LCH.Clearnet posts year-end profits and revenues increase

Financial highlights

• Organic growth in turnover of 24.7%1 to €790.3m
• 1,250 million trades, an increase of 19.9% on 2004
• Record traded values of €408 trillion
• Operating profit increased by 11.1% to €86.3m

Commenting on the Group's performance, LCH.Clearnet's Chief Executive David Hardy said "Once again, the Group has seen significant volume growth in its business areas, with members registering a new record total of 1,250 million trades, an increase of 19.9% on 2004. This reflected a traded value of €408 trillion, an impressive indicator of the size of financial markets today and of our central role within them.

Revenue from transactions rose by 13.9% over 2004 to €329 million. This growth was primarily due to increasingly high levels of activity in European equity markets throughout the year. Interest payments to clearing members in respect of cash and collateral margin payments increased by 44% to €344 million, again reflecting the substantial increase in balances arising from the high levels of activity. By contrast, administrative expenditure remained stable at €236 million, demonstrating the effect of the cost control initiatives on which we embarked during the early part of 2005. These initiatives are expected to yield
further benefits during 2006 and thereafter as part of our added value approach to service.

2005 was a year of achievements. We will achieve more in 2006, as the two underlying businesses are brought still closer together, and as we develop and enhance our service offering. Yet the landscape in which we operate is anything but settled, and it is clear that consolidation within the industry infrastructure is still at the forefront of anticipated change. Whatever may or may not happen to the ownership of Exchanges, it has fuelled further debate about the desirability of further consolidation in Europe at the clearing level, which remains very much the aspiration of the key cross border market participants. It is difficult to see how such further consolidation might take place without the key involvement and leadership of LCH.Clearnet.

2005 generated challenges to which the management and staff of the Group, as well as the advisory groups on whose counsel we rely, have risen magnificently. Whether in Amsterdam, Brussels, London, Paris or Porto, their skills, determination and commitment to delivering our objectives have been unfailing to our success. To them all I offer my deep personal thanks and appreciation."

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