LSE stable in Q3; Turquoise derivatives roll-out a priority

Source: London Stock Exchanges

Interim management statement for the period to 26 January 2011 - Including revenues and KPIs for the three months ended 31 December 2010

Revenues and KPIs for three months ended 31 December 2010 ("Q3"):

* Strong increase in total income, up six per cent on Q3 last year (up nine per cent at constant currency) at £165.9 million

* Sequential growth in total income of nine per cent on Q2

* Capital Markets saw a strong performance from primary markets with a 75 per cent increase in number of new issues on the Group's markets, including continued good growth in international IPOs; primary markets revenue rose five per cent

* Also in Capital Markets, secondary markets saw an increase of nine per cent from fixed income trading revenue due to strong growth in MTS money markets, offset by a decline of five per cent in the value of UK cash equities traded, a three per cent decline in volumes in Italy and a decrease in volumes of 10 per cent at IDEM. Overall this led to a decline in secondary market revenues of nine per cent

* Share of order book trading in UK cash equities in Q3 averaged 63.8 per cent, continuing the stabilisation in share since the start of the financial year (63.1 per cent over the past nine months); in Italy the share of order book trading in the period was 82.5 per cent and 84.0 per cent for the year to date

* Post Trade Services total income was up 33 per cent, driven by an increase in treasury management income from clearing operations

* Information Services revenues increased two per cent; the total number of professional users of real time information remained at the same level as the half year and broadly unchanged year on year, while other information products delivered good revenue growth

* Technology Services revenues rose 11 per cent, reflecting full quarter revenue at MillenniumIT compared with partial Q3 contribution last year

Operational Developments:

* Millennium Exchange trading system successfully launched on Turquoise in Q3 and from the outset has been performing at class leading speeds; roll out to the UK cash marketing speeds; keting speeds; roll out to the UK cash market is scheduled for 14 February 2011

* Successful migration of the IDEM derivatives business on to the SOLA trading system in past quarter

* CC&G extended operations, providing CCP services to the MOT Italian retail bond market, and CC&G went live with the collateralised section of the Interbank Deposit Market, replacing a Bank of Italy service

* In Information Services, the first client has commenced directly reporting its global real-time terminal inventory following an initiative to simplify client reporting of data use and remove duplication of costs for individual users

* In Technology Services, the London data centre has been opened to non-trading market participants, including vendors and service providers, for faster receipt and distribution of trading data

* The Group has signed a strategic partnership agreement to develop the Mongolian Stock Exchange, providing MillenniumIT technology and capital markets advisory services to modernise and develop the Mongolian exchange

Commenting on performance in the past quarter, Xavier Rolet, Chief Executive, said:

"This has been another good quarter for us with growth of six per cent in Group total income, up nine per cent in constant currency, and particularly strong performances from the treasury management part of Post Trade Services and MTS, our pan-European fixed income market. At the macro level, the IPO market trends continue to be very encouraging and the pipeline remains strong.

"Development work for derivatives trading on Turquoise is going well and we are on schedule for launch in calendar Q2. Preparation is also advanced for the roll out of the Millennium Exchange trading platform for the UK equities market next month. We continue to work on further ways to leverage the Group's portfolio of assets and to develop opportunities to drive growth."

Nine months to 31 December 2010

Total income increased three per cent year on year to £484.3 million (up five per cent at constant currency; up two per cent on organic, constant currency basis excluding Turquoise and MillenniumIT). Including treasury management income within Post Trade Services, there has been growth year to date in all divisions other than Capital Markets.

Current trading and Outlook

Calendar 2011 has started well relative to Q3 with cash equities average value traded in the UK up 15 per cent at £4.8bn per day (down two per cent on January last year) and share of trading remains steady at 63.0 per cent. In Italy volumes are up 37 per cent against average daily levels in the last quarter (up 29 per cent on January last year). MTS fixed income trading is ahead of Q3 average levels and up on January last year, while IDEM derivative volumes are down slightly on Q3 but up on January last year . Post Trade operations are benefitting from improved trading levels. In primary markets the pipeline for new issues remains very encouraging with a number of international and domestic companies planning capital raising in the period ahead.

Focus remains on improving business efficiency, ensuring the successful roll out of new technology for the UK cash equities market on 14 February 2011 and extending our product offerings. Development work for launch of derivatives trading through Turquoise is a current priority and other work continues across the Group to provide a platform for longer-term growth.

Financial Position

The Group's financial position is broadly unchanged since 30 September 2010. As announced in November, the Group re-financed £225 million of its bank lines with a new £250 million, five year revolving credit facility, with committed credit lines for general group purposes totalling £1 billion, of which £750 million extends to 2015 or beyond.

The euro decreased 5 per cent against sterling Q3 over Q3 last year - a €0.05 decrease in the average euro:sterling rate for the full year reduces operating profit total by c£6.6 million.

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