposed of.
PROVISIONS
A provision is recognised where there is a present obligation, whether legal or constructive, as a result of a past
event for which it is probable that a transfer of economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
BORROWINGS
Bank borrowings are recorded initially as proceeds received, net of direct issue costs and transaction costs (including
upfront facility fees). Subsequently, these liabilities are carried at amortised cost, and interest charged to the
income statement over the period of the borrowings using the effective interest method. Similarly direct issue costs
and transaction costs (including upfront facility fees) are also charged to the income statement over the period of the
borrowings using the effective interest rate method.
Redeemable Class B shares issued in connection with the capital return are carried at amortised cost, and presented as
a financial liability, in line with IAS 32, 'Financial Instruments: Disclosure and Presentation'. The dividend
accrued in respect of the Class B shares has been classified within finance costs in the income statement.
OPERATING LEASES
Rental costs for operating leases are charged to the income statement on a straight line basis. Lease incentives are
spread over the term of the lease. Provision is made in the accounts for lease commitments less income from
sub-letting, for property space which is surplus to business requirements. Such provisions are discounted where the
time value of money is considered material.
PENSION COSTS
The Group operates defined benefit and defined contribution pension schemes. For the defined benefit scheme the
service cost, representing benefits accruing to employees, is included as an operating expense and the expected
return on scheme assets and interest cost from unwinding of the discount on scheme obligations are included as
finance income and finance costs respectively. Actuarial gains and losses arising from experience adjustments, changes
in actuarial assumptions or differences between actual and expected returns on assets are recognised at each period
end net of tax in the statement of recognised income and expense. The net asset or liability recognised on the balance
sheet comprises the difference between the present value of pension obligations and the fair value of scheme assets.
For defined contribution schemes, the expense is charged to the income statement as incurred.
DEFERRED TAXATION
Full provision is made, using the liability method, for temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred taxation is determined using tax
rates that are substantially enacted at the balance sheet date and are expected to apply when the asset is realised
or liability settled.
Deferred tax assets are recognised to the extent it is probable that they will be recoverable against future taxable
profits.
SHARE BASED COMPENSATION
The Group operates a number of equity settled share based compensation plans for employees. The charge to the income
statement is determined by the fair value of the options granted or shares awarded at the date of grant and recognised
over the relevant vesting period. The transactions are equity-settled in accordance with the provisions of IFRS 2,
'Group and Treasury Share Transactions'.
2. SEGMENT INFORMATION
Segmental disclosures for the year ended 31 March 2007 are as follows:
Issuer Broker Information Derivatives
Services Services Services Services Other Corporate Group
£m £m £m £m £m £m £m
_______________________________________________________________________________________________________________________
Revenue
Ongoing revenue 63.2 163.8 105.9 9.3 7.4 - 349.6
_______________________________________________________________________________________________________________________
Total revenue 63.2 163.8 105.9 9.3 7.4 - 349.6
_______________________________________________________________________________________________________________________
Expenses
Depreciation and amortisation (2.9) (10.6) (9.6) (0.4) - (0.6) (24.1)
Exceptional costs (see note 3) - - - 3.1 - (14.5) (11.4)
Other expenses (32.5) (39.6) (43.8) (7.4) (6.5) (10.1) (139.9)
_______________________________________________________________________________________________________________________
Total expenses (35.4) (50.2) (53.4) (4.7) (6.5) (25.2) (175.4)
_______________________________________________________________________________________________________________________
Operating profit 27.8 113.6 52.5 4.6 0.9 (25.2) 174.2
Share of profit after tax of joint venture - - 1.9 - - - 1.9
_______________________________________________________________________________________________________________________
Assets 19.7 68.7 49.7 11.1 22.2 93.8 265.2
Investment in joint venture - - 1.9 - - - 1.9
_______________________________________________________________________________________________________________________
Total assets 19.7 68.7 51.6 11.1 22.2 93.8 267.1
_______________________________________________________________________________________________________________________
Liabilities (24.2) (23.8) (32.7) (3.8) (18.0) (514.5) (617.0)
Capital expenditure 3.3 16.7 3.1 0.1 0.2 0.1 23.5
_______________________________________________________________________________________________________________________
Comparative segmental disclosures for the year ended 31 March 2006 are as follows:
Issuer Broker Information Derivatives
Services Services Services Services Other Corporate Group
£m £m £m £m £m £m £m
_______________________________________________________________________________________________________________________
Revenue
Ongoing revenue 56.9 125.5 94.1 7.7 6.9 - 291.1
Exceptional revenue (see note 3) - - 6.4 - - - 6.4
_______________________________________________________________________________________________________________________
Total revenue 56.9 125.5 100.5 7.7 6.9 - 297.5
_______________________________________________________________________________________________________________________
Expenses
Depreciation and amortisation (2.6) (13.0) (9.2) (0.9) (0.2) (0.6) (26.5)
Exceptional costs (see note 3) - - - (23.2) - (17.9) (41.1)
Other expenses (30.4) (43.0) (45.8) (10.4) (6.5) (8.4) (144.5)
_______________________________________________________________________________________________________________________
Total expenses (33.0) (56.0) (55.0) (34.5) (6.7) (26.9) (212.1)
_______________________________________________________________________________________________________________________
Operating profit 23.9 69.5 45.5 (26.8) 0.2 (26.9) 85.4
Share of profit after tax of joint venture - - 1.2 - - - 1.2
_______________________________________________________________________________________________________________________
Assets 19.0 75.2 59.4 1.3 4.5 252.6 412.0
Investment in joint venture - - 1.7 - - - 1.7
_______________________________________________________________________________________________________________________
Total assets 19.0 75.2 61.1 1.3 4.5 252.6 413.7
_______________________________________________________________________________________________________________________
Liabilities (11.2) (13.9) (14.7) (5.8) (33.9) (45.4) (124.9)
Capital expenditure 1.1 20.0 3.5 0.1 0.8 0.1 25.6
_______________________________________________________________________________________________________________________
The Other segment represents property letting and activities not directly related to the main four business segments
and do not individually constitute separately reportable segments. Corporate expenses are for corporate services
which cannot reasonably be allocated to business segments.
Principal operations and customers of the Group are in the United Kingdom.
3. EXCEPTIONAL ITEMS 2007 2006
£m £m
_______________________________________________________________________________________________________________________
Exceptional Information Services revenue - 6.4
Fees in respect of offers for the Company (13.5) (12.1)
Impairment of goodwill and provision in respect of EDX London Ltd (see notes 9 and 13)1 3.1 (23.1)
Restructuring costs 2 (1.0) (5.9)
_______________________________________________________________________________________________________________________
Total exceptional items (11.4) (34.7)
1 A provision for an onerous operating contract of EDX London Ltd has been released in 2007 as it is no longer required.
2 Restructuring costs of £1.0m (2006: £5.9m) are one-off implementation costs arising from the cost saving programme
announced in February 2006.
4. NET FINANCE (COSTS)/INCOME
2007 2006
£m £m
_______________________________________________________________________________________________________________________
Finance income
Bank deposit and other interest 4.7 9.4
Expected return on defined benefit pension scheme assets (see note 14) 11.9 10.8
_______________________________________________________________________________________________________________________
16.6 20.2
_______________________________________________________________________________________________________________________
Finance cost
Interest payable on bank and other borrowings (17.8) (0.4)
Other finance costs (0.5) (0.4)
Interest on discounted provision for leasehold properties (see note 13) (1.4) (1.6)
Defined benefit pension scheme interest cost (see note 14) (11.8) (11.2)
_______________________________________________________________________________________________________________________
(31.5) (13.6)
_______________________________________________________________________________________________________________________
Net finance (costs)/income (14.9) 6.6
_______________________________________________________________________________________________________________________
5. TAXATION
2007 2006
Taxation charged to the income statement £m £m
_______________________________________________________________________________________________________________________
Current tax:
Corporation tax for the year at 30% (2006:30%) 49.6 30.4
Adjustments in respect of previous years (5.1) (2.5)
_______________________________________________________________________________________________________________________
44.5 27.9
Deferred tax:
Deferred tax for the current year 1.3 (2.0)
Adjustments in respect of previous years 5.1 0.8
_______________________________________________________________________________________________________________________
Taxation charge 50.9 26.7
_______________________________________________________________________________________________________________________
The adjustments in respect of previous years' corporation tax are mainly in respect of tax returns agreed with HM
Revenue & Customs.
2007 2006
Taxation on items (credited)/charged to equity £m £m
_______________________________________________________________________________________________________________________
Current tax (credit):
Tax allowance on share options/awards in excess of expense recognised (2.3) -
Deferred tax charge/(credit):
Defined benefit pension scheme actuarial gains/(losses) 0.1 (1.2)
Tax allowance on share options/awards in excess of expense recognised (2.6) (2.6)
_______________________________________________________________________________________________________________________
Factors affecting the tax charge for the year
The reconciling items between the standard rate of corporation tax in the UK of 30% (2006: 30%)and the income
statement tax charge for the year are explained below:
2007 2006
£m £m
_______________________________________________________________________________________________________________________
Profit before taxation 161.5 93.5
_______________________________________________________________________________________________________________________
Profits multiplied by standard rate of corporation tax in the UK of 30% 48.5 28.1
Expenses not deductible/income not taxable 3.0 0.7
Share of joint venture consolidated at profit after tax (0.6) (0.4)
Adjustments in respect of previous years - (1.7)
_______________________________________________________________________________________________________________________
Taxation charge 50.9 26.7
_______________________________________________________________________________________________________________________
6. 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 which would arise on conversion or vesting of share options and share awards
under the Employee Share Ownership Plan (ESOP). Adjusted basic earnings per share excludes exceptional items to enable
comparison of the underlying earnings of the business with prior periods.
2007 2006
_______________________________________________________________________________________________________________________
Basic earnings per share 50.5p 27.8p
Diluted earnings per share 49.4p 27.4p
Adjusted basic earnings per share 56.2p 37.4p
£m £m
_______________________________________________________________________________________________________________________
Profit for the financial year attributable to equity holders 109.6 70.7
Adjustments:
Exceptional items 11.4 34.7
Tax effect of exceptional items 0.6 (6.5)
Exceptional items and taxation attributable to minority interest 0.5 (3.7)
_______________________________________________________________________________________________________________________
Adjusted profit for the financial year attributable to equity holders 122.1 95.2
_______________________________________________________________________________________________________________________
Weighted average number of shares - million 217.2 254.3
Effect of dilutive share options and awards - million 4.6 4.1
_______________________________________________________________________________________________________________________
Diluted weighted average number of shares - million 221.8 258.4
_______________________________________________________________________________________________________________________
The weighted average number of shares excludes those held in the ESOP, reducing the weighted average number of shares
to 217.2 million (2006: 254.3 million).
7. DIVIDENDS
2007 2006
£m £m
_______________________________________________________________________________________________________________________
Final dividend for 2005 paid August 2005: 5.0p per Ordinary share - 12.6
Second interim dividend (in lieu of final dividend) for 2006 paid May 2006: 8.0p per
Ordinary share 20.5 -
Interim dividend for 2007 paid January 2007: 6.0p (2006: 4.0p) per Ordinary share 12.7 10.2
_______________________________________________________________________________________________________________________
33.2 22.8
_______________________________________________________________________________________________________________________
The Board has declared a final dividend in respect of the year ended 31 March 2007 of 12.0p per share, which is
estimated to amount to £23.1m to be paid on 13 August 2007.
8. PROPERTY, PLANT & EQUIPMENT
Total
£m
_______________________________________________________________________________________________________________________
Cost:
1 April 2005 151.1
Additions 5.8
Disposals (44.3)
_______________________________________________________________________________________________________________________
31 March 2006 112.6
Additions 6.6
Disposals (1.4)
_______________________________________________________________________________________________________________________
31 March 2007 117.8
_______________________________________________________________________________________________________________________
Depreciation:
1 April 2005 79.4
Charge for the year 12.0
Impairment loss 0.3
Disposals (43.2)
_______________________________________________________________________________________________________________________
31 March 2006 48.5
Charge for the year 11.4
Disposals (0.9)
_______________________________________________________________________________________________________________________
31 March 2007 59.0
_______________________________________________________________________________________________________________________
Net book values:
_______________________________________________________________________________________________________________________
31 March 2007 58.8
_______________________________________________________________________________________________________________________
31 March 2006 64.1
_______________________________________________________________________________________________________________________
9. INTANGIBLE ASSETS
Goodwill Software Total
£m £m £m
_______________________________________________________________________________________________________________________
Cost:
1 April 2005 31.2 80.2 111.4
Additions - 19.8 19.8
Revised estimate of contingent consideration 1.0 - 1.0
Disposals - (4.9) (4.9)
_______________________________________________________________________________________________________________________
31 March 2006 32.2 95.1 127.3
Additions - 16.9 16.9
Disposals - (0.7) (0.7)
_______________________________________________________________________________________________________________________
31 March 2007 32.2 111.3 143.5
_______________________________________________________________________________________________________________________
Amortisation and accumulated impairment:
1 April 2005 1.7 44.7 46.4
Charge for the year - 14.5 14.5
Impairment loss 19.4 0.3 19.7
Disposals - (4.9) (4.9)
_______________________________________________________________________________________________________________________
31 March 2006 21.1 54.6 75.7
Charge for the year - 12.7 12.7
Disposals - (0.7) (0.7)
_______________________________________________________________________________________________________________________
31 March 2007 21.1 66.6 87.7
_______________________________________________________________________________________________________________________
Net book values:
_______________________________________________________________________________________________________________________
31 March 2007 11.1 44.7 55.8
_______________________________________________________________________________________________________________________
31 March 2006 11.1 40.5 51.6
_______________________________________________________________________________________________________________________
The net book value of goodwill relates entirely to the Information Services segment.
An impairment review of goodwill and other assets has been carried out in accordance with IAS 36, 'Impairment of
assets'.
The carrying value of goodwill and other assets in respect of Proquote was supported by the estimated net present
value of future cash flows in the business plan over the next five years, with a growth rate of 2.25 per cent beyond
that and cash flows discounted using a pre-tax discount rate of 12.6 per cent.
10. TRADE AND OTHER RECEIVABLES
2007 2006
£m £m
_______________________________________________________________________________________________________________________
Trade receivables 27.0 20.2
Less: provision for impairment of receivables (0.1) (0.2)
_______________________________________________________________________________________________________________________
Trade receivables - net 26.9 20.0
Other receivables 0.2 0.2
Prepayments and accrued income 34.3 29.1
_______________________________________________________________________________________________________________________
61.4 49.3
_______________________________________________________________________________________________________________________
11. TRADE AND OTHER PAYABLES
2006 2005
£m £m
_______________________________________________________________________________________________________________________
Trade payables 3.3 2.0
Social security and other taxes 2.1 1.9
Other payables 7.0 2.1
Share buyback programme1 60.0 -
Accruals and deferred income 57.0 45.1
_______________________________________________________________________________________________________________________
129.4 51.1
_______________________________________________________________________________________________________________________
1 Shares purchased during the close period following the 2007 year end, under an irrevocable commitment entered into
with the Company's corporate brokers prior to the year end, are recorded as a current liability at a total cost of £60m
(2006: nil) (see note 15).
12. BORROWINGS
2007 2006
£m £m
_______________________________________________________________________________________________________________________
Current
Bank borrowings 155.7 -
Redeemable Class B shares 15.7 -
Other borrowings - 0.6
_______________________________________________________________________________________________________________________
171.4 0.6
_______________________________________________________________________________________________________________________
Non-current
Bond issue 248.2 -
Other borrowings 0.5 0.5
_______________________________________________________________________________________________________________________
248.7 0.5
_______________________________________________________________________________________________________________________
Current borrowings
The Company has in place a multicurrency revolving loan facility of £200m, available up to February 2011. Borrowings
under the loan facility are unsecured and currently bear interest at a floating rate of LIBOR plus 40 basis points.
The interest margin applicable to borrowings under the loan facility is dependant upon the Group net debt: EBITDA ratio.
At 31 March 2007 the Company also had a bridge facility of £250m which is available for drawdown up to September 2007,
repayable by July 2008, to fund the share buyback programme. The facility had not been drawn down at 31 March 2007.
Redeemable Class B shares were issued to facilitate the capital return in May 2006. Shareholders who elected to retain
their B shares are entitled to a non-cumulative preference dividend based on 75% of six month LIBOR on 1 June and
1 December each year until 1 June 2009 and may redeem their B shares for 200 pence each on those dates. Any
outstanding B shares will be redeemed on 1 June 2009.
Non-current borrowings
In July 2006 the Company issued a £250m bond which is unsecured and due for repayment in 2016, with a 5.875% coupon,
interest to be paid semi-annually in arrears. The issue price of the bond was £99.679 per £100 nominal. The coupon on
the bond is dependent on the Company's credit rating. As a result of a change in the Company's credit rating from
Moody's in February 2007 from Baa1 to Baa2, the coupon will increase to 6.125% from July 2007.
13. PROVISIONS
Contingent
Property consideration Other Total
£m £m £m £m
_______________________________________________________________________________________________________________________
1 April 2005 34.8 5.2 - 40.0
Revised estimate of contingent consideration - 1.0 - 1.0
Exceptional charges during the year - - 9.0 9.0
Utilised during the year (4.8) (6.2) (0.1) (11.1)
Interest on discounted provision 1.6 - - 1.6
_______________________________________________________________________________________________________________________
31 March 2006 31.6 - 8.9 40.5
Exceptional charges during the year - - 1.0 1.0
Utilised during the year (4.3) - (3.6) (7.9)
Released during year - - (3.1) (3.1)
Interest on discounted provision 1.4 - - 1.4
_______________________________________________________________________________________________________________________
31 March 2007 28.7 - 3.2 31.9
_______________________________________________________________________________________________________________________
Non-current 23.9 - - 23.9
Current 4.8 - 3.2 8.0
_______________________________________________________________________________________________________________________
28.7 - 3.2 31.9
_______________________________________________________________________________________________________________________
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 seven and 21 years to expiry.
Other
As at 31 March 2007, other provisions relate to the one-off implementation costs arising from the cost saving
programme announced in February 2006. A provision for an onerous operating contract of EDX London Ltd was released as
it is no longer required.
14. RETIREMENT BENEFIT OBLIGATIONS
The Group operates separate defined benefit and defined contribution schemes. The assets of the defined benefit and
defined contribution schemes are held separately from those of the Group in a separate trustee administered fund and
the funds are primarily managed by Schroder Investment Management Limited, Investec Asset Management Limited and
Legal & General Investment Management Limited.
Defined benefit scheme
The defined benefit scheme is non-contributory and provides benefits based on final pensionable pay related to salary
earned in the last five years of employment. The defined benefit scheme was closed to new members in 1999 but
provides retirement benefits to approximately 20 per cent of current and many former employees. Pension scheme
obligations and costs are determined by an independent qualified actuary on a regular basis using the projected unit
credit method. The obligations are measured by discounting the best estimate of future cash flows to be paid out by
the scheme and are reflected in the Group balance sheet.
Defined contribution schemes
The Group's defined contribution schemes are now the only schemes open to new employees. A core contribution of eight
per cent of pensionable pay is provided and the Group will match employee contributions up to a maximum of six per
cent of pensionable pay.
AMOUNTS RECOGNISED IN THE INCOME STATEMENT 2007 2006
£m £m
_______________________________________________________________________________________________________________________
Defined contribution schemes (2.0) (2.7)
Defined benefit scheme - current service cost (1.4) (1.4)
_______________________________________________________________________________________________________________________
Total pension charge included in employee benefit expense (3.4) (4.1)
_______________________________________________________________________________________________________________________
Finance income and costs:
Interest cost (11.8) (11.2)
Expected return on assets in the scheme 11.9 10.8
_______________________________________________________________________________________________________________________
Net finance income/(cost) 0.1 (0.4)
_______________________________________________________________________________________________________________________
Total recognised in the income statement (3.3) (4.5)
_______________________________________________________________________________________________________________________
DEFINED BENEFIT ASSETS AND OBLIGATIONS
Funded obligations and assets are set out below:
2007 2006 2005
£m £m £m
_______________________________________________________________________________________________________________________
Fair value of assets:
Equities 35.7 69.4 52.2
Bonds 185.2 153.3 139.1
Property 3.7 - -
_______________________________________________________________________________________________________________________
Total fair value of assets 224.6 222.7 191.3
Present value of funded obligations (239.6) (243.0) (210.0)
_______________________________________________________________________________________________________________________
Balance sheet liability (15.0) (20.3) (18.7)
_______________________________________________________________________________________________________________________
MOVEMENT IN DEFINED BENEFIT OBLIGATION DURING THE YEAR 2007 2006
£m £m
_______________________________________________________________________________________________________________________
1 April 2006 243.0 210.0
Current service cost 1.4 1.4
Interest cost 11.8 11.2
Benefits paid (5.6) (5.4)
Actuarial (gain)/loss (11.0) 25.8
_______________________________________________________________________________________________________________________
31 March 2007 239.6 243.0
_______________________________________________________________________________________________________________________
MOVEMENT IN FAIR VALUE OF PLAN ASSETS DURING THE YEAR 2007 2006
£m £m
_______________________________________________________________________________________________________________________
1 April 2006 222.7 191.3
Expected return on assets 11.9 10.8
Contributions paid 6.3 4.2
Benefits paid (5.6) (5.4)
Actuarial (loss)/gain (10.7) 21.8
_______________________________________________________________________________________________________________________
31 March 2007 224.6 222.7
_______________________________________________________________________________________________________________________
15. RECONCILIATION OF MOVEMENTS IN EQUITY
Attributable to equity holders of the Group
_______________________________________________________________
Other reserves
___________________
Ordinary Capital Reverse
share share Retained redemp'n acquisit'n Minority Total
capital premium earnings reserve reserve interest equity
Group Notes £m £m £m £m £m £m £m
_______________________________________________________________________________________________________________________
1 April 2005 14.9 - 220.3 - - 1.1 236.3
Total recognised income and
expense for the financial year - - 70.5 - - (3.9) 66.6
Final dividend relating to the
year ended 31 March 2005 7 - - (12.6) - - - (12.6)
Interim dividend relating to the
year ended 31 March 2006 7 - - (10.2) - - - (10.2)
Issue of new shares - 4.3 - - - - 4.3
Issue of share capital in
subsidiary undertaking1 - - - - - 4.4 4.4
_______________________________________________________________________________________________________________________
31 March 2006 14.9 4.3 268.0 - - 1.6 288.8
The Scheme 238.7 (4.3) (491.7) 257.3 (512.5) - (512.5)
Equity transaction costs - - (1.1) - - - (1.1)
Redemption of B shares - - (0.8) 0.8 - - -
Total recognised income and
expense for the financial year - - 114.7 - - 1.0 115.7
Second interim dividend relating
to the year ended 31 March 2006 7 - - (20.5) - - - (20.5)
Interim dividend relating to the
year ended 31 March 2007 7 - - (12.7) - - - (12.7)
Share buyback2 (0.6) - (169.9) 0.6 - - (169.9)
Employee share schemes and
own shares - - (37.7) - - - (37.7)
_______________________________________________________________________________________________________________________
31 March 2007 253.0 - (351.7) 258.7 (512.5) 2.6 (349.9)
_______________________________________________________________________________________________________________________
The capital redemption reserve is a non-distributable capital reserve set up primarily by redemption of the B shares.
The reverse acquisition reserve is a non-distributable capital reserve arising on consolidation as a result of the
Scheme.
1 Issue of share capital in subsidiary undertaking to minority interest includes £2.8m of converted loans, giving net
cash impact of £1.6m.
2 The Company has entered into an irrevocable commitment with its corporate brokers to purchase shares which in part
covers the close period from 1 April 2007 up to the preliminary announcement of the Company's results. This has
resulted in £60m being included in the share buyback total of £169.9m and also being recorded as a current liability.
16. CASH GENERATED FROM OPERATIONS Group
2007 2006
£m £m
_______________________________________________________________________________________________________________________
Profit before taxation 161.5 93.5
Depreciation and amortisation 24.1 26.5
Impairment loss and provision for EDX London Ltd (3.1) 23.1
Provision for restructuring costs 1.0 5.9
Net finance costs/(income) 14.9 (6.6)
Investment income (0.3) (0.3)
Share of profit after tax of joint venture (1.9) (1.2)
(Increase)/decrease in trade and other receivables (13.5) 2.0
Increase in trade and other payables 6.0 3.4
Defined benefit pension obligation - contributions in excess of expenses charged (4.9) (2.8)
Provisions utilised during the year (7.9) (4.9)
Share scheme expense 4.5 2.0
_______________________________________________________________________________________________________________________
Cash generated from operations 180.4 140.6
_______________________________________________________________________________________________________________________
Comprising:
Ongoing operating activities 198.6 145.9
Exceptional items (see note 3) (18.2) (5.3)
_______________________________________________________________________________________________________________________
180.4 140.6
_______________________________________________________________________________________________________________________
17. ABRIDGED ACCOUNTS
These abridged accounts do not constitute, but have been extracted from, the Group'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.
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