Return of Capital

London Stock Exchange Plc
07 March 2006

7 March 2006

London Stock Exchange plc

PROPOSED RETURN TO SHAREHOLDERS OF APPROXIMATELY £510 MILLION

On 17 February 2006, the Board of the London Stock Exchange plc ("the Exchange")
announced its intention to return approximately £510 million to shareholders
equivalent to 200 pence per existing share (the "Return") and subsequently
commence an ongoing share buyback programme of up to £50 million per annum.

The Return allows the Exchange to return capital to shareholders whilst making
the balance sheet more efficient and ensuring sufficient resources are available
to invest in future growth.

Chris Gibson-Smith, Chairman of the Exchange, said:

"Following the lapse of Macquarie's offer, we are pleased to provide details of
the £510m (200 pence per share) capital return announced last month.  Subsequent
to the return, the company intends to initiate a share repurchase programme of
up to £50m per annum.  These substantial returns of capital are made possible by
the company's strong growth and robust cash generation.  They will improve the
efficiency of the balance sheet while leaving us capacity to invest for the
future."

The Return will be effected through the issue of B shares following the
introduction of a new holding company, London Stock Exchange Group plc 
("Exchange Group") via a Court approved scheme of arrangement (the "Scheme"). 
The B Share is the means by which shareholders will receive the Return.

Exchange Group will become the holding company of the Exchange and upon
admission to the Official List will replace the Exchange as the listed entity.
     
•    This Return is equivalent to 200 pence per existing ordinary share in the 
     Exchange and in aggregate approximately £510 million.

•    Under the terms of the proposed Scheme, shareholders holding existing 
     ordinary shares in the Exchange at the Scheme record time, expected to be 
     5 pm on 12 May 2006 will receive:
          
     -    3 new ordinary shares in Exchange Group for every 4 existing ordinary
          shares in the Exchange; and
          
     -    one B share in Exchange Group for every one existing ordinary share
          in the Exchange.
     
•    Shareholders will not have to pay anything for these new ordinary shares 
     and B shares in Exchange Group.
     
•    The exchange ratio of new ordinary shares for existing ordinary shares has 
     been selected in order that the share price of the new ordinary shares 
     immediately after listing (and having regard to the Return) should be
     approximately equal to the share price of an existing ordinary share 
     immediately prior to listing of the new ordinary shares (subject to market 
     conditions).

•    Shareholders will have three choices as to how to receive their Return:
          
     (1)  Initial B share dividend - a single dividend of 200 pence per B share;
          
     (2)  Initial redemption - immediate 200 pence redemption per B share;  or
          
     (3)  Future redemption right - retention of B share with the right to 
          redeem on certain redemption dates for 200 pence per B share, with a 
          dividend right pending redemption equal to 75% of six months' LIBOR, 
          payable semi-annually.
     
•    The Return requires the approval of London Stock Exchange plc's 
     shareholders at a shareholders' meeting to be held on 19 April 2006 and the
     subsequent approval of the High Court (expected to be sought on 12 May 
     2006).

•    It is expected, for those shareholders electing for either the initial B 
     share dividend or initial redemption, that cheques for the proceeds will be 
     sent to shareholders, or that their bank accounts or CREST accounts will be 
     credited with the proceeds, on 26 May 2006.

•    Based on the closing middle market price of 863.5 pence per existing 
     ordinary share on 6 March 2006, the total amount of the Return 
     (approximately £510 million) is equivalent to approximately 23 per cent of 
     the market capitalisation of the Exchange.
     
•    Rights under the Exchange Employee Share Schemes will (to the extent
     possible) be rolled over into equivalent rights relating to new ordinary 
     shares when the Scheme becomes effective.
     
•    In addition to the capital return of £510 million, the Exchange Group 
     intends to commence an ongoing share buyback programme following the Return 
     of up to £50 million per annum. 

•    A circular setting out full details of the return of capital is expected to 
     be posted to shareholders on 21 March 2006.
     
•    The Directors have resolved to pay a second interim dividend, in lieu of a 
     final dividend, of 8.0 pence per share.  This takes the full year dividend 
     to 12.0 pence per share, a 71% increase, as announced on 17 February 2006.  
     This second interim dividend will be paid on 26 May 2006 to those
     shareholders on the register on 12 May 2006.  Dealings will commence ex the
     entitlement to both the second interim dividend and the Return on 15 May 
     2006. The balance of the dividend for the year is being paid by way of 
     second interim dividend on the Exchange's shares so as to avoid the effect 
     of the consolidation arising from the capital return.



London Stock Exchange
John Wallace - Media                                         [phone]
Paul Froud - Investor Relations                              [phone]

Finsbury                                                     [phone]
James Murgatroyd
Simon Moyse



JPMorgan Cazenove Limited, which is regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively as financial adviser and
broker for London Stock Exchange and for no one else in connection with the
Return and will not be responsible to any person other than London Stock
Exchange for providing the protections afforded to its customers or for giving
advice in relation to the Return or the matters contemplated by this
announcement.


                                     - END


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