Press Release

LCH.Clearnet Group results and announcements

London 29 April 2008 – LCH.Clearnet today announced its results for the year ended 31 December 2007

Financial highlights

• Dividend of €26 million (€0.35 per share) to shareholders;

• Strong growth in net revenue of 12.8%¹ to €500.6 million from record cleared volumes in 2007;

• Operating profit increased by 44.9% to €257.4 million;

• 1.72 billion trades cleared, an increase of 36%2 on 2006;

• Record cleared values of €616 trillion;

• Substantial tariff reductions implemented of more than 25% in cash equities,  25% in energy products and 5% in fixed income, with  further reductions of 25% in cash equities and 30% in energy products implemented in 2008;

• Successful issue of €200 million preferred securities during the year;

• Redemption of €198.8 million redeemable convertible purchase shares from NYSE Euronext;

• Repurchase of €200 million of ordinary shares from NYSE Euronext with a further €61.8 million to be repurchased in the first half of 2008;

¹ Percentage changes are on an annualised basis compared to the year ended 31 December 2006.
² Measured on a like-for-like basis.

Commenting on the Group’s performance, LCH.Clearnet’s Chief Executive Roger Liddell said:

“I opened my Review last year by saying that 2006 had been a challenging year for the Group. 2007 was certainly no different.  A period of enormous change in the industry, coupled with ever greater levels of clearing activity across all sectors, presented us with very considerable opportunities as well as a number of threats to our pre-eminence in European central counterparty clearing.  At the same time, the Group has delivered a very robust financial performance.

LCH.Clearnet achieved a new record in clearing activity, with 1.72 billion contracts cleared, an increase of 36% over the 1.27 billion contracts cleared in 2006.  These reflected a traded value of €616 trillion, 23% up on 2006.

Clearing revenue increased by 11.1% over 2006 to €404.3 million, despite an average reduction of 7% in clearing fees across all classes.  Growth was primarily due to the very high levels of activity in several of our business areas, but particularly in the equity, energy and freight markets during the year, and resulted in a higher proportional increase in transaction revenue than in overall volumes.  Treasury revenues grew very considerably, driven by not only high levels of cash and non-cash margin commitments, but also by very high demand for short term investment following the general deterioration in capital markets in the second half of the year. Cash margins and default fund contributions under Treasury management peaked in December at €19.7 billion, against an average over the year of €16.4 billion.  Interest payments to members, in respect of cash and collateral margin payments, increased by 16.3% to €769.7 million, again reflecting the size of balances arising from these high activity levels. Administrative expenditure increased by 11.4% to €243.2 million reflecting the increase in staff numbers in 2007 and the renewal of some IT infrastructure which has reinforced headcount and the resilience of the systems as well as enhanced the capacity to deliver significant projects to customers, particularly in the second half of 2007.”

Financial Review

Summarised consolidated income statement for LCH.Clearnet Group

Total Revenue

*Clearing fees in 2006 have been adjusted to deduct fees payable and similar charges to be comparable to 2007.

Group turnover from continuing operations, on a like-for-like basis, increased by 15.8% to €1,362.7 million.

Interest income from cash and collateral margin balances increased by €118.3 million (16.2%) to €847.1 million  (2006: €728.8 million) principally due to the substantially higher cash and collateral margin balances arising from increased levels of market activity during the year, along with rising sterling and euro interest rates.

Default Fund interest earnings increased by €20.6 million (33.2%) to €82.6 million (2006: €62.0 million) due to the rising sterling interest rate.

Other income has increased by €6.4 million (28.7%) to €28.7 million (2006: €22.3 million). Other income includes annual fees charged to members, recovery of settlement fees and transfer fees.

Interest payments to clearing members

Interest expense and similar charges have risen by €128.8 million (17.6%) to €826.1 million (2006: €733.3 million). This includes interest payments to clearing members in respect of cash and collateral margins that have increased by €108.1 million (16.3%) to €769.7 million (2006: €661.6 million) and interest paid in respect of contributions to the Default Funds that have increased by €20.7 million (28.9%) to €92.4 million (2006: €71.7million).

Fees payable and similar charges

Since 1 January 2007, the Group is transparently acting as a collection agent for fees that are transferred to NYSE Euronext. Previously these retrocession fees had passed through the Group’s income statement.

Administrative expenditure

Administrative expenditure has risen by €24.9 million (11.4%) to €243.2 million (2006: €218.3 million).

The rise reflects an increase in staff numbers in 2007, in particular within the IT department, and the renewal of some IT infrastructure. This follows the recruitment of a new IT management team in late 2006. The effect of this has been to reinforce headcount and the resilience of the systems as well as to enhance the capacity to deliver a significant number of projects to customers, particularly in the second half of 2007.

Write-off of capitalised development costs

In 2006 the Group wrote off €47.8 million, which substantially related to assets from the Generic Clearing System (GCS) within its technology strategy. The programme was fully written off in 2006.

Operating profit

Strong trading volumes across all markets enabled the business to implement a programme of tariff reductions in 2007, which has continued into 2008. This has also resulted in an increase in operating profit of €79.8 million (44.9%) to €257.4 million (2006: €177.6 million after allowing for the write off of capitalised development costs of €47.8 million).

LCH.Clearnet Group Limited

Extracts from the 2007 Annual Report and Consolidated Financial Statements

Consolidated income statement for the year ended 31 December 2007

Consolidated balance sheet as at 31 December 2007

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