Interim Results

RNS Number : 0322D

London Stock Exchange Group PLC

25 November 2009

 



25 November 2009

LONDON STOCK EXCHANGE GROUP plc

ANNOUNCEMENT OF INTERIM RESULTS 

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009

London Stock Exchange Group plc ("the Group") today reports results for the six months ended 30 September 2009.  

Financial Headlines:

•	Revenue of £310.9 million (H1 FY2009: 342.5 million), down four per cent sequentially on H2 last year and nine per cent on the corresponding period last year reflecting continuing competitive and difficult markets in cash equity trading
•	Underlying operating expenses1 of £180.2 million (H1 FY2009: £165.6m); down eight per cent against same period last year and down four per cent on H2 last year in constant currency and excluding £20.4 million of non-recurring costs following acquisition of MillenniumIT
•	Operating profit1 of £134.8 million (H1 FY2009: £181.0 million), partly reflecting inclusion of £20.4 million (of a  total £31 million) non-recurring MillenniumIT related costs
•	Profit before tax of £79.4 million (H1 FY2009: £127.0 million)
•	Basic EPS of 18.5 pence (H1 FY2009: 30.3 pence) and adjusted basic EPS of 29.0 pence (H1 FY2009: 39.3 pence); the £20.4 million non-recurring MillenniumIT related costs equate to 5.5 pence of EPS dilution in both cases
•	Interim dividend of 8.4 pence per share, unchanged from last year's interim payment
•	Strong net cash flow from operating activities of £106.8 million; net cash generated after return to shareholders of £37.6 million - gross drawn debt of £608 million, with £950 million of committed borrowing facilities through to 2012 or beyond
1before impairment, amortisation of purchased intangibles and exceptional items

Operational Headlines:

•	Capital Markets (47 per cent of Group revenue): £43.5 billion of new capital raised by companies on or coming to the Group's primary markets, continuing the trend of re-equitisation. In secondary markets activity trends were mixed reflecting the Group's diverse portfolio of products:
	-   average daily UK equity value traded declined 16 per cent vs H2 last year;
	-   average daily equity trades in Italy grew five per cent over the immediately preceding six months; and
	-   the volume of trading in the Group's fixed income (cash) and derivatives markets increased 37 and 15     per cent respectively over the immediately preceding six months

•	Post Trade Services (19 per cent of Group revenue): resilient performance with revenue up 16 per cent over the corresponding period last year albeit down slightly on H2 last year due to lower interest spreads, with continuing sequential increases in clearing and settlement contract volumes (up 14 and 11 per cent respectively on H2 last year)
•	Information & Technology Services (33 per cent of Group revenue): demand for the Group's real time data by professional users declined as expected, but mostly offset by growth in other information and technology products, particularly reference data products and FTSE, where revenues were up ten per cent compared with corresponding period last year
•	Benefits starting to flow from actions taken to meet market challenges and position for growth:
	-   management structure streamlined and total headcount reduced by 12 per cent to give annualised cost     savings of £11 million
	-   business increasingly client focused
	-   Millennium Information Technologies Ltd ("MillenniumIT") acquired in October to provide a competitive,     high performance trading system, which will also deliver at least £10 million annual cost savings from     FY 2012

Commenting on the six months, Xavier Rolet, Chief Executive said:

"Despite testing markets, there are some encouraging elements within our first half results. Both the Post Trade and the Information & Technology divisions performed well and in our primary markets business there was a continued flow of capital raising activity. The overall Group performance reflected market conditions depressed by the fall out from turmoil in financial markets last year and increased competition, particularly in UK cash equities trading which, as expected, resulted in a weaker performance in the Capital Markets division.

"The Group is taking a number of actions to diversify, strengthen and grow the business. The acquisition of MillenniumIT is a strategically important first step. As well as providing a high performance trading platform to enable us to compete more effectively, it will help to lower our cost base as part of an ongoing focus on cost reduction and provide further growth opportunities through technology sales in the global exchange market.  

"Throughout the Group we are focusing on projects to leverage our considerable asset base and to drive efficiency as we operate in highly competitive and still somewhat uncertain market conditions."

Further information is available from:

London Stock Exchange	Patrick Humphris - Media	[phone]
	Paul Froud - Investor Relations	[phone]
Citigate Dewe Rogerson	Patrick Donavan/Grant Ringshaw/Lucie Holloway	[phone]

Chairman's Statement

As expected, over the past six months the Group encountered testing market conditions and increasing competition in its Capital Markets business, most notably in UK cash equities, with the overall effect of lower revenues and profitability in the period. However, there were good performances in both the Post Trade and Information & Technology Services divisions, which recorded increased revenues over H1 last year and in aggregate comprised 53 per cent of Group revenues.  

Equity markets staged a recovery in the period in terms of growth in both the FTSE 100 (UK) and the FTSE MIB (Italy) indices, which has benefited the Group to some extent, though values traded still significantly lagged the equivalent period last year which featured heightened volatility and trading levels related to the turmoil in financial markets. The Group has continued to fulfil a vital function in providing capital raising facilities for companies, with record levels of money raised in the first quarter, and the flow of secondary issues continuing right through the half year and beyond. Conditions for IPOs remained difficult, though there was an uplift in new issue activity on our Main Market compared with H2 last year. Lower trading levels, together with intense competition from new trading venues with aggressive pricing, have contributed to lower equity trading revenues, the main area of decline for the Group. Derivative and fixed income trading performed more robustly in terms of trading volumes, although derivatives revenues were impacted by the mix of trading and changes to tariffs to promote market growth.

Across the Group a series of projects are underway to meet market challenges, position us for growth and to diversify revenues. In broad terms, the process can be characterised as:

•	getting in shape by retaining a focus on cost reduction, ensuring we are fully client focused and accordingly improving our competitiveness;
•	leveraging our core assets, particularly in post trade, non-real time information and technology products, derivatives and fixed income; and
•	developing the business through selected partnership opportunities in their various forms.

Benefits from executing this strategy are already evident, with a more streamlined management team, a 12 per cent reduction in Group headcount from the position at the start of the year which will give annualised cost savings of £11 million, an increased client focus and a new technology road map.  

Securing a low cost, flexible and high performance trading technology is key to being able to fully compete, and in the acquisition of MillenniumIT we now have an in-house ability to implement a new system towards the end of 2010 that will provide a high performance trading platform and result in lower development costs. It will also allow us to develop related market services and enhance MillenniumIT's third party technology sales business.  

Financial Summary

Unless otherwise stated, all figures below refer to the six months ended 30 September 2009. Comparative figures are for the previous six months ended 31 March 2009 ("H2 last year") to better illustrate recent trends, although comparison is also made to the corresponding H1 period last year. The basis of preparation is set out at the end of this report. 

The Group's performance in the first six months of the financial year reflects underlying market conditions, with revenue of £310.9 million, down four per cent on H2 last year, and down nine per cent on the comparable period (H1 FY2009: £342.5 million). Operating profit for the period, before impairment, amortisation of purchased intangibles and exceptional items, declined to £134.8 million from £159.7 million in H2 last year and £181.0 million in H1 last year.  In constant currency, compared with H1 last year, revenues for the period were down 13 per cent and operating profit, before impairment, amortisation of purchased intangibles and exceptional items, declined 28 per cent.

Operating expenses, before impairment, amortisation of purchased intangibles and exceptional items, increased to £180.2 million from £167.2 million in H2 last year and from £165.6 million in H1 last year. Included in operating expenses in the current period is £20.4 million, of a total £31 million, of non-recurring accelerated depreciation and other IT costs relating to the existing TradElect platform, which will be replaced next year as a result of the acquisition of MillenniumIT.  Excluding these costs, operating expenses in constant currency were eight per cent lower than the same period last year and four per cent below H2 last year. An additional £5 million of associated non-recurring costs will be taken in H2 this year, and £6 million in FY2011.  The MillenniumIT acquisition (for US$30 million/£18 million) is expected to result in estimated annual cost savings of at least £10 million from FY2012.  

Exceptional items of £13.6 million principally relate to costs associated with the reduction of 133 in Group headcount announced in the period.  At 30 September 2009, headcount fell to 1,006, down from 1,135 at year end, with the final staff leaving under this programme in the third quarter.  

Net finance costs reduced to £18.8 million from £27.2 million in H1 last year (which included a £6.8 million exceptional loss related to a gilt lock interest rate contract), reflecting cash generation and lower interest rates. The underlying Group tax rate of 31 per cent (H1 FY2009: 32 per cent), compared with the standard UK tax rate of 28 per cent, reflects the mix of profit between the UK and Italy and the confirmation with HMRC of the deductibility of certain prior year costs.

Basic earnings per share were 18.5 pence (H1 FY2009: 30.3 pence). Adjusted basic earnings per share decreased 26 per cent to 29.0 pence, reflecting the lower revenues and the effect of the £20.4 million of non-recurring costs associated with the MillenniumIT acquisition, equivalent to 5.5 pence per share.

Net cash flow from operating activities was £106.8 million (H1 FY2009: £145.4 million). Capital expenditure in the period amounted to £22.4 million, and full year spend is expected to be broadly in line with the prior year (FY2009: £56.4 million).  Net cash generated after dividends was £36.9 million (H1 FY2009: £74.3 million).

The Group retains its prudent financial structure. At 30 September 2009 adjusted net debt was £581 million (after setting aside £125 million of cash for regulatory purposes) while drawn borrowings amounted to £608 million (31 March 2009: £625 million). A new £250 million, ten year bond was issued in June to replace a £180 million bridge facility due to expire in April 2010. Committed credit lines available for general Group purposes total £975 million, of which £950 million extend to 2012 or beyond, providing comfortable headroom.

Interim Dividend  

The Directors have declared an interim dividend of 8.4 pence per share, holding the dividend unchanged from the level at the interim stage last year.  

The interim dividend will be paid on 5 January 2010 to shareholders on the register on 4 December 2009. 

Current Trading and Outlook

Underlying market conditions remain uncertain, at least in the near term, and competition in cash equities trading is expected to remain intense. During October daily average equity value traded in London increased eight per cent compared with September, while average daily equity volumes were up 13 per cent in Italy, although trading on both markets in November to date has fallen below October levels. In terms of equity capital raising, significant further issues are still taking place, and the pipeline for IPOs appears promising for 2010 although there is no certainty regarding the timing of new issues.  In the Post Trade division, increased trading volumes will help drive post trade activities, although with more settled debt market conditions returning, lower interest spreads on margins held will weigh on clearing revenues. Demand for real time data by professional users is likely to remain under pressure in the second half, however the number of terminals remained unchanged in October, while other parts of the Information & Technology Services division remain robust.

The Group is pursuing a range of initiatives and opportunities to grow, diversify and further strengthen the business, while operational efficiency through the ongoing control of costs remains a key priority. These actions will make the Group a more competitive and structurally stronger business.  

Chris Gibson-Smith

Chairman

25 November 2009

Operating Performance

A more detailed review of the operational performance of the business is provided in the operating report below.  To assist investors in understanding the underlying performance of the Group, percentage changes are also presented on a constant currency basis.

Capital Markets

	Six months ended				Variance at		Six months ended		Variance at
	30 Sep		31 Mar		constant		30 Sep		constant
	2009		2009	Variance	currency		2008	Variance	currency
Revenue	£m		£m	%	%		£m	%	%
Primary Markets
Annual fees	17.5		20.2	-13%	-13%		20.8	-16%	-19%
Admission fees	16.7		11.4	46%	46%		16.7	0%	-1%
	34.2		31.6	8%	8%		37.5	-9%	-11%
Secondary Markets
Cash equities	70.9		79.1	-10%	-10%		105.1	-33%	-33%
Derivatives	10.5		12.1	-13%	-13%		13.5	-22%	-26%
Fixed income	13.8		12.8	8%	7%		13.0	6%	-2%
	95.2		104.0	-8%	-9%		131.6	-28%	-29%
Other	17.8		18.6	-4%	-4%		18.2	-2%	-11%
Total revenue	147.2		154.2	-5%	-5%		187.3	-21%	-24%

Capital Markets comprises the Group's primary markets activities, providing access to capital for corporates and others, and the secondary market trading of cash equities, derivatives and fixed income. Performance was mixed, with declines in cash equities and derivatives trading revenues on H2 last year reflecting difficult underlying market conditions and, for derivatives, lower prices. However, there was a pick up in fixed income trading and also improved primary markets results as strong further issue activity continued. The segment contributed 47 per cent of total Group revenues, down from 55 per cent in H1 last year.

Capital Markets - Primary Markets
	Six months ended
	30 Sep	31 Mar	Variance		30 Sep	Variance
	2009	2009	%		2008	%
New Issues
UK Main Market, PSM & SFM	22	16	38%		49	-55%
UK AIM	13	27	-52%		60	-78%
Borsa Italiana	3	3	0%		5	-40%
Total	38	46	-17%		114	-67%
Company Numbers (as at period end)
UK Main Market, PSM & SFM	1,511	1,530	-1%		1,575	-4%
UK AIM	1,353	1,478	-8%		1,609	-16%
Borsa Italiana	295	296	0%		305	-3%
Total	3,159	3,304	-4%		3,489	-9%
Market capitalisation (as at period end)
UK Main Market (£bn)	1,635	1,170	40%		1,445	13%
UK AIM (£bn)	57	38	50%		62	-8%
Borsa Italiana (€bn)	465	314	48%		480	-3%
Borsa Italiana (£bn)	425	289	47%		383	11%
Total (£bn)	2,117	1,497	41%		1,890	12%
Money raised (£bn)
UK new	1.2	0.7	71%		6.2	-81%
UK further	30.9	57.3	-46%		34.0	-9%
Borsa Italiana new and further money raised	11.4	4.1	178%		3.5	226%
Total (£bn)	43.5	62.1	-30%		43.7	0%

Primary markets revenue of £34.2 million declined compared to the prior year reflecting the expected fall in annual fee revenues following the reductions in market capitalisation last year.  Against the immediately preceding six month period, strong Main Market new and  further issue activity grew admission fees, contributing to an eight per cent overall increase in primary market revenue.

During the period there was a notable increase in new issues on the UK Main Market compared with H2 last year, which together with the recovery in share prices resulted in aggregate market capitalisation across the Group's UK and Italian markets increasing by 41 per cent. The number of international new issues remained good overall in the period, with ten international companies listing on the Group's markets during the period.  Although the total amount of money raised in further issues dropped against the previous six month period, the Group benefited in fee terms from an increased number of smaller and mid-sized capital raisings, rather than a few large issues.

Capital Markets - Secondary Markets
	Six months ended
	30 Sep	31 Mar	Variance		30 Sep	Variance
	2009	2009	%		2008	%
Equity Volume Bargains (m)
UK	78.4	94.0	-17%		94.6	-17%
Borsa Italiana	33.4	31.1	7%		33.8	-1%
Total	111.8	125.1	-11%		128.4	-13%
Equity Value Traded
UK (£bn)	580	703	-17%		1,068	-46%
Borsa Italiana (€bn)	377	271	39%		568	-34%
Borsa Italiana (£bn)	331	233	42%		451	-27%
Total (£bn)	911	936	-3%		1,519	-40%
Equity Average Daily Bargains ('000)
UK	622	740	-16%		739	-16%
Borsa Italiana	261	249	5%		262	0%
Total	883	989	-11%		1,001	-12%
Equity Average Daily Value Traded
UK (£bn)	4.6	5.5	-16%		8.3	-45%
Borsa Italiana (€bn)	2.9	2.2	32%		4.4	-34%
Borsa Italiana (£bn)	2.6	1.9	37%		3.5	-26%
Total (£bn)	7.2	7.4	-3%		11.8	-39%
SETS Yield
Yield basis points	0.92	0.89	3%		0.86	7%

Secondary markets revenues declined eight per cent against the immediately preceding six months, mainly reflecting a reduction in the value of UK cash equities traded.

The average daily number of trades in Italy rose five per cent compared with the six months ended March 2009, with a similar increase in the value of the FTSE MIB index over the same period.  Trading on the UK electronic order book saw a 16 per cent reduction in the average daily value traded compared to H2 last year. This in part reflects an eight percentage point reduction in average share of market traded (from 78.6 per cent to 70.7 per cent) as competition from alternative venues, with aggressive pricing tactics, remained intense. A new tariff structure for UK cash equities trading took effect from 1 September 2009, with further refinements effective from 1 December 2009. The tariff change re-balances the charging between passive and aggressive trades, and makes the discount scheme more achievable for the most active traders, with charges for aggressive trades significantly lower than before. The effect of the changes for the two full months since introduction (until the end of October) has been a 15 per cent reduction in yield to 0.80 basis points, compared with the average yield from 1 April to 31 August 2009.

Upgrades to the TradElect platform continued, with reductions in latency to sub 2 milliseconds and new functionality, including hidden orders, to further enhance the attractiveness and competitiveness of the system. Work was also undertaken to define a trading technology roadmap that puts the Group at the forefront of market capabilities.  The acquisition of Sri Lanka-based MillenniumIT, completed in October, will provide the Group with a high performance, lower cost and highly scaleable trading platform. It will also bring in-house software development expertise and dedicated research and development support. Work is underway to effect a transition to MillenniumIT technology towards the end of calendar 2010, which will provide a significantly faster and more competitive trading platform in the cash equities market. 

	Six months ended
	30 Sep	31 Mar	Variance		30 Sep	Variance
	2009	2009	%		2008	%
Derivatives (contracts m)
EDX	31.3	29.1	8%		32.0	-2%
IDEM	22.3	17.6	27%		19.4	15%
Total	53.6	46.7	15%		51.4	4%
Fixed Income
MTS cash and Bondvision (€bn)	1,030	753	37%		975	6%
MTS money markets (€bn term adjusted)	18,288	14,856	23%		17,777	3%
Borsa Italiana MOT (€bn)	116	119	-3%		78	49%
Borsa Italiana MOT number of trades (m)	1.7	2.0	-15%		1.4	21%

The Group's derivatives operations produced strong growth in trading volumes on IDEM, the Italian derivatives market, following a change to tariffs earlier in the year.  The benefits of the 27 per cent growth in IDEM volumes feeds through to clearing revenues in the Group's post trade operations. Trading on Borsa Italiana's energy derivatives market, IDEX, which started in November 2008, made good progress with 9.4 million MegaWatt hours (MWh) traded in H1, compared with 4.3 million MWh in H2 last year.  Growth at EDX was driven by Russian derivatives, which now comprise over 50 per cent of contracts traded, from launch less than three years ago. Total derivatives revenues declined due to the mix of trading and tariff changes.  

EDX will move to the TMX Sola derivatives trading platform on 30 November 2009, providing an improvement in the capability of the derivatives trading service, and work will continue to further develop the trading opportunities for this business in conjunction with TMX.

On the fixed income markets, revenues improved over the two preceding six month periods (though down slightly in constant currency against H1 last year). Trading levels on MTS increased following poor market conditions at the time of the financial crisis last year, with value traded on cash and repo markets increasing 37 per cent and 23 per cent respectively over H2 last year.  On MOT, Borsa Italiana's electronic bond and government securities market, the number of trades declined 15 per cent.

Post Trade 

	Six months ended				Variance at		Six months ended		Variance at
	30 Sep		31 Mar		constant		30 Sep		constant
	2009		2009	Variance	currency		2008	Variance	currency
	£m		£m	%	%		£m	%	%
Revenue
Clearing	25.7		31.1	-17%	-18%		21.7	18%	8%
Settlement	10.8		9.3	16%	15%		7.9	37%	23%
Custody & other	22.8		20.9	9%	9%		21.5	6%	-4%
Total revenue	59.3		61.3	-3%	-4%		51.1	16%	5%

The Post Trade division principally comprises the Group's Italian-based clearing, settlement and custody businesses. Good revenue growth over the same time last year was achieved through stronger performances by the CC&G clearing operations and the Monte Titoli settlement business, although lower interest spreads on margin funds held in CC&G resulted in an overall revenue decline on H2 last year. The division accounted for 19 per cent of total Group revenue.

	Six months ended
	30 Sep	31 Mar	Variance		30 Sep	Variance
	2009	2009	%		2008	%
CC&G Clearing:
Equity clearing (m)	34.4	32.0	8%		34.4	0%
Derivative clearing (m)	22.3	17.6	27%		19.4	15%
Total Contracts (m)	56.7	49.6	14%		53.8	5%
Open interest (m) (as at period end)	4.9	4.6	7%		3.7	32%
Monte Titoli:
Settlement instructions (m)	26.4	23.7	11%		21.9	21%
Custody assets under management (€tn)	2.8	2.7	4%		2.7	4%

Clearing transaction volumes at CC&G increased over H2 last year as a result of growth in both Italian cash equities and derivatives trading volumes.  Revenues from treasury management fees declined from their elevated levels last year, despite an increase in the quantum of margin funds held, as a result of lower interest spreads compared with the unusually high spreads in the volatile markets last year.

CC&G achieved Recognised Overseas Clearing House status in the period, giving the opportunity to provide clearing services in the UK market for the EDX derivatives business once the transfer to the new trading platform for that market has been completed.

In Monte Titoli, the number of settlement instructions during the half year increased, mainly reflecting the recovery in level of equities trading over the period, helping to increase revenues.

Custody and other revenues for the six months increased over the seasonally quieter H2 last year, with the average value of assets under custody increasing four per cent to €2.8 trillion following an improvement in market values.  Revenues compared to last year reduced in constant currency due to the mix of assets shifting to government bonds which attract a lower custody charge, and a lower level of corporate actions which generate additional fees for both the custody and company secretarial businesses.

Information & Technology Services

	Six months ended				Variance at		Six months ended		Variance at
	30 Sep		31 Mar		constant		30 Sep		constant
	2009		2009	Variance	currency		2008	Variance	currency
	£m		£m	%	%		£m	%	%
Revenue
Data charges	54.0		56.9	-5%	-5%		57.5	-6%	-9%
Other	49.5		48.2	3%	3%		44.9	10%	8%
Total revenue	103.5		105.1	-2%	-1%		102.4	1%	-2%

The Information & Technology Services division consists of real time data products and a number of other discrete businesses, including Global Indices products, Trade Processing operations, Desktop and Work Flow products and Technology operations. The division delivered a solid performance against a backdrop of the anticipated decline in demand for terminals taking real time data. The division contributed 33 per cent of total Group revenues.

	Six months ended
	30 Sep	31 Mar	Variance		30 Sep	Variance
	2009	2009	%		2008	%
UK Terminals
Professional - UK	38,000	42,000	-10%		45,000	-16%
Professional - International	56,000	62,000	-10%		67,000	-16%
Total	94,000	104,000	-10%		112,000	-16%
Borsa Italiana Professional Terminals	142,000	151,000	-6%		161,000	-12%
Proquote	5,000	4,800	4%		4,500	11%
Borsa Italiana Market Connect	28,000	26,000	8%		21,000	33%

The total number of terminals taking Group price and trading information continued on a declining trend, reflecting cut backs by UK and international users of real time data. However, the number of users of the Group's own data distribution and market connection services, Proquote and Market Connect, increased over the period, reflecting the value proposition of these businesses.

Revenue from other Information & Technology Services businesses grew 10 per cent over the same time last year. Growing contributions were provided by SEDOL (which provides unique identification for a range of global tradable securities), UnaVista (a post trade data matching service) and the FTSE indices joint venture. The Server Hosting business, which enables trading firms to physically locate their servers within the Exchange's own data centre to gain sub-millisecond access to TradElect, contributed increased revenues having launched last year. Going forward, revenues from MillenniumIT will be reported in this division.

Basis of Preparation

Results for Borsa Italiana for the period ended 30 September 2009 have been translated into Sterling using the average monthly exchange rate for the period of €1.143 : £1. Constant currency growth rates have been calculated by translating prior period results at the average exchange rate for the current period.

Average €:£ rate 6 months ended 30 September 2009	Closing €:£ rate at 30 September 2009	Average €:£ rate 6 months ended 31 March 2009	Closing €:£ rate at 31 March 2009	Average €:£ rate 6 months ended 30 September 2008	Closing €:£ rate at 30 September 2008
€1.143	€1.094	€1.148	€1.079	€1.260	€1.268

Further information

The Group will host a presentation of its Interim Results for analysts and institutional shareholders today at 9.30am at 10 Paternoster Square, London EC4M 7LS. The presentation will be accessible via live web cast which can be viewed at http://www.londonstockexchangegroup.com/investor-relations/investor-relations.htm, or listened to on [phone]. For further information, please call the Group's Investor Relations department on [phone].

A conference for members of the Press will be held today at 11:30am, at 10 Paternoster Square, London EC4M 7LS. For more information, please call the Press Office on: + 44 (0)20 7797 1222 (London) or [phone] (Milan).

CONSOLIDATED INCOME STATEMENT
Six months ended 30 September 2009
		Six months ended 30 September			Year ended 31 March
		2009	2008		2009
		Unaudited	Unaudited
Continuing operations	Notes	£m	£m		£m
Revenue	2	310.9	342.5		665.5
Other Income	2	3.1	3.0		5.9
Expenses
Operating expenses before amortisation of purchased intangible assets, exceptional items and impairment of goodwill		(180.2)	(165.6)		(332.8)
Share of profit after tax of joint ventures/associates		1.0	1.1		2.1
Operating profit before amortisation of purchased intangible assets, exceptional items and impairment of goodwill		134.8	181.0		340.7
Amortisation of purchased intangible assets	3	(25.4)	(23.4)		(49.4)
Exceptional items and impairment of goodwill	3	(13.6)	(3.4)		(499.2)
Operating profit/(loss)	2	95.8	154.2		(207.9)
Profit on disposal of shares in subsidiary/associate		2.4	-		2.0
Finance income		7.2	13.1		20.8
Finance costs including exceptional items in the prior periods		(26.0)	(40.3)		(65.7)
Net finance costs	4	(18.8)	(27.2)		(44.9)
Profit/(loss) before taxation		79.4	127.0		(250.8)
Taxation on profit before amortisation of purchased intangible assets, exceptional items and impairment of goodwill		(36.6)	(50.2)		(96.7)
Taxation on amortisation of purchased intangible assets, exceptional items and impairment of goodwill	3	8.1	6.9		14.7
Total taxation	5	(28.5)	(43.3)		(82.0)
Profit/(loss) for the financial period		50.9	83.7		(332.8)
Profit attributable to minority interests		1.6	2.0		5.2
Profit/(loss) attributable to equity holders		49.3	81.7		(338.0)
		50.9	83.7		(332.8)

Basic earnings per share	6	18.5p	30.3p		(126.1)p
Diluted earnings per share	6	18.4p	30.0p		(126.1)p
Adjusted basic earnings per share	6	29.0p	39.3p		74.2p
Adjusted diluted earnings per share	6	28.9p	38.9p		73.6p
Dividend per share in respect of financial period:	7
Dividend per share paid during the period		16.0p	16.0p		24.4p
Dividend per share proposed for the period		8.4p	8.4p		24.4p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended 30 September 2009
		Six months ended 30 September			Year ended 31 March
		2009	2008		2009
		Unaudited	Unaudited
		£m	£m		£m
Profit/(loss) for the financial period		50.9	83.7		(332.8)
Other Comprehensive Income
Defined benefit pension scheme actuarial loss		(7.5)	(11.9)		(11.7)
Cash flow hedge		(0.3)	7.9		6.2
Net investment hedge		(12.0)	1.4		(24.8)
Exchange (loss)/gain on translation of foreign operations		(24.2)	(19.8)		284.3
Tax related to items not recognised in income statement		3.5	0.3		2.2
Total other comprehensive (expenditure)/income		(40.5)	(22.1)		256.2
Total comprehensive income/(expenditure) for the financial period		10.4	61.6		(76.6)
Attributable to minority interests		0.6	1.3		14.9
Attributable to equity holders		9.8	60.3		(91.5)
		10.4	61.6		(76.6)

CONSOLIDATED BALANCE SHEET
30 September 2009
		30 September			31 March
		2009	2008		2009
		Unaudited	Unaudited
	Notes	£m	£m		£m
Assets
Non-current assets
Property, plant and equipment		78.1	72.4		79.9
Intangible assets	8	1,525.6	1,789.2		1,584.9
Investment in joint ventures		7.9	1.0		1.7
Investment in associates		1.8	2.2		1.9
Deferred tax assets		5.2	8.4		5.7
Available for sale financial assets		0.4	0.4		0.4
Retirement benefit asset	9	-	2.6		5.0
Other non-current assets		0.4	0.4		0.4
		1,619.4	1,876.6		1,679.9
Current assets
Trade and other receivables	10	126.1	113.1		114.5
Derivative financial instruments		0.4	0.5		-
CCP financial assets		47,226.9	18,593.8		32,077.9
CCP cash and cash equivalents (restricted)		4,727.8	2,885.0		3,596.6
CCP clearing business assets	12	51,954.7	21,478.8		35,674.5
Assets held at fair value	12	4.2	22.0		5.0
Assets held for disposal		-	0.9		-
Cash and cash equivalents		169.5	142.2		143.7
		52,254.9	21,757.5		35,937.7
Total assets		53,874.3	23,634.1		37,617.6
Liabilities
Current liabilities
Trade and other payables	11	147.5	140.6		112.9
Derivative financial instruments		2.0	6.8		1.6
CCP clearing business liabilities	12	51,954.9	21,501.6		35,679.2
Current tax		2.7	12.4		7.6
Borrowings	13	-	184.6		2.3
Provisions	15	3.8	4.2		3.8
		52,110.9	21,850.2		35,807.4

Non-current liabilities
Borrowings	13	608.3	450.3		622.5
Derivative financial instruments		15.9	-		-
Deferred tax liabilities		96.2	89.6		103.3
Retirement benefit obligations	9	7.4	7.4		8.3
Provisions	15	21.9	22.6		22.9
		749.7	569.9		757.0
Total liabilities		52,860.6	22,420.1		36,564.4
Net assets		1,013.7	1,214.0		1,053.2
Equity
Capital and reserves attributable to the Company's equity holders
Share capital		18.7	18.7		18.7
Retained losses		(801.9)	(364.6)		(803.2)
Other reserves		1,708.3	1,472.4		1,741.4
		925.1	1,126.5		956.9
Minority interests		88.6	87.5		96.3
Total equity		1,013.7	1,214.0		1,053.2

CONSOLIDATED CASH FLOW STATEMENT
Six months ended 30 September 2009
		Six months ended 30 September			Year ended 31 March
		2009	2008		2009
		Unaudited	Unaudited
		£m	£m		£m
	Notes		Restated
Cash flow from operating activities
Cash generated from operations	16	155.2	210.9		352.6
Interest received		1.5	4.6		7.0
Interest paid		(13.0)	(24.2)		(52.1)
Corporation tax paid		(31.2)	(30.1)		(51.9)
Withholding tax paid		(5.7)	(15.8)		(30.5)
Net cash inflow from operating activities		106.8	145.4		225.1
Cash flow from investing activities
Purchase of property, plant and equipment		(7.2)	(7.0)		(19.9)
Purchase of intangible assets		(15.2)	(17.4)		(36.5)
Investment in joint venture		(6.1)	-		(0.7)
Investment in subsidiary		-	-		(5.3)
Proceeds from sale of minority interest in subsidiary		4.4	-		-
Disposal of associate		-	-		2.7
Dividends received		1.0	2.6		3.8
Net cash outflow from investing activities		(23.1)	(21.8)		(55.9)
Cash flow from financing activities
Dividends paid to shareholders		(42.7)	(42.9)		(65.3)
Dividends paid to minorities		(4.1)	(6.4)		(7.0)
Redemption of B shares		(2.3)	(2.1)		(5.3)
Share buyback		-	(51.6)		(51.5)
Purchase of own shares by ESOP trust		-	(26.3)		(26.3)
Proceeds from exercise of employee share options		1.2	0.7		0.9
Proceeds from borrowings		299.4	195.6		735.2
Repayment of borrowings		(308.4)	(249.2)		(818.5)
Net cash outflow from financing activities		(56.9)	(182.2)		(237.8)
Increase/(decrease) in cash and cash equivalents		26.8	(58.6)		(68.6)
Cash and cash equivalents at beginning of period		143.7	200.6		200.6
Exchange (losses)/gains on cash and cash equivalents		(1.0)	0.2		11.7
Cash and cash equivalents at end of period		169.5	142.2		143.7
The comparative for September 2008 has been restated to show separately the cash outflow relating to withholding tax on the interest received on the CCP balances. The interest received by CC&G is net of withholding tax which is deducted at source.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
30 September 2009
	Attributable to equity holders of the Company
					Other reserves
	Ordinary Share capital		Retained (loss)/ earnings	Capital redemption reserve	Reverse acquisition reserve	Foreign Exchange translation reserve	Merger reserve	Hedging reserve	Total attrib- utable to equity holders	Minority interests	Total equity
	£m		£m	£m	£m	£m	£m	£m	£m	£m	£m
1 April 2008	19.1		(331.1)	506.2	(512.5)	201.5	1,299.2	(14.7)	1,167.7	95.2	1,262.9
Total comprehensive income for the financial period	-		70.1	-	-	(19.1)	-	9.3	60.3	1.3	61.6
Redemption of B shares	-		(2.1)	2.1	-	-	-	-	-	-	-
Dividend payments to minorities	-		-	-	-	-	-	-	-	(9.3)	(9.3)
Final dividend relating to the year ended 31 March 2008	-		(42.9)	-	-	-	-	-	(42.9)	-	(42.9)
Share buyback	(0.4)		(38.5)	0.4	-	-	-	-	(38.5)	-	(38.5)
Employee share schemes and own shares	-		(21.0)	-	-	-	-	-	(21.0)	-	(21.0)
Currency translation differences	-		0.9	-	-	-	-	-	0.9	0.3	1.2
30 September 2008		18.7	(364.6)	508.7	(512.5)	182.4	1,299.2	(5.4)	1,126.5	87.5	1,214.0
Total comprehensive income for the financial period	-		(418.5)	-	-	293.7	-	(27.9)	(152.7)	13.3	(139.4)
Redemption of B shares	-		(3.2)	3.2	-	-	-	-	-	-	-
Dividend payments to minorities	-		-	-	-	-	-	-	-	(0.2)	(0.2)
Interim dividend relating to the year ended 31 March 2009	-		(22.4)	-	-	-	-	-	(22.4)	-	(22.4)
Employee share schemes and own shares	-		5.1	-	-	-	-	-	5.1	-	5.1
Acquisition of subsidiary	-		-	-	-	-	-	-	-	(4.3)	(4.3)
Share of equity recognised by FTSE	-		0.4	-	-	-	-	-	0.4	-	0.4
31 March 2009	18.7		(803.2)	511.9	(512.5)	476.1	1,299.2	(33.3)	956.9	96.3	1,053.2

Total comprehensive income for the financial period	-		45.2	-	-	(23.1)	-	(12.3)	9.8	0.6	10.4
Redemption of B shares	-		(2.3)	2.3	-	-	-	-	-	-	-
Dividend payments to minorities	-		-	-	-	-	-	-	-	(8.3)	(8.3)
Final dividend relating to the year ended 31 March 2009	-		(42.7)	-	-	-	-	-	(42.7)	-	(42.7)
Employee share schemes	-		1.1	-	-	-	-	-	1.1	-	1.1
30 September 2009		18.7	(801.9)	514.2	(512.5)	453.0	1,299.2	(45.6)	925.1	88.6	1,013.7
The £45.6m hedging reserve represents the cumulative fair value adjustment recognised in respect of net investment and cash flow hedges undertaken in accordance with hedge accounting principles.

NOTES TO THE FINANCIAL INFORMATION  The interim report for London Stock Exchange Group plc ("the Group" or "the Company") for the six months ended 30 September 2009 was approved by the Directors on 24 November 2009. 1. Basis of Preparation and Accounting Policies This interim report has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and in accordance with International Accounting Standard ("IAS") 34 - "Interim Financial Reporting". The accounting policies used are consistent with those set out on pages 58 to 61 of the Group's Annual Report for the year ended 31 March 2009, with the following exceptions: IAS 1 (Revised), 'Presentation of Financial Statements', has been adopted. The revised standard prohibits the presentation of items of income and expense in the statement of changes in equity, requiring non-shareholder changes in equity to be presented separately from shareholder changes in equity. All non-shareholder changes in equity are required to be presented in a performance statement. IAS 1 (Revised) permits a choice between presenting a single performance statement (being a Statement of Comprehensive Income) or two statements (being an Income Statement and a Statement of Comprehensive Income). The Group has elected to present two statements.  IFRS 8, 'Operating Segments', has been adopted. This standard replaces IAS 14, 'Segment Reporting' and effectively requires segmental information reported to be based on that which the Group's Executive Committee, which is considered the Group's chief operating decision maker, uses internally for the purposes of evaluating the performance of the Group's operating segments. Note 2 of the condensed consolidated financial statements sets out the Group's reportable segments and sets out reconciliations between these and the results reported in the Income Statement. The segmental reporting of the Group's revenues has been restated to reflect management re-organisation and associated changes in the reporting of the business lines. Following the change in operating segments, the results of the Joint Ventures are now considered operating activities and as such are disclosed  in operating profit. IAS 23, 'Borrowing Costs (Revised)', has been adopted. The standard has been revised to require capitalisation of borrowing costs on qualifying assets and the Group has amended its accounting policy accordingly. In accordance with the transitional requirements of the standard, the capitalisation of borrowing costs has been adopted as a prospective change from the commencement date of 1 January 2009. No change has been made for borrowing costs incurred prior to this date that have been expensed. Since adoption, the Group has incurred no borrowing costs on qualifying assets which are required to be capitalised. The following standards and amendments were also effective for the current period, but the adoption of these did not have a material impact on these condensed consolidated interim financial statements: IFRIC 15, 'Agreements for the Construction of Real Estate'; IFRIC 16, 'Hedges of a Net Investment in a Foreign Operation'; IFRS 7, 'Financial Instrument: Disclosure'; and IFRS various Annual improvements 2009. The following standards and interpretations were issued by the IASB and IFRIC since the last Annual Report, but have not been adopted either because they were not endorsed by the European Union ("EU") at 30 September 2009 or they are not yet mandatory and the Group has not chosen to early adopt. None of these are expected to have a material impact on the Group's historic consolidated results: IFRS 2, 'Share-based Payment' - Amendments relating to group cash-settled share-based payment transactions (effective for annual periods beginning on or after 1 January 2010); IFRS 3, 'Business Combinations' - Comprehensive revision on applying the acquisition method (effective for annual periods beginning on or after 1 July 2009); IAS 27, 'Consolidated and Separate Financial Statements' - Consequential amendments arising from amendments to IFRS 3 (effective for annual periods beginning on or after 1 July 2009); IAS 28, 'Investments in Associates' - Consequential amendments arising from amendments to IFRS 3 (effective for annual periods beginning on or after 1 July 2009); IAS 31, 'Interests in Joint Ventures' - Consequential amendments arising from amendments to IFRS 3 (effective for annual periods beginning on or after 1 July 2009); IAS 39, 'Financial Instruments: Recognition and Measurement' - Amendments for eligible hedged items (effective for annual periods beginning on or after 1 July 2009); IFRIC 17, 'Distributions of Non-cash Assets to Owners' (effective for annual periods beginning on or after 1 July 2009); and  IFRIC 18, 'Transfers of Assets from Customers' (effective for annual periods beginning on or after 1 July 2009). The preparation of the interim report requires management to make estimates and assumptions that affect the reported income and expense, assets and liabilities and disclosure of contingencies at the date of the interim report. Although these estimates and assumptions are based on management's best judgment at the date of the interim report, actual results may differ from these estimates. For these condensed consolidated interim financial statements the Group is not adopting the columnar format for its income statement as stated in the Group basis of preparation and accounting policies. The statutory accounts of London Stock Exchange Group plc for the year ended 31 March 2009, which carried an unqualified audit report, have been delivered to the Registrar of Companies and did not contain a statement under section 237 of the Companies Act 1985. The interim report is unaudited but has been reviewed by the auditors and their review opinion is included in this report. The interim report does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006.

2. Segmental information Segmental disclosures for the six months ended 30 September 2009 are as follows:
			Capital Markets	Information & Technology Services	Post Trade	Other	Group
			£m	£m	£m	£m	£m
Revenue			147.2	103.5	59.3	0.9	310.9
Other Income			-	-	-	3.1	3.1
Expenses
Depreciation and software amortisation			(25.3)	(8.9)	(1.5)	(0.4)	(36.1)
Other non-exceptional expenses			(77.8)	(39.2)	(20.2)	(6.9)	(144.1)
Share of (loss)/profit after tax of joint ventures/associates			(0.7)	1.7	-	-	1.0
Operating profit/(loss) before amortisation of purchased intangible assets and exceptional items			43.4	57.1	37.6	(3.3)	134.8
Amortisation of purchased intangible assets			(9.2)	(3.3)	(12.9)	-	(25.4)
Exceptional costs			(5.8)	(4.2)	(3.3)	(0.3)	(13.6)
Operating profit/(loss)			28.4	49.6	21.4	(3.6)	95.8
Comparative segmental disclosures for the six months ended 30 September 2008 are as follows:
			Capital Markets	Information & Technology Services	Post Trade	Other	Group
			£m	£m	£m	£m	£m
Revenue			187.3	102.4	51.1	1.7	342.5
Other Income			-	-	-	3.0	3.0
Expenses
Depreciation and software amortisation			(9.5)	(4.9)	(1.6)	(0.6)	(16.6)
Other non-exceptional expenses			(80.0)	(36.3)	(18.9)	(13.8)	(149.0)
Share of profit after tax of joint ventures/associates			-	1.1	-	-	1.1
Operating profit/(loss) before amortisation of purchased intangible assets and exceptional items			97.8	62.3	30.6	(9.7)	181.0
Amortisation of purchased intangible assets			(8.6)	(3.2)	(11.6)	-	(23.4)
Exceptional integration costs			(1.3)	(1.1)	(0.1)	(0.9)	(3.4)
Operating profit/(loss)			87.9	58.0	18.9	(10.6)	154.2

Comparative segmental disclosures for the year ended 31 March 2009 are as follows:
		Capital Markets	Information & Technology Services	Post Trade	Other	Group
		£m	£m	£m	£m	£m
Revenue		341.5	207.5	112.4	4.1	665.5
Other Income		-	-	-	5.9	5.9
Expenses
Depreciation and software amortisation		(16.9)	(15.5)	(3.3)	(0.7)	(36.4)
Other non-exceptional expenses		(159.9)	(78.8)	(38.7)	(19.0)	(296.4)
Share of (loss)/profit after tax of joint ventures/associates		(0.1)	2.2	-	-	2.1
Operating profit/(loss) before amortisation of purchased intangible assets, exceptional items and impairment		164.6	115.4	70.4	(9.7)	340.7
Amortisation of purchased intangible assets		(18.1)	(6.7)	(24.6)	-	(49.4)
Exceptional integration costs		(4.1)	(4.3)	(4.0)	(2.8)	(15.2)
Operating profit/(loss) before impairment		142.4	104.4	41.8	(12.5)	276.1
Impairment of goodwill		(357.6)	(40.9)	(85.5)	-	(484.0)
Operating (loss)/profit		(215.2)	63.5	(43.7)	(12.5)	(207.9)
Assets		773.9	343.1	36,393.4	107.2	37,617.6
The full year comparatives show the total assets of the group following the restatement of the segmental disclosure. The only material change in the total assets in the period relates to CC&G assets within the Post Trade segment. The movements in these assets in the current period are shown in note 12.

3.    Amortisation of purchased intangible assets and exceptional items
		Six months ended 30 September			Year ended 31 March
		2009	2008		2009
	Notes	£m	£m		£m
Impairment of goodwill		-	-		(484.0)
Amortisation of purchased intangible assets	8	(25.4)	(23.4)		(49.4)
Exceptional integration costs		(0.9)	(3.4)		(15.2)
Exceptional restructuring costs		(12.7)	-		-
Total affecting operating profit		(39.0)	(26.8)		(548.6)
Exceptional finance costs	4
Bond adjustment to reflect changes in valuation of cash flows		-	0.4		3.7
Loss on cash flow hedge recycled to income statement		-	(6.8)		(7.9)
Loss on gilt lock contract in the period		-	-		(2.7)
Total affecting profit before tax		(39.0)	(33.2)		(555.5)
Tax effect on items affecting profit before tax
Deferred tax on amortisation of purchased intangible assets		4.3	4.0		8.5
Tax effect on other items affecting profit before tax		3.8	2.9		6.2
Total tax effect on items affecting profit before tax		8.1	6.9		14.7
Total charge to income statement		(30.9)	(26.3)		(540.8)
Integration costs relate to the integration of the businesses of the London Stock Exchange and Borsa Italiana, and include costs of assimilating and harmonising trading systems and websites as well as staff related costs. Restructuring costs are one-off redundancy costs arising from the cost savings programme announced in July 2009.

4.    Net finance costs
		Six months ended 30 September			Year ended 31 March
		2009	2008		2009
		£m	£m		£m
	Notes
Finance income
Bank deposit and other interest		1.0	6.2		7.5
Expected return on defined benefit pension scheme assets		6.0	6.6		13.0
Investment income		0.2	0.3		0.3
Total finance income		7.2	13.1		20.8
Finance costs
Interest payable on bank and other borrowings		(16.8)	(23.7)		(40.4)
Other finance costs		(1.4)	(2.4)		(2.8)
Interest on discounted provision for leasehold properties	15	(0.6)	(0.6)		(1.2)
Defined benefit pension scheme interest cost		(7.2)	(7.2)		(14.4)
		(26.0)	(33.9)		(58.8)
Exceptional finance costs
Bond adjustment to reflect changes in valuation of cash flows	3	-	0.4		3.7
Loss on cash flow hedge recycled to income statement		-	(6.8)		(7.9)
Loss on gilt lock contract in the year		-	-		(2.7)
Total finance costs		(26.0)	(40.3)		(65.7)
Net finance costs		(18.8)	(27.2)		(44.9)

5.    Taxation
	Six months ended 30 September			Year ended 31 March
	2009	2008		2009
Taxation charged to the income statement	£m	£m		£m
Current tax:
UK corporation tax for the period at 28%	12.4	25.0		42.4
Overseas tax for the period	22.3	21.0		46.7
Adjustments in respect of previous years	(1.7)	(0.1)		(4.3)
	33.0	45.9		84.8
Deferred tax:
Deferred tax for the period	0.3	0.8		3.1
Adjustments in respect of previous years	(0.5)	0.6		2.6
Deferred tax liability on amortisation of purchased intangible assets	(4.3)	(4.0)		(8.5)
Taxation charge	28.5	43.3		82.0

	Six months ended 30 September			Year ended 31 March
	2009	2008		2009
Taxation on items taken to equity	£m	£m		£m
Current tax (credit)/charge:
Tax allowance on share options/awards in excess of expense recognised	(0.6)	1.2		(1.1)
Deferred tax (credit)/charge:
Defined benefit pension scheme actuarial loss	(2.1)	(3.5)		(3.2)
Tax allowance on share options/awards in excess of expense recognised	(0.8)	2.0		2.1
Factors affecting the tax charge for the period
The income statement tax charge for the period differs from the standard rate of corporation tax in the UK of 28% as explained below:

	Six months ended 30 September			Year ended 31 March
	2009	2008		2009
	£m	£m		£m
Profit/(loss) before taxation	79.4	127.0		(250.8)
Profit/(loss) multiplied by standard rate of corporation tax in the UK of 28%	22.2	35.6		(70.2)
Expenses not deductible/income not taxable	2.2	3.0		10.5
Impairment of goodwill	-	-		135.5
Share of joint venture consolidated at profit after tax	(0.3)	(0.3)		(0.6)
Overseas earnings taxed at higher rate	3.8	2.4		3.2
Adjustments in respect of previous years	(2.2)	0.5		(1.7)
Amortisation of purchased intangibles	2.8	2.5		5.3
Other	-	(0.4)		-
Taxation charge	28.5	43.3		82.0
The tax rate applied at 30 September 2009 is the expected rate for the full financial year.

6.  Earnings Per Share  Earnings per share is presented on four bases: basic earnings per share, diluted earnings per share, adjusted basic earnings per share and adjusted diluted 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 the conversion or vesting of share options and share awards under the Employee Share Ownership Plan (ESOP). Adjusted basic earnings per share and adjusted diluted earnings per share exclude amortisation of purchased intangible assets, exceptional items and impairment of goodwill to enable comparison of the underlying earnings of the business with prior periods.
	Six months ended 30 September			Year ended 31 March
	2009	2008		2009
Basic earnings per share	18.5p	30.3p		(126.1p)
Diluted earnings per share	18.4p	30.0p		(126.1p)
Adjusted basic earnings per share	29.0p	39.3p		74.2p
Adjusted diluted earnings per share	28.9p	38.9p		73.6p
	£m	£m		£m
Profit/(loss) for the financial period attributable to equity holders	49.3	81.7		(338.0)
Adjustments:
Amortisation of purchased intangible assets	25.4	23.4		49.4
Impairment of goodwill	-	-		484.0
Exceptional integration costs	0.9	3.4		15.2
Exceptional restructuring costs	12.7	-		-
Exceptional finance costs	-	6.4		6.9
Tax effect of amortisation and exceptional items	(8.1)	(6.9)		(14.7)
Exceptional items, amortisation and taxation attributable to minority shareholders	(2.6)	(1.9)		(3.9)
Adjusted profit for the financial period attributable to equity holders	77.6	106.1		198.9
Weighted average number of shares - million	267.1	269.9		268.1
Effect of dilutive share options and awards - million	1.2	2.6		-
Diluted weighted average number of shares - million	268.3	272.5		268.1
The weighted average number of shares excludes those held in the ESOP. The effect of dilutive share options only applies to periods in which there is a profit. The effect of dilutive share options and awards at 31 March 2009 would have been 2.0 million.

7.   Dividends
	Six months ended 30 September			Year ended 31 March
	2009	2008		2009
	£m	£m		£m
Final dividend for 2008 paid August 2008: 16.0p per Ordinary share	-	42.9		42.9
Interim dividend for 2009 paid January 2009: 8.4p per Ordinary share	-	-		22.4
Final dividend for 2009 paid August 2009: 16.0p per Ordinary share	42.7	-		-
Total dividends	42.7	42.9		65.3
An interim dividend relating to the six months ended 30 September 2009 of 8.4p, amounting to an estimated £22.5m, is proposed. This interim dividend, which is due to be paid in January 2010, is not reflected in this financial information.

8.    Intangible assets
	Goodwill	Software	Purchased intangibles	Total
	£m	£m	£m	£m
Cost:
1 April 2008	1,082.2	137.6	728.3	1,948.1
Additions	-	19.1	-	19.1
Exchange differences	(11.4)	-	(9.2)	(20.6)
30 September 2008	1,070.8	156.7	719.1	1,946.6
Additions	0.5	16.1	0.9	17.5
Disposal	-	(8.6)	-	(8.6)
Exchange differences	182.0	1.1	125.9	309.0
31 March 2009	1,253.3	165.3	845.9	2,264.5
Additions	-	15.4	-	15.4
Disposals	(0.3)	-	-	(0.3)
Exchange differences	(16.5)	(0.2)	(11.2)	(27.9)
30 September 2009	1,236.5	180.5	834.7	2,251.7
Amortisation and accumulated impairment:
1 April 2008	21.1	80.6	24.5	126.2
Amortisation charge for the period	-	9.2	23.4	32.6
Exchange differences	-	-	(1.4)	(1.4)
30 September 2008	21.1	89.8	46.5	157.4
Amortisation charge for the period	-	11.1	26.0	37.1
Impairment charge	484.0	-	-	484.0
Disposals	-	(8.5)	-	(8.5)
Exchange differences	-	-	9.6	9.6
31 March 2009	505.1	92.4	82.1	679.6
Amortisation charge for the period	-	27.7	25.4	53.1
Exchange differences	(6.4)	(0.1)	(0.1)	(6.6)
30 September 2009	498.7	120.0	107.4	726.1
Net book values:
30 September 2009	737.8	60.5	727.3	1,525.6
31 March 2009	748.2	72.9	763.8	1,584.9
30 September 2008	1,049.7	66.9	672.6	1,789.2
The purchased intangible assets arising on consolidation represent customer relationships, brands, software and licences relating to Borsa Italiana and EDX.

9.  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. The 'Other plans' referred to below relate to the severance and leaving indemnity scheme (TFR) operated by Borsa Italiana Group in accordance with Italian law.
	Six months ended 30 September			Year ended 31 March
	2009	2008		2009
Defined benefit assets/(obligations) for UK pension scheme	£m	£m		£m
Fair value of assets	255.2	227.8		234.8
Present value of funded obligations	(255.4)	(225.2)		(229.8)
(Deficit)/Surplus	(0.2)	2.6		5.0

Movement in defined benefit net asset/(liability) during the period (UK Pension)
	Six months ended 30 September			Year ended 31 March
	2009	2008		2009
	£m	£m		£m
At beginning of period	5.0	11.8		11.8
Current service cost	(0.4)	(0.4)		(0.9)
Net finance cost	(1.2)	(0.6)		(1.3)
Contributions paid	3.2	3.3		6.5
Curtailment	0.8	-		-
Actuarial loss	(7.6)	(11.5)		(11.1)
At end of period	(0.2)	2.6		5.0

Movement in defined benefit liability during the period (Other plans)
	Six months ended 30 September			Year ended 31 March
	2009	2008		2009
	£m	£m		£m
At beginning of period	(8.3)	(7.6)		(7.6)
Reclassification to other payables	-	0.5		0.4
Current service cost	-	(0.1)		(0.1)
Interest cost	(0.2)	(0.3)		(0.4)
Benefits paid	1.1	0.4		1.1
Actuarial gain/(loss)	0.1	(0.4)		(0.6)
Exchange differences	0.1	0.1		(1.1)
At end of period	(7.2)	(7.4)		(8.3)

The main actuarial assumptions are set out below:
	Six months ended 30 September 2009			Six months ended 30 September 2008			Year ended 31 March 2009
	UK	Other		UK	Other		UK	Other
	Pension	plans		Pension	plans		Pension	plans
Inflation	3.2%	2.0%		3.6%	2.5%		3.1%	2.0%
Rate of increase in salaries	5.2%	3.5%		5.6%	3.3%		5.1%	3.5%
Rate of increase in pensions in payment	3.8%	3.0%		3.9%	3.0%		3.7%	3.0%
Discount rate	5.5%	4.4%		6.6%	6.0%		6.3%	4.2%
Expected return on assets
- equities	8.2%	-		7.9%	-		8.2%	-
- bonds	5.4%	-		5.1%	-		5.4%	-
- property	7.2%	-		6.9%	-		7.2%	-
Life expectancy from age 60 (Years)
- Non retired male member	27.6	-		29.1	-		29.2	-
- Non retired female member	30.4	-		32.6	-		32.7	-
- Retired male member	26.0	-		27.5	-		27.6	-
- Retired female member	28.9	-		30.8	-		31.0	-
The mortality assumptions are based on the standard tables S1NA published by the Institute and Faculty of Actuaries adjusted to take account of projected future improvements in life expectancy from the Self Administered Pension Scheme (SAPS) mortality survey, which was published in 2008 (September 2008 and March 2009 - PA92 tables). The S1NA base data is derived from pension scheme data from 2000 to 2006 which is more recent than PA92 which was based on insurance death data from the period 1990 to 1994. The change in the assumption has been made on the basis of actuarial guidance to reflect the most current data available on mortality experience within pension schemes.

10.   Trade and other receivables
	30 September			31 March
	2009	2008		2009
	£m	£m		£m
Current
Trade receivables	67.0	63.5		65.7
Other receivables	5.8	2.9		0.9
Prepayments and accrued income	53.3	46.7		47.9
Total trade and other receivables	126.1	113.1		114.5

11.   Trade and other payables
	30 September			31 March
	2009	2008		2009
	£m	£m		£m
Trade payables	12.1	23.2		20.1
Social security and other taxes	9.6	8.0		8.8
Other payables	28.5	31.0		21.1
Accruals and deferred income	97.3	78.4		62.9
Total trade and other payables	147.5	140.6		112.9

12.   Financial instruments by category
The financial instruments of the Group are categorised as follows:
	30 September			31 March
	2009	2008		2009
	£m	£m		£m
Assets as per balance sheet
Financial assets of the CCP clearing business
- CCP trading assets	6,270.2	5,882.8		5,480.5
- Receivables for repurchase transactions	39,651.0	11,671.2		25,302.5
- Other receivables from clearing members	1,296.3	914.7		1,287.6
- Financial assets held at fair value	9.4	125.1		7.3
- Cash and cash equivalents of clearing members	4,727.8	2,885.0		3,596.6
Financial assets of the CCP clearing business	51,954.7	21,478.8		35,674.5
Assets held at fair value	4.2	22.0		5.0
Total financial assets for CCP clearing	51,958.9	21,500.8		35,679.5
Trade and other receivables	126.1	113.1		114.5
Derivative financial instruments	0.4	0.5		-
Cash and cash equivalents	169.5	142.2		143.7
Available for sale financial assets	0.4	0.4		0.4
Total	52,255.3	21,757.0		35,938.1

	30 September			31 March
	2009	2008		2009
	£m	£m		£m
Liabilities as per balance sheet
Financial liabilities of the CCP clearing business
- CCP trading liabilities	6,270.2	5,882.8		5,480.5
- Liabilities under repurchase transactions	39,651.0	11,671.2		25,302.5
- Other payables to clearing members	6,024.3	3,823.6		4,889.0
- Financial liabilities held at fair value	9.4	124.0		7.2
Financial liabilities of the CCP clearing business	51,954.9	21,501.6		35,679.2
Borrowings	608.3	634.9		624.8
Derivative financial instruments	17.9	6.8		1.6
Total	52,581.1	22,143.3		36,305.6
Financial assets of the CCP clearing business substantially offset its Financial liabilities. The significant year on year increase principally reflects the higher number and value of repurchase transactions ("repos") that remained open on 30 September 2009 together with an increase in the volatility of their nominal values compared to prior reporting dates.  During the period, the Group executed two cross-currency swaps, of €50m each, to effectively swap a proportion of its 2019 sterling bond issue obligation (Note 13) into Euros. The swaps are designated part of the Group's net investment hedge and these derivative financial instruments exactly match the term of the bond, the sterling coupon interest rates and their timings and so these hedges are expected to be perfectly effective. For the six months ended 30 September 2009, the Group recognised the movement in mark to market value of these derivatives (£15.9m) in reserves.

13.   Borrowings
	30 September			31 March
	2009	2008		2009
	£m	£m		£m
Current
Bank borrowings	-	179.1		-
Redeemable Class B shares	-	5.5		2.3
	-	184.6		2.3
Non-current
Bonds	499.7	255.8		252.6
Bank borrowings	108.6	194.5		369.9
	608.3	450.3		622.5
Total borrowings	608.3	634.9		624.8

The Group has the following unsecured notes and bank facilities:
		Facility	Value at 30 September 2009	Interest rate
Type	Expiry Date	£m	£m	percentage
Multi-currency revolving credit facility	October 2011	25.0	-	LIBOR + 0.8
Multi-currency revolving credit facility	February 2012	200.0	-	LIBOR + 1.25
Multi-currency revolving credit facility	July 2013	250.0	109.7	LIBOR + 0.8
Capitalised bank facility arrangement fees		-	(1.1)
Total Bank facilities		475.0	108.6
Notes issued July 2006	July 2016	250.0	252.5	6.125
Notes issued June 2009	October 2019	250.0	247.2	9.125
Total Bonds		500.0	499.7
Total Debt		975.0	608.3
Cassa di Compensazione e Garanzia S.p.A. ("CC&G") has direct intra-day access to refinancing with the Bank of Italy to cover its operational liquidity requirements. In addition, uncommitted credit lines of €1bn (30 September 2008 and 31 March 2009: €1bn) are available from major Italian banks in relation to support of the MTS markets. If these are drawn they are guaranteed by Italian Government Bonds. CC&G also has available to it €125m (30 September 2008 and 31 March 2009: €150m) of committed facilities with banks, available for short term CCP related activity purposes only. The remaining outstanding Redeemable Class B shares were redeemed in full on 1 June 2009. Non-current borrowings The Company issued a further £250m of unsecured notes in June 2009 with a maturity date of 18 October 2019. The issue price of the Notes was £99.548 per £100 nominal with a coupon of 9.125 per cent, interest to be paid semi-annually in arrears following a short first coupon period to 19 October 2009. The new bond issue allowed the Company to repay and cancel £180m of short-dated bank facilities during July 2009. In common with the Company's existing 2016 bond the interest coupon is dependent on the Company's credit rating. Following an improvement in the Company's credit rating with Moody's in February 2009, the coupon on the existing 2016 bond reduced by 25 basis points to 6.125 per cent per annum, effective for the coupon paid in July 2009.

14.   Analysis of net debt	30 September			31 March
	2009	2008		2009
	£m	£m		£m
Due within one year
Cash and cash equivalents	169.5	142.2		143.7
Bank borrowings	-	(179.1)		-
Redeemable Class B shares	-	(5.5)		(2.3)
Derivative financial assets	0.4	0.5		-
Derivative financial liabilities	(2.0)	(6.8)		(1.6)
	167.9	(48.7)		139.8
Due after one year
Bank borrowings	(108.6)	(194.5)		(369.9)
Bonds	(499.7)	(255.8)		(252.6)
Derivative financial liabilities	(15.9)	-		-
Total net debt	(456.3)	(499.0)		(482.7)

Reconciliation of net cash flow to movement in net debt	Six months ended 30 September			Year ended 31 March
	2009	2008		2009
	£m	£m		£m
Increase/(decrease) in cash and cash equivalents in the period	26.8	(58.6)		(68.6)
Bank loan repayments	9.0	53.6		82.0
B share redemptions	2.3	2.1		5.3
Other repayments	0.8	1.2		1.2
Change in net debt resulting from cash flows	38.9	(1.7)		19.9
Foreign exchange movements	3.0	0.2		(13.0)
Movement on derivative financial assets and liabilities	(15.9)	1.6		6.3
Bond revaluation	0.2	0.3		3.5
Bond/bank fee net capitalisation	0.2	-		-
Net debt at the start of the period	(482.7)	(499.4)		(499.4)
Net debt at the end of the period	(456.3)	(499.0)		(482.7)

15.    Provisions
	Property	Other	Total
	£m	£m	£m
1 April 2008	27.0	1.4	28.4
Utilised during the period	(1.5)	(0.3)	(1.8)
Released during the period	(0.4)	-	(0.4)
Interest on discounted provision	0.6	-	0.6
30 September 2008	25.7	1.1	26.8
Utilised during the period	(2.1)	(1.1)	(3.2)
Charges during the period	2.5	-	2.5
Interest on discounted provision	0.6	-	0.6
31 March 2009	26.7	-	26.7
Utilised during the period	(1.6)	-	(1.6)
Interest on discounted provision	0.6	-	0.6
30 September 2009	25.7	-	25.7
Current	3.8	-	3.8
Non-current	21.9	-	21.9
	25.7	-	25.7
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 five and 19 years to expiry.

16.   Net cash flow generated from operations
	Six months ended 30 September			Year ended 31 March
	2009	2008		2009
	£m	£m Restated		£m
Profit/(loss) before taxation	79.4	127.0		(250.8)
Depreciation and amortisation	61.5	40.0		85.8
Goodwill impairment	-	-		484.0
Loss on disposal of property, plant and equipment	-	-		0.1
Profit on sale of shares in subsidiary	(2.4)	-		-
Profit on disposal of share of associate	-	-		(2.0)
Net finance costs	18.8	27.2		44.9
Share of profit after tax of joint venture	(1.0)	(1.1)		(2.1)
Decrease in trade and other receivables	7.4	4.2		15.2
(Decrease)/increase in trade and other payables	(0.6)	5.3		(32.7)
Increase in total financial assets for CCP clearing	(16,280.2)	(4,406.0)		(18,371.2)
Increase in CCP clearing business liabilities	16,275.7	4,415.0		18,371.5
Defined benefit pension obligation - contributions in excess of expenses charged	(2.6)	(3.6)		(6.9)
Provisions utilised during the period	(1.6)	(1.8)		(5.0)
Provisions (released)/created during the period	-	(0.4)		2.1
Decrease in assets held at fair value	0.8	-		9.9
Share scheme expense	1.3	5.1		10.2
Foreign exchange gains on operating activities	(1.3)	-		(0.4)
Cash generated from operations	155.2	210.9		352.6
Comprising:
Ongoing operating activities	161.9	214.3		378.9
Exceptional items	(6.7)	(3.4)		(26.3)
	155.2	210.9		352.6
17.   Transactions with related parties Royalties receivable from FTSE were £4.5m (September 2008: £3.8m, March 2009: £8.2m) while dividends received were £0.8m (September 2008: £2.3m, March 2009: £3.5m).  On 14 May 2009, the Group signed a shareholders' agreement formalising the funding and governance of TOKYO AIM, a joint venture with the Tokyo Stock Exchange Group. As a result, a further £6.1m was invested into the joint venture. The nature and contractual terms of key management compensation and inter-company transactions with subsidiary undertakings during the period are consistent with the disclosures in Note 38 of the Annual Report for the year ended 31 March 2009. 18.   Commitments and Contingencies There were no contracted capital commitments. Other contracted commitments not provided for in the interim report of the Group were £5.5m (2008: nil).  The Group has provided indemnities of £2m (September 2008: nil) for certain ongoing business obligations under letters of guarantee for subsidiary operations. 19.   Events after the Balance Sheet date On 16 September 2009, the Group announced that it had offered to acquire 100 per cent of Millennium Information Technologies Limited, a Sri Lankan based technology services company serving the capital markets industry, for an estimated US$30m, subject to satisfaction of all conditions to the offer and receipt of all necessary clearances. On 16 October 2009, the Group acquired 98.18 per cent of the share capital and on 19 November 2009 compulsorily acquired the remaining shares to achieve 100 per cent ownership. Principal Risks The Group's risk management processes bring greater judgement to decision making as they allow management to make better, more informed and more consistent decisions based on a clear understanding of the risks involved. We regularly review the risk assessment and monitoring process as part of our commitment to continually improve the quality of decision-making across the Group. The Group's principal risks and uncertainties and its internal control policies are consistent with those set out on pages 32 and 33 of its Annual Report for the year ended 31 March 2009. The principal risks and uncertainties which may affect the Group in the second half of the financial year include the following specific risks: Economic conditions remain difficult and the outlook remains uncertain, particularly with regards to prospects for a sustained recovery. This impacts our business in a number of areas, with market conditions not yet ideal for new listings, equity trading values remaining relatively low and the possibility of further reductions in headcount in the financial services industry which may also impact our information services business. Competition for UK and Italian equities trading is expected to remain strong and the Group must therefore succeed in extracting the benefits of its recent acquisition of MillenniumIT and its broader cost reduction initiatives. In addition, the Group faces challenges in post trade in the UK where the costs of clearing and settlement services provided by organisations outside the Group remain significantly higher than those provided for competing trading venues and there is currently regulatory uncertainty over inter-operability between CCP's, restricting greater competition in the provision of post trade services.  Going Concern After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. The financial risk management objectives and policies of the Group and the exposure of the Group to market risk, credit risk and liquidity risk are discussed on pages 62 to 65 of the Annual Report for the Group for the year ended 31 March 2009. Directors The directors of London Stock Exchange Group plc are listed in the Annual Report as at 31 March 2009. Xavier Rolet was appointed to the board on 16 March 2009 and became Chief Executive Officer on 20 May 2009. Clara Furse stood down as Chief Executive Officer on 20 May 2009 and as a director on 15 July 2009. A list of current directors is maintained and is available for inspection at the Company's registered office located at 10 Paternoster Square, London EC4M 7LS.

Statement of Directors' Responsibilities The directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the EU, and that the interim management report herein includes a fair review of the information required by the Financial Services Authority's Disclosure & Transparency Rules 4.2.7 indicating any important events that have occurred during the first six months and their impact on the interim report, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and 4.2.8 stating any material related party transactions in the first six months and any material changes in the related-party transactions described in the last annual report. By order of the Board

Independent review report to London Stock Exchange Group plc We have been engaged by the company to review the condensed set of financial statements in the interim report for the six months ended 30 September 2009, which comprises the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. Directors' Responsibilities The interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union. Our Responsibility Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Scope of Review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim report for the six months ended 30 September 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. PricewaterhouseCoopers LLP Chartered Accountants 25 November 2009 London

 

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