Half-yearly Report
TULLETT PREBON PLC
INTERIM RESULTS - for the six months ended 30 June 2011
Tullett Prebon plc (the "Company") today announced its results for the six
months ended 30 June 2011.
Financial Highlights
* Revenue £454.8m (2010: £475.8m)
* Operating profit £80.2m (2010: £84.7m)
* Underlying (1) Operating profit £79.4m (2010: £87.3m)
* Underlying (1) Operating margin 17.5% (2010: 18.3%)
* Adjusted Profit before tax (2) £73.1m (2010: £78.6m)
* Adjusted EPS (3) 24.4p (2010: 25.5p)
* Interim dividend (4) 5.25p per share (2010: 5.25p per share)
Notes
1 Underlying Operating profit and margin is stated before the net credit/
charge arising in each period from the costs and income relating to the
major legal actions between the Company and BGC
2 Adjusted PBT is stated before non cash gains and losses in net finance
income/(expense). A reconciliation of the adjusted PBT to the reported PBT
of £74.6m (2010: £79.3m) is shown in the Financial Review
3 Adjusted EPS is stated before non cash gains and losses in net finance
income/(expense) net of tax
4 The interim dividend will be paid on 17 November 2011 to shareholders on
the register at 28 October 2011
Terry Smith, Chief Executive, commented:
"The financial results for the first half of 2011 demonstrate the strength of
the business in challenging market and competitive conditions, and the benefit
from the actions taken to re-establish the position of the business in North
America and to develop our activities in Risk Management Services and
Information Sales.
The world's financial markets remain unsettled and, although it is difficult to
predict market conditions accurately, it seems reasonable to expect that there
will be periods of market volatility and heightened activity in the remaining
months of the year.
The enduring strength of the business is the valuable service it provides to
clients through its ability to create liquidity through price and volume
discovery to facilitate trading in a wide range of financial instruments. We
believe that we are well positioned to continue to provide a valuable service
to clients and that our offering can be developed to meet the various OTC
market rules and regulations that will be introduced in both the United States
and Europe."
Enquiries:
Investors and Analysts
Nigel Szembel, Head of Communications
Tullett Prebon plc
44 (0)20 7200 7722
Press
Charlotte Kirkham
M:Communications
44 (0)20 7920 2331
Further information on the Company and its activities is available on the
Company's website: www.tullettprebon.com
TULLETT PREBON PLC
INTERIM MANAGEMENT REPORT - for the six months ended 30 June 2011
Overview
The financial results for the first half of 2011 demonstrate the strength of
the business in challenging market and competitive conditions, and the benefit
from the actions taken to re-establish the position of the business in North
America and to develop our activities in Risk Management Services and
Information Sales.
The world's financial markets remain unsettled, but after a good start to the
year, market activity slowed in the second quarter. During the first half
overall, market activity was more subdued than in the same period last year,
which benefited from the increased volatility experienced in May 2010.
Revenue of £454.8m was 4% lower than reported for 2010. Most of the reduction
reflects the impact of the closure during the second half of last year of six
satellite offices in North America which accounted for 2.5% of the group's
revenue in the first half of 2010, and the adverse impact of currency movements
on the translation of the non-UK operations compared with the same period last
year. Adjusting for these items, revenue was 1% lower than in the prior year,
which was a good performance in the market conditions.
In North America we have re-established our presence in those product areas
affected by the raid on the business in 2009. Including the twenty-six strong
credit broking team who started with the business in early January 2011, broker
headcount on the affected desks is now largely back to the levels before the
defections in the second half of 2009. New senior management for the region
started in June this year. The appointment of a new Chief Executive Officer for
the region, supported by the newly created role of Chief Operating Officer, has
increased our regional management capability at an important time as we
continue to develop our business in the Americas.
Approval from the President of Brazil for the Company's acquisition of
Convenção, one of the leading and most respected inter-dealer brokers in
Brazil, was received on 12 July 2011. The acquisition is expected to complete
later this month. Convenção has 43 brokers facilitating client trading in
derivatives, securities and exchange traded futures, and will provide the base
for further expansion in both Brazil and in other countries in South America.
We have continued to develop our electronic broking capabilities. Our
electronic broking strategy continues to focus on the hybrid model, offering
electronic platforms which complement and support our existing strong voice
broking capability. This approach is consistent with the nature and operation
of the majority of OTC product markets for which voice liquidity is essential.
Our platforms also provide a pure electronic broking option for those clients
who wish to trade without any broker support, as well as "auction" capability
through tpQUICKDEAL that facilitates clients trading anonymously at mid market
price levels with instant volume matching. tpQUICKDEAL technology is also
provided as a standalone platform for some products.
The development of our electronic interest rate swap platform, tpSWAPDEAL, has
been completed and the platform is in the process of being rolled out to
clients. The platform is based on market leading technology supplied by
MillenniumIT to provide extremely low latency trading, and has been created
with the flexibility to give clients the ability to transact either directly or
via voice brokers, and to be adaptable to operate within both the current
trading landscape and under the regional regulatory environments that may
develop in the future.
We have also continued to invest in our Information Sales and Risk Management
Services activities, which have delivered significant revenue growth during the
first half. In Information Sales we have expanded both the customer base,
particularly in Asia, and the breadth of the data offered to customers. Demand
for independent pricing data, notably in risk management and compliance
functions, continues to drive revenues. Tullett Prebon Information was named
Best Data Provider (Broker) at the Inside Market Data Awards in May 2011, a
clear endorsement of our position as the leading provider of OTC price
information and data to market participants. In Risk Management Services the
tpMATCH platform for interest rates has been extended to cover an increased
number of currencies, and the matching platform technology, which allows
clients to execute trades to reduce risk, can be extended to other asset
classes.
Revenue from products supported by electronic platforms, together with
Information Sales and Risk Management Services revenue, has increased compared
with the first half of 2010, and accounted for just less than one fifth of
total revenue. This proportion is expected to increase further as electronic
platforms are launched in new product areas such as interest rate swaps.
Operating profit for the first half was £80.2m, 5% lower than reported for
2010. Excluding the net credit or charge arising in each period from the costs
and income relating to the major legal actions between the Company and BGC,
which are discussed below, underlying operating profit for the first half was
£79.4m (2010: £87.3m) with an underlying operating margin of 17.5% (2010:
18.3%). The reduction in the operating margin is primarily driven by the
increase in the broker compensation to revenue percentage, which at 58.7% in
the first half is 0.8% points higher than in the comparable period. This
reflects the higher broker compensation to revenue percentage currently being
incurred in North America following the significant investments made in
rebuilding the business, and the initial inefficiencies as new hires build up
to their full run rate of revenue. Broking support costs are little changed,
with broking support headcount of 688 at the end of June, 2% lower than at June
last year.
Our key financial and performance indicators for the first half of 2011
compared with those for the first half of 2010 are summarised in the table
below.
Change
Constant
Exchange
H1 2011 H1 2010 Reported Rates
Revenue £454.8m £475.8m -4% -4%
Underlying Operating profit £79.4m £87.3m -9% -9%
Underlying Operating margin 17.5% 18.3% -0.8%
points
Broker headcount (period end) 1,666 1,624 +3%
Average revenue per broker (£'000) 266 283 -6% -6%
Broker employment costs : broking 58.7% 57.9% +0.8%
revenue points
Broking support headcount (period 688 703 -2%
end)
Litigation
The legal action that the Company had taken in London against BGC, two of BGC's
senior directors and ten former Company brokers, in response to a raid by BGC
in early 2009 on the London business, was settled during the period. As part of
the settlement it was agreed that no further statement would be made by either
side about the settlement or the dispute.
Legal action continues to be pursued against BGC and former employees in the
United States. The subsidiary companies in the United States directly affected
by the raid on the business by BGC in the second half of 2009 have brought a
claim against BGC in arbitration pursuant to the rules of the Financial
Industry Regulatory Authority ("FINRA"). The FINRA arbitration is expected to
be heard during 2012.
The claim by BGC Market Data and certain of its affiliates, alleging that the
Company misappropriated data supplied to its information sales subsidiary in
violation of a redistribution agreement, is scheduled to be heard in
arbitration under the rules of the American Arbitration Association during
August 2011. A provision for the estimated cost of the resolution of this claim
has been included in the first half results.
OTC Market Regulation
There has been significant progress during the first half in the process of
agreeing and implementing reforms designed to strengthen the financial system
and to improve the operation of the financial markets.
In the United States, however, due to the delay in agreeing the definition of
certain reference terms, it is now unlikely that the final detailed rules and
regulations to apply the principles of the Dodd-Frank Wall Street Reform and
Consumer Protection Act governing the regulation and operation of OTC
derivatives markets will be issued by the CFTC and SEC much before the end of
this calendar year. The implementation of the mandatory clearing requirement
for swaps and the requirement that such instruments are traded through Swap
Execution Facilities (SEFs) is therefore likely to be during 2012.
In Europe, the European Market Infrastructure Regulation (EMIR) is still under
legislative review. This regulation contains provisions governing the mandatory
clearing requirement and trade reporting requirements for derivatives. The
European Parliament and the Council expect to reach agreement by the end of the
year. The proposed revisions to the Markets in Financial Instruments Directive,
commonly known as MiFID II, which is expected to include provisions for
permissible execution venues for OTC derivative transactions, is expected to be
published in October 2011. It is envisaged that the EMIR and MiFID II reforms
will come into force during 2013.
As we have previously commented, we agree with the objectives and support the
direction of these proposed reforms. We believe that their introduction will be
positive for our business as the proposals formalise the role of the
intermediary in the OTC markets. We have a broad and successful electronic
broking offering and we are well positioned to successfully respond to, and
benefit from, both regulatory and market developments.
Regulatory Capital
The Company's application for a renewal of its waiver from consolidated capital
resources requirements was approved by the FSA on 8 June 2011. The renewed
investment firm consolidation waiver runs for five years and will expire on 6
June 2016. The terms of the renewed waiver are the same as those under the
previous waiver. Each investment firm within the group must be either a limited
activity or limited licence firm and must comply with its individual regulatory
capital resources requirements. Tullett Prebon plc, as the parent company, must
continue to maintain capital resources in excess of the solo notional capital
resources requirements for each relevant firm within the group.
Revenue and Operating Profit
The tables below analyse revenue and operating profit for the first half of
2011 compared with the equivalent period in 2010. A significant proportion of
the group's activity is conducted outside the UK and the reported results are
therefore impacted by the movement in the foreign exchange rates used to
translate the results of non-UK operations. In order to give a more complete
analysis of performance, revenue and operating profit growth rates for the
first half of 2011 shown below are presented both as reported and using
translation exchange rates consistent with those used for 2010. The commentary
below refers to growth rates at constant exchange rates.
Revenue by product group Change
Constant
H1 2011 H1 2010 Exchange
£m £m Reported Rates
Treasury Products 127.8 125.2 +2% +2%
Interest Rate Derivatives 103.8 107.5 -3% -3%
Fixed Income 126.8 132.7 -4% -3%
Equities 23.7 38.1 -38% -36%
Energy 53.8 55.6 -3% -3%
Information Sales and Risk 18.9 16.7 +13% +15%
Management Services
454.8 475.8 -4% -4%
The increase in revenue in Treasury Products reflects growth in forward FX,
including non-deliverable-forwards, and in FX options, offset by a reduction in
revenue from cash and deposits.
In Interest Rate Derivatives, strong growth in emerging market interest rate
swaps and in interest rate options was offset by lower activity in the
traditional interest rate swaps markets, reflecting the low level of interest
rates in the world's major economies throughout the period.
The overall decline in revenue in Fixed Income reflects the lower level of
market activity in government bonds in Europe offset by higher revenues in
credit products, particularly corporate bonds in North America, reflecting the
investments that have been made in rebuilding our presence in that area,
including the twenty-six strong credit broking team who started with the
business in early January 2011.
The reduction in revenue in Equities reflects the exit of the cash equities
business that was part of the satellite office closures in the second half of
last year, and a reduction in market activity and revenue in equity
derivatives.
In Energy, after adjusting for the revenue from the satellite offices that were
exited, revenue was unchanged compared with last year.
The Information Sales business has continued to benefit from increasing
customer demand for both real time and end of day data, and from an expansion
of the customer base. The post trade Risk Management Services business has
continued to gain market share in electronic LIBOR reset matching through the
tpMATCH platform.
Revenue by region Change
Constant
H1 2011 H1 2010 Exchange
£m £m Reported Rates
Europe 269.9 288.1 -6% -7%
North America 123.4 135.6 -9% -4%
Asia Pacific 61.5 52.1 +18% +13%
454.8 475.8 -4% -4%
Europe
Revenue in Europe was 7% lower than last year. We have continued to increase
broker headcount, particularly in corporate bonds, with total broker headcount
at the end of June of 833, 4% higher than at June last year. Average revenue
per broker was 9% lower than in the same period a year ago. Europe's revenue
also includes most of the revenue from Information Sales.
Revenue in Treasury Products and Interest Rate Derivatives was slightly lower
than last year, with growth in emerging markets products, and in FX options and
interest rate options, offset by lower volumes in cash and in the traditional
interest rate swaps markets. In Fixed Income, revenue from government bonds was
lower reflecting the very strong performance in the comparable period, with
revenue from credit products unchanged compared with a year ago. The quality of
the business and the value of the service it provides to clients in credit
products were recognised by the business being voted the number one broker in
both investment grade and high yield bonds in Credit magazine's 2011 European
Interdealer Broker rankings in May this year. Revenue in equity derivatives was
lower than last year reflecting the lower level of activity in the market. In
Energy, revenue from natural gas products was higher, with revenue from oil
products and power products little changed. The new base metals desk, broking
LME contracts, commenced operation in January.
North America
Revenue in North America has reduced by 4%. Adjusting for the impact of the
closure during the second half of last year of the six satellite offices in the
region, revenue was 4% higher than a year ago. Broker headcount in North
America has increased to 466 at the end of June, 9% higher than a year ago
excluding the satellite offices, but average revenue per broker reduced by 3%
on the same basis.
The revenue performance by product group in North America was mixed. In
Treasury Products, revenue in forward FX and FX options increased strongly,
reflecting buoyant markets in those products especially in emerging markets
currencies. In Fixed Income, revenue from credit products, primarily corporate
bonds, doubled compared to a year ago reflecting the investment made in that
area, but this was partly offset by lower activity in mortgage backed
securities and repos. Similarly to Europe, revenue in Interest Rate Derivatives
and in equity derivatives was lower, reflecting the market conditions. Revenue
in Energy products, excluding the impact from the exit of the satellite
offices, was higher, with good growth in natural gas and oil products.
Asia
Revenue in Asia has increased by 13%. Broking revenue in the region has
benefited from an increase in broker headcount to 367 at the end of June, 2%
higher than a year ago, and from an increase in average revenue per broker
reflecting the continued recovery of market activity in the region. The
increase in revenue also reflects the development of the Risk Management
Services business, much of which is operated from Singapore.
The rate of growth in revenue in Asia was held back by the performance in
Japan, where revenue was slightly lower than last year. We successfully dealt
with the disruption caused by the earthquake in March, and we were able to
provide full services to clients in Japan from both Tokyo and from temporarily
relocated staff in Singapore. The relocated staff returned to the office in
Tokyo within two weeks. Activity in that centre, however, has not yet recovered
to the levels before the earthquake.
In the other centres in the Asia Pacific region, volumes in forward FX,
especially in non-deliverable-forwards for non-convertible currencies have
continued to increase, and the region has also benefited from good revenue
growth in interest rate derivatives in both convertible and non-convertible
currencies.
Operating profit by region Change
Constant
H1 2011 H1 2010 Exchange
£m £m Reported Rates
Europe 65.5 69.6 -6% -6%
North America 7.4 11.7 -37% -33%
Asia Pacific 7.3 3.4 +115% +109%
Reported 80.2 84.7 -5% -5%
Operating margin by region H1 2011 H1 2010
Europe 24.3% 24.2%
North America 6.0% 8.6%
Asia Pacific 11.9% 6.5%
17.6% 17.8%
Operating profit in Europe has reduced by 6%. The operating profit in 2011
includes a net credit arising from the costs and income relating to the major
legal actions between the Company and BGC, compared with a net charge in the
comparable period. The underlying operating margin in 2011 was 1.6% points
lower than in 2010 mainly reflecting the impact of the reduction in revenue, as
fixed costs have not reduced in line. Broker employment costs as a percentage
of revenue were also slightly higher than in the same period last year.
Operating profit in North America has fallen by one-third with a reduction in
operating margin to 6.0%. The fall in operating profit and margin reflects the
decline in revenue and an increase in the broker employment costs to revenue
percentage due to the general increase in the costs of employment in the light
of competitor action, the costs associated with new hires, and the initial
inefficiencies as new hires build up to their full run rate of revenue. The
operating profit in 2011 also includes a net charge relating to the major legal
actions between the Company and BGC.
In Asia Pacific operating profit has more than doubled reflecting the higher
broking revenue compared to a year ago, together with the growth in Risk
Management Services which has a higher operating margin than broking. Broker
employment costs as a percentage of revenue are lower than a year ago due to
the benefit of higher revenue and the development of the scale of the equity
derivatives business in Tokyo which commenced operations during the first half
of last year and was still building up to the anticipated revenue run rate.
Financial Review
The results for the first half of 2011 compared with those for the first half
of 2010 are shown in the table below.
H1 2011 H1 2010
£m £m
Revenue 454.8 475.8
Underlying operating profit 79.4 87.3
Net credit/(charge) relating to major legal actions 0.8 (2.6)
Operating profit 80.2 84.7
Net cash finance expense (7.1) (6.1)
Adjusted Profit before tax * 73.1 78.6
Tax (20.8) (24.8)
Associates 0.8 1.0
Minority interests (0.3) (0.2)
Adjusted Earnings ** 52.8 54.6
Weighted average number of shares 216.5m 214.3m
Adjusted Earnings per share 24.4p 25.5p
* Adjusted PBT reconciles to reported PBT as follows: H1 2011 H1 2010
£m £m
Adjusted Profit before tax 73.1 78.6
Non cash finance income 1.5 0.7
Reported Profit before tax 74.6 79.3
** Adjusted Earnings reconciles to reported Earnings H1 2011 H1 2010
as follows: £m £m
Adjusted Earnings 52.8 54.6
Non cash finance income 1.5 0.7
Tax on non cash finance income (0.5) (0.2)
Reported Earnings 53.8 55.1
Finance Expense
The increase in the net cash finance expense reflects the higher interest and
commitment fees payable on the new bank facilities entered into in February
2011. Non cash finance income comprises the expected return and interest on
pension scheme assets and liabilities.
Taxation
The effective rate of tax on adjusted PBT is 28.5% (2010: 31.5%). The effective
rate of tax reflects the estimated effective rate for the full year. The
reduction in the effective rate compared with 2010 results from the reduction
in the UK corporation tax rate to 26.5% for 2011 from 28.0% for 2010, and an
increase in the proportion of taxable profits generated in the UK and Asia
relative to the US.
Exchange rates
The income statements and balance sheets of the group's non-UK operations are
translated into sterling at average and period end exchange rates respectively.
The most significant exchange rates for the group are the US dollar, the Euro,
the Singapore dollar and the Japanese Yen. Average and period end exchange
rates for these currencies against sterling are shown below.
Average Period End
H1 H1 H2 30 June 31 Dec 30 June
2011 2010 2010 2011 2010 2010
US dollar $1.62 $1.54 $1.56 $1.61 $1.57 $1.50
Euro €1.15 €1.14 €1.19 €1.11 €1.17 €1.22
Singapore dollar S$2.04 S$2.15 S$2.08 S$1.97 S$2.01 S$2.09
Japanese Yen ¥132 ¥141 ¥131 ¥130 ¥127 ¥132
Cash flow and financing
Cash flow before dividends and debt repayments and draw downs is summarised in
the table below.
H1 2011 H1 2010
£m £m
Operating profit 80.2 84.7
Share based compensation 0.6 1.3
Depreciation and amortisation 4.2 4.5
EBITDA 85.0 90.5
Capital expenditure (net of disposals) (5.6) (5.2)
Increase in sign-on prepayment (16.2) (8.9)
Other working capital (29.6) (38.1)
Operating cash flow 33.6 38.3
Interest (1.3) (0.5)
Taxation (22.9) (20.1)
Defined benefit pension scheme funding (0.5) (6.3)
ESOT transactions - 1.7
Dividends received from associates / paid 0.9 1.4
to minorities
Acquisitions/investments (6.6) (2.4)
Cash flow 3.2 12.1
Reflecting the normal seasonal pattern of working capital movements, trade
receivables and net settlement balances were higher, and bonus accruals were
lower, at June than at December last year, resulting in operating cash flow for
the first half of the year that is lower than operating profit. The working
capital cash flow in the first half also reflects an increase in the broker
sign-on prepayment balance, as new sign-on payments in the first half were
higher than the amortisation.
The triennial actuarial valuations of the two defined benefit pension schemes
in the UK undertaken in 2010 concluded that each scheme has a significant
funding surplus. As a result, the group agreed with the trustees of each scheme
that, with effect from February 2011 until the next actuarial valuation,
contributions will be equal to the schemes' administration expenses.
Acquisition and investment expenditure in the first half of 2011 includes a
deferred consideration payment relating to the acquisition of Aspen, investment
in membership of the LME, and the payment of consideration to the former
employer of the credit broking team who joined the business in North America in
January 2011.
The movement in cash and debt is summarised below.
£m Cash Debt Net
At 31 December 2010 425.7 (357.9) 67.8
Cash flow 3.2 - 3.2
Dividends (22.6) - (22.6)
Debt repayments / draw downs (90.1) 90.1 -
Debt issue costs (3.4) 3.4 -
Effect of movement in exchange rates 0.2 - 0.2
Amortisation of debt issue costs - (0.7) (0.7)
At 30 June 2011 313.0 (265.1) 47.9
At 31 December 2010 the group's outstanding debt comprised £141.1m Eurobonds
due July 2016, the remaining £8.5m of the Eurobonds due August 2014, £210m of
bank debt drawn under an amortising term loan maturing in February 2014, and a
small amount of finance leases. In addition, the group had a committed £50m
revolving credit facility that was undrawn. On 8 February 2011 the Group
entered into new bank facilities comprising a £120m amortising term loan
facility and a committed £115m revolving credit facility, replacing the bank
facilities discussed above. The revolving credit facility remained undrawn
throughout the period.
Dividend
The interim dividend for 2011 has been set at a level equal to 50% of the final
dividend paid for the previous year. This approach to setting the interim
dividend is expected to continue.
Outlook
The world's financial markets remain unsettled and, although it is difficult to
predict market conditions accurately, it seems reasonable to expect that there
will be periods of market volatility and heightened activity in the remaining
months of the year.
Broker headcount at the end of the first half was 4% higher than at the end of
last year. We will continue to invest in the development of the business
through broker hires, the development and introduction of electronic platforms
which complement and support our strong voice broking capability, and the
continued extension of Information Sales and Risk Management Services. The
acquisition of Convenção will provide the base for expansion both in Brazil and
in other countries in South America.
The enduring strength of the business is the valuable service it provides to
clients through its ability to create liquidity through price and volume
discovery to facilitate trading in a wide range of financial instruments. We
believe that we are well positioned to continue to provide a valuable service
to clients and that our offering can be developed to meet the various OTC
market rules and regulations that will be introduced in both the United States
and Europe.
Condensed Consolidated Income Statement
for the six months ended 30 June 2011
Notes Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited)
£m £m £m
Revenue 5 454.8 475.8 908.5
Administrative expenses (393.8) (393.8) (764.4)
Other operating income 6 19.2 2.7 8.3
Operating profit 5 80.2 84.7 152.4
Finance income 7 6.5 5.6 11.3
Finance costs 8 (12.1) (11.0) (22.4)
Profit before tax 74.6 79.3 141.3
Taxation (21.3) (25.0) (33.7)
Profit of consolidated companies 53.3 54.3 107.6
Share of results of associates 0.8 1.0 1.5
Profit for the period 54.1 55.3 109.1
Attributable to:
Equity holders of the parent 53.8 55.1 108.5
Minority interests 0.3 0.2 0.6
54.1 55.3 109.1
Earnings per share
Adjusted basic 9 24.4p 25.5p 46.4p
Basic 9 24.8p 25.7p 50.5p
Diluted 9 24.8p 25.4p 50.3p
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2011
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited)
£m £m £m
Profit for the period 54.1 55.3 109.1
Other comprehensive income:
Revaluation of available-for-sale (0.5) - 0.3
assets
Effect of changes in exchange rates (1.4) 12.2 9.1
on translation of foreign operations
Actuarial gains/(losses) on defined 21.4 (0.9) 14.5
benefit pension schemes
Taxation charge on components of (5.9) (3.2) (6.8)
other comprehensive income
Other comprehensive income for the 13.6 8.1 17.1
period
Total comprehensive income for the 67.7 63.4 126.2
period
Attributable to:
Equity holders of the parent 67.4 63.0 125.3
Minority interests 0.3 0.4 0.9
67.7 63.4 126.2
Condensed Consolidated Balance Sheet
as at 30 June 2011
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited)
£m £m £m
Non-current assets
Goodwill 380.1 378.1 376.5
Other intangible assets 14.3 10.2 12.1
Property, plant and equipment 23.4 24.3 24.3
Interest in associates 3.5 3.1 3.6
Other financial assets 5.7 4.7 4.1
Deferred tax assets 11.3 14.7 13.0
Retirement benefit asset 47.0 4.8 23.6
485.3 439.9 457.2
Current assets
Trade and other receivables 28,188.9 15,289.1 4,186.9
Other financial assets 28.5 33.0 35.6
Cash and cash equivalents 284.5 331.3 390.1
28,501.9 15,653.4 4,612.6
Total assets 28,987.2 16,093.3 5,069.8
Current liabilities
Trade and other payables (28,186.8) (15,303.1) (4,229.4)
Interest bearing loans and (29.4) (30.0) (30.1)
borrowings
Derivative financial instruments - (0.1) -
Current tax liabilities (31.5) (44.9) (40.3)
Short term provisions (6.2) (1.1) (0.5)
(28,253.9) (15,379.2) (4,300.3)
Net current assets 248.0 274.2 312.3
Non-current liabilities
Interest bearing loans and (235.7) (327.1) (327.8)
borrowings
Deferred tax liabilities (30.7) (11.1) (19.5)
Long term provisions (3.9) (9.0) (3.9)
Other long term payables (5.5) (9.4) (6.5)
(275.8) (356.6) (357.7)
Total liabilities (28,529.7) (15,735.8) (4,658.0)
Net assets 457.5 357.5 411.8
Equity
Share capital 53.8 53.8 53.8
Share premium account 9.9 9.9 9.9
Reverse acquisition reserve (1,182.3) (1,182.3) (1,182.3)
Other reserves 146.5 140.1 146.7
Retained earnings 1,426.5 1,333.4 1,380.9
Equity attributable to equity 454.4 354.9 409.0
holders of the parent
Minority interests 3.1 2.6 2.8
Total equity 457.5 357.5 411.8
Condensed Consolidated Cash Flow Statement
for the six months ended 30 June 2011
Notes Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited)
£m £m £m
Net cash from operating activities 11(a) 13.8 15.7 94.7
Investing activities
Sale/(purchase) of other financial 7.0 (2.5) (5.2)
assets
Interest received 0.7 0.9 1.9
Dividends from associates 0.9 1.4 1.4
(Purchase)/sale of (1.9) - 1.7
available-for-sale assets
Expenditure on intangible fixed (3.8) (3.8) (7.5)
assets
Purchase of property, plant and (1.8) (1.4) (4.9)
equipment
Proceeds on disposal of property, - 0.1 0.2
plant and equipment
Investment in subsidiaries (4.7) (2.4) (2.4)
Net cash used in investment (3.6) (7.7) (14.8)
activities
Financing activities
Dividends paid 10 (22.6) (21.4) (32.7)
Dividends paid to minority interests - - (0.3)
Sale of own shares - 1.7 1.7
Repayment of debt (210.0) (30.3) (30.3)
Funds received from debt issue 120.0 - -
Debt issue costs (3.4) - -
Repayment of obligations under (0.1) (0.2) (0.3)
finance leases
Net cash used in financing (116.1) (50.2) (61.9)
activities
Net (decrease)/increase in cash and (105.9) (42.2) 18.0
cash equivalents
Cash and cash equivalents at the 390.1 366.1 366.1
beginning of the period
Effect of foreign exchange rate 0.3 7.4 6.0
changes
Cash and cash equivalents at the 11(b) 284.5 331.3 390.1
end of the period
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2011
...................Equity attributable to equity holders of the parent.................
Share Reverse Re- Hedging
Share premium acquisition Equity valuation Merger and Own Retained Minority Total
capital account reserve reserve reserve reserve translation shares earnings Total interests equity
(unaudited) £m £m £m £m £m £m £m £m £m £m £m £m
Balance at 53.8 9.9 (1,182.3) 5.3 2.6 121.5 17.4 (0.1) 1,380.9 409.0 2.8 411.8
1 January
2011
Profit for - - - - - - - - 53.8 53.8 0.3 54.1
the period
Revaluation of - - - - (0.5) - - - - (0.5) - (0.5)
available-
for-sale assets
Exchange - - - - - - (1.4) - - (1.4) - (1.4)
differences on
translation of
foreign operations
Actuarial - - - - - - - - 21.4 21.4 - 21.4
gains on
defined benefit
pension schemes
Taxation - - - - - - 1.7 - (7.6) (5.9) - (5.9)
credit/(charge) on
components of other
comprehensive income
Other - - - - (0.5) - 0.3 - 13.8 13.6 - 13.6
comprehensive
income for the period
Total - - - - (0.5) - 0.3 - 67.6 67.4 0.3 67.7
comprehensive
income for the period
Dividends - - - - - - - - (22.6) (22.6) - (22.6)
paid in the
period
Credit arising - - - - - - - - 0.6 0.6 - 0.6
on share-based
payment awards
Balance at 53.8 9.9 (1,182.3) 5.3 2.1 121.5 17.7 (0.1) 1,426.5 454.4 3.1 457.5
30 June 2011
...................Equity attributable to equity holders of the parent.................
Share Reverse Re- Hedging
Share premium acquisition Equity valuation Merger and Own Retained Minority Total
capital account reserve reserve reserve reserve translation shares earnings Total interests equity
(unaudited) £m £m £m £m £m £m £m £m £m £m £m £m
Balance at 53.8 9.9 (1,182.3) - 2.3 121.5 7.6 (2.8) 1,300.3 310.3 2.2 312.5
1 January
2010
Profit for - - - - - - - - 55.1 55.1 0.2 55.3
the period
Revaluation of - - - - - - - - - - - -available-
for-sale assets
Exchange - - - - - - 12.0 - - 12.0 0.2 12.2
differences on
translation of
foreign operations
Actuarial - - - - - - - - (0.9) (0.9) - (0.9)
loss on
defined benefit
pension schemes
Taxation - - - - - - (3.1) - (0.1) (3.2) - (3.2)
credit/(charge) on
components of other
comprehensive income
Other - - - - - - 8.9 - (1.0) 7.9 0.2 8.1
comprehensive
income for the period
Total - - - - - - 8.9 - 54.1 63.0 0.4 63.4
comprehensive
income for the period
Dividends - - - - - - - - (21.4) (21.4) - (21.4)
paid in the
period
Sale of - - - - - - - 2.3 (0.6) 1.7 - 1.7
own shares
Shares used to - - - - - - - 0.3 (0.3) - - -
meet share
award exercises
Credit arising - - - - - - - - 1.3 1.3 - 1.3
on share-based
payment awards
Balance at 53.8 9.9 (1,182.3) - 2.3 121.5 16.5 (0.2) 1,333.4 354.9 2.6 357.5
30 June 2010
...................Equity attributable to equity holders of the parent.................
Share Reverse Re- Hedging
Share premium acquisition Equity valuation Merger and Own Retained Minority Total
capital account reserve reserve reserve reserve translation shares earnings Total interests equity
(unaudited) £m £m £m £m £m £m £m £m £m £m £m £m
Balance at 53.8 9.9 (1,182.3) - 2.3 121.5 7.6 (2.8) 1,300.3 310.3 2.2 312.5
1 January
2010
Profit for - - - - - - - - 108.5 108.5 0.6 109.1
the year
Revaluation of - - - - 0.3 - - - - 0.3 - 0.3
available-
for-sale assets
Exchange - - - - - - 8.8 - - 8.8 0.3 9.1
differences on
translation of
foreign operations
Actuarial - - - - - - - - 14.5 14.5 - 14.5
gains on
defined benefit
pension schemes
Taxation - - - - - - 1.0 - (7.8) (6.8) - (6.8)
credit/(charge) on
components of other
comprehensive income
Other - - - - 0.3 - 9.8 - 6.7 16.8 0.3 17.1
comprehensive
income for the year
Total - - - - 0.3 - 9.8 - 115.2 125.3 0.9 126.2
comprehensive
income for the year
Equity - - - 5.3 - - - - - 5.3 - 5.3
component
of deferred
consideration
Dividends - - - - - - - - (32.7) (32.7) (0.3) (33.0)
paid in the
year
Sale of own - - - - - - - 2.3 (0.6) 1.7 - 1.7
shares
Shares used - - - - - - - 0.4 (0.4) - - -
to meet share
award exercises
Debit arising - - - - - - - - (0.9) (0.9) - (0.9)
on share-based
payment awards
Balance at 53.8 9.9 (1,182.3) 5.3 2.6 121.5 17.4 (0.1) 1,380.9 409.0 2.8 411.8
31 December
2010
Notes to the Condensed Consolidated Financial Statements
for the six months ended 30 June 2011
1. General information
The condensed consolidated financial information for the six months ended 30
June 2011 has been prepared in accordance with the Disclosure and Transparency
Rules (DTR) of the Financial Services Authority and with IAS 34 `Interim
Financial Reporting' as adopted by the European Union (EU). This condensed
financial information should be read in conjunction with the statutory accounts
for the year ended 31 December 2010 which were prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU.
The statutory accounts for the year ended 31 December 2010 have been reported
on by the Company's auditors, Deloitte LLP, and have been delivered to the
Registrar of Companies. The report of the auditors on those accounts was
unqualified and did not contain a statement under section 498(2) or (3) of the
Companies Act 2006.
The condensed consolidated financial information for the six months ended 30
June 2011 has been prepared using accounting policies consistent with IFRS. The
interim information, together with the comparative information contained in
this report for the year ended 31 December 2010, does not constitute statutory
accounts within the meaning of section 434 of the Companies Act 2006. The
financial information is unaudited but has been reviewed by the Company's
auditors, Deloitte LLP, and their report appears at the end of the interim
financial report.
2. Accounting policies
The condensed consolidated financial statements have been prepared on the
historical cost basis, except for the revaluation of certain financial
instruments. The Group has considerable financial resources both in the regions
and at the corporate centre to comfortably meet the Group's ongoing
obligations. Accordingly, the going concern basis continues to be used in
preparing these condensed consolidated financial statements. The condensed
consolidated financial statements are rounded to the nearest hundred thousand
pounds (expressed as millions to one decimal place - £m), except where
otherwise indicated.
The same accounting policies, presentation and methods of computation are
followed in the condensed financial statements as applied in the Group's latest
annual audited financial statements for the year ended 31 December 2010, except
as described below.
The Group has adopted the amendment to IAS 32 `Financial Instruments:
Presentation' regarding the classification of rights issues, the amendment to
IFRIC 14 `IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction' regarding prepayments of a Minimum Funding
Requirement, IFRIC 19 `Extinguishing Financial Liabilities with Equity
Instruments', Improvements to IFRSs (2010), and the revised IAS 24 `Related
Party Disclosures'. The adoption of these amendments has not had any
significant impact on the condensed consolidated financial statements.
3. Related party transactions
Related party transactions are described in the 2010 annual report and accounts
in note 36 to the consolidated financial statements. There have been no
material changes in the nature or value of related party transactions in the
six months ended 30 June 2011.
4. Principal risks and uncertainties
Robust risk management is fundamental to the achievement of the Group's
objectives. The Group maintains a Risk Assessment Framework which identifies
risks within the following eight risk categories: credit risk, market risk,
operational risk, strategic and business risk, financial risk, reputational
risk, governance risk and regulatory, legal and human resource risk. A detailed
explanation of the above risks can be found on pages 16 to 19 of the latest
annual report which is available at www.tullettprebon.com. The directors do not
consider that the principal risks and uncertainties have changed since the
publication of the annual report for the year ended 31 December 2010. Risks and
uncertainties which could have a material impact on the Group's performance
over the remaining six months of the financial year are discussed in the
Interim Management Report.
5. Segmental analysis
Products and services from which reportable segments derive their revenues
The Group is organised by geographic reporting segments which are used for the
purposes of resource allocation and assessment of segmental performance by
Group management. These are the Group's reportable segments under IFRS 8
`Operating Segments'.
Each geographic reportable segment derives revenue from Treasury Products,
Interest Rate Derivatives, Fixed Income, Equities, Energy and Information Sales
and Risk Management Services.
Information regarding the Group's operating segments is reported below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
£m £m £m
Revenue
Europe 269.9 288.1 536.1
North America 123.4 135.6 259.0
Asia Pacific 61.5 52.1 113.4
454.8 475.8 908.5
Operating profit
Europe 65.5 69.6 120.7
North America 7.4 11.7 22.5
Asia Pacific 7.3 3.4 9.2
Reported operating profit 80.2 84.7 152.4
Finance income 6.5 5.6 11.3
Finance costs (12.1) (11.0) (22.4)
Profit before tax 74.6 79.3 141.3
Taxation (21.3) (25.0) (33.7)
Profit of consolidated companies 53.3 54.3 107.6
Share of results of associates 0.8 1.0 1.5
Profit for the period 54.1 55.3 109.1
There are no inter-segment sales included in segment revenue.
Other segmental information
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
£m £m £m
Segment assets
Europe 15,636.0 7,279.7 1,834.1
North America 13,276.5 8,743.0 3,155.0
Asia Pacific 74.7 70.6 80.7
28,987.2 16,093.3 5,069.8
Segmental assets exclude all inter-segment balances.
Analysis by product group Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
£m £m £m
Revenue
Treasury Products 127.8 125.2 248.4
Interest Rate Derivatives 103.8 107.5 205.0
Fixed Income 126.8 132.7 249.3
Equities 23.7 38.1 67.2
Energy 53.8 55.6 105.8
Information Sales and Risk Management 18.9 16.7 32.8
Services
454.8 475.8 908.5
6. Other operating income
Other operating income represents receipts such as rental income, royalties,
insurance proceeds, settlements from competitors and business relocation
grants. Costs associated with such items are included in administrative
expenses.
7. Finance income
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
£m £m £m
Interest receivable and similar income 1.2 0.9 1.9
Expected return on pension schemes' 5.3 4.7 9.4
assets
6.5 5.6 11.3
8. Finance costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
£m £m £m
Interest payable on bank loans 1.9 1.2 2.5
Interest payable on Eurobonds 5.2 5.2 10.5
Other interest payable 0.5 0.1 0.4
Amortisation of debt issue costs 0.7 0.5 1.2
Total borrowing costs 8.3 7.0 14.6
Fair value loss on derivative instruments - 0.1 -
Interest cost on pension schemes' 3.8 3.9 7.8
liabilities
12.1 11.0 22.4
9. Earnings per share
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
Adjusted basic 24.4p 25.5p 46.4p
Basic 24.8p 25.7p 50.5p
Diluted 24.8p 25.4p 50.3p
The calculation of basic and diluted earnings per share is based on the
following number of shares in issue:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
No. (m) No. (m) No. (m)
Weighted average shares in issue used for 216.5 214.3 214.9
calculating basic and adjusted basic
earnings per share
Contingently issuable shares 0.3 2.0 0.2
Issuable on exercise of options 0.3 0.8 0.6
Diluted weighted average shares in issue 217.1 217.1 215.7
The earnings used in the calculation of adjusted, basic and diluted earnings
per share are set out below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
£m £m £m
Profit for the period 54.1 55.3 109.1
Minority interests (0.3) (0.2) (0.6)
Earnings for calculating basic and 53.8 55.1 108.5
diluted earnings per share
Expected return on pension schemes' (5.3) (4.7) (9.4)
assets
Interest cost on pension schemes' 3.8 3.9 7.8
liabilities
Fair value movement on derivative - 0.1 -
financial instruments
Tax on above items 0.5 0.2 0.5
Tax on capital related items - - (6.0)
Prior year tax - - (1.6)
Adjusted earnings for calculating 52.8 54.6 99.8
adjusted basic earnings per share
10. Dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
£m £m £m
Amounts recognised as distributions to
equity holders in the period:
Final dividend for the year ended 31 22.6 - -
December 2010 of 10.5p per share
Interim dividend for the year ended 31 - - 11.3
December 2010 of 5.25p per share
Final dividend for the year ended 31 - 21.4 21.4
December 2009 of 10.0p per share
22.6 21.4 32.7
An interim dividend of 5.25p per share will be paid on 17 November 2011 to all
shareholders on the Register of Members on 28 October 2011.
During the period the ordinary shares held by the Tullett Prebon plc Employee
Share Ownership Trust were transferred to the Tullett Prebon plc Employee
Benefit Trust 2007. The trustees of the Tullett Prebon plc Employee Benefit
Trust 2007 have waived their rights to dividends.
As at 30 June 2011 the Tullett Prebon plc Employee Benefit Trust 2007 held
202,029 ordinary shares (2010: 200,833 ordinary shares) and the Tullett Prebon
plc Employee Share Ownership Trust held nil ordinary shares (2010: 1,196
ordinary shares).
11. Notes to the Condensed Consolidated Cash Flow Statement
a. Reconciliation of operating profit to net cash from operating activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
£m £m £m
Operating profit 80.2 84.7 152.4
Adjustments for:
Share-based compensation 0.6 1.3 (0.9)
Profit on sale of other non-current - - (1.0)
financial assets
Loss on sale of property, plant and - - 0.2
equipment
Depreciation of property, plant and 2.8 3.3 6.4
equipment
Amortisation of intangible assets 1.4 1.2 3.0
Increase/(decrease) in provisions for 5.6 0.2 (5.4)
liabilities and charges
Retirement benefit obligation funding (0.5) (6.3) (8.8)
Decrease in non-current liabilities (0.4) - (1.1)
Operating cash flows before movement in 89.7 84.4 144.8
working capital
Increase in trade and other receivables (29.6) (31.7) (15.0)
(Increase)/decrease in net settlement (5.8) (0.6) 0.2
balances
(Decrease)/increase in trade and other (15.6) (14.9) 5.6
payables
Cash generated from operations 38.7 37.2 135.6
Income taxes paid (22.9) (20.1) (27.5)
Interest paid (2.0) (1.4) (13.4)
Net cash from operating activities 13.8 15.7 94.7
(b) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and other short term highly
liquid investments with an original maturity of three months or less. Cash at
bank earns interest at floating rates based on daily bank deposit rates. Short
term deposits are made for varying periods of between one day and one week
depending on the immediate cash requirements of the Group, and earn interest at
the respective short term deposit rates.
12. Analysis of net funds
At At
1 January Cash Non-cash Exchange 30 June
2011 flow items differences 2011
£m £m £m £m £m
Cash 242.4 (40.4) - 0.4 202.4
Cash equivalents 145.3 (65.9) - (0.1) 79.3
Client settlement 2.4 0.4 - - 2.8
money
Cash and cash 390.1 (105.9) - 0.3 284.5
equivalents
Other current 35.6 (7.0) - (0.1) 28.5
financial assets
Total funds 425.7 (112.9) - 0.2 313.0
Bank loans within one (30.0) 30.0 (29.4) - (29.4)
year
Bank loans after one (180.0) 63.4 28.9 - (87.7)
year
Loans due after one (147.6) - (0.2) - (147.8)
year
Finance leases (0.3) 0.1 - - (0.2)
(357.9) 93.5 (0.7) - (265.1)
Total net funds 67.8 (19.4) (0.7) 0.2 47.9
Client settlement money represents balances held by the Group received as a
result of corporate actions relating to securities transactions.
Other current financial assets comprise short term government securities and
term deposits held with banks and clearing organisations.
On 8 February 2011, the Group entered into a new £235m credit agreement
consisting of a £120m amortising term loan facility and a £115m committed
revolving credit facility. These facilities replaced the previous facilities
outstanding at that date, a £180m term loan and a £50m committed revolving
credit facility that were due to mature in January 2012. The new term loan is
subject to repayments of £30m in each of February 2012 and February 2013 with
£60m maturing in February 2014. The committed revolving credit facility, which
has not been drawn, will also mature in February 2014.
13. Legal Proceedings
The claim by BGC Market Data and certain of its affiliates, alleging that the
Company misappropriated data supplied to its information sales subsidiary in
violation of a redistribution agreement, is scheduled to be heard in
arbitration under the rules of the American Arbitration Association during
August 2011. A provision for the estimated cost of the resolution of this claim
has been included in the first half results. The amount claimed against the
Company is significantly higher than the amount provided. The outcome remains
uncertain and is dependent upon the conclusion of the arbitration process.
14. Events after the balance sheet date
Approval from the President of Brazil for the Company's acquisition of
Convenção was received on 12 July 2011. The acquisition is expected to complete
during August 2011.
Directors' Responsibility Statement
The directors confirm, to the best of their knowledge, that the condensed set
of financial statements has been prepared in accordance with IAS 34 `Interim
Financial Reporting' as adopted by the European Union, and that the interim
management report herein includes a fair review of the information required by
DTR 4.2.7R and DTR 4.2.8R.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial information differs from legislation in other jurisdictions.
By order of the Board
Terry Smith
Chief Executive
2 August 2011
Independent Review Report to Tullett Prebon plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half year report for the six months ended 30 June 2011 which
comprises the Condensed Consolidated Income Statement, the Condensed
Consolidated Statement of Comprehensive Income, the Condensed Consolidated
Balance Sheet, the Condensed Consolidated Cash Flow Statement, the Condensed
Consolidated Statement of Changes in Equity and related notes 1 to 14. We have
read the other information contained in the half year report and considered
whether it contains any apparent misstatements or material inconsistencies with
the information in the condensed set of financial statements.
This report is made solely to the Company 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. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company for our review work, for this report, or for the conclusions
we have formed.
Directors' responsibilities
The half year report is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the half year 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 half year 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 half year report based on our review.
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 inquiries, 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 half year report
for the six months ended 30 June 2011 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.
Deloitte LLP
Chartered Accountants and Statutory Auditor
2 August 2011
London, UK
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