Preliminary Results - year ended 31 December 2007

Released : 11.03.2008 07:00


TULLETT PREBON PLC

PRELIMINARY RESULTS - for the year ended 31 December 2007

Highlights

Tullett Prebon plc today announced its preliminary results for the year ended
31 December 2007. The highlights are:

- Revenue £753.8m (2006: £654.1m) - growth of 20% at constant exchange rates
- Operating profit £131.8m (2006: £114.8m) - growth of 19% at constant
  exchange rates
- Adjusted* Profit before tax £114.4m (2006: £110.8m)
- Adjusted** EPS 33.5p (2006: 31.6p)

* excluding non cash gains and losses in net finance income / (expense)

** excluding non cash gains and losses in net finance income / (expense) net
of tax, prior year tax items, and capital tax items

A reconciliation of adjusted PBT and adjusted Earnings to the reported figures
is shown on page 10.

Commenting on the results, Keith Hamill, Chairman of Tullett Prebon plc, said:

"Our focus in 2007 has been to prioritise growth in revenues and to
develop our electronic broking capabilities, and we took a number of actions
in pursuit of these objectives.

The results for 2007 overall, and particularly for the second half,
are encouraging. Revenue of £754m represents growth of 20% for the year at
constant exchange rates, with growth of 29% in the second half. Operating
profit of £132m has grown by 19% at constant exchange rates. Adjusted basic
earnings per share for the year were 33.5p."

Terry Smith, Chief Executive, added:

"The short term outlook for financial markets continues be
characterised by uncertainty, and the volatility that we experienced in the
second half of 2007 has continued into the first two months of this year.
These conditions are ideal for our business, and we are increasingly well
placed to benefit from them.

The outlook for Tullett Prebon is positive and we believe that the
actions being taken to develop the business will create future value for
shareholders."

Enquiries:

Nigel Szembel, Head of Communications      Mobile: 07802 362088
Tullett Prebon plc

Further information on the Company and its activities is available
on the Company's website:

www.tullettprebon.com



CHAIRMAN'S STATEMENT

This is the first set of results for Tullett Prebon plc as a
standalone inter-dealer broking business, following the demerger of the
Collins Stewart stockbroking business in December 2006. The demerger took
place in order to enable both companies to focus on the substantial
opportunities for growth available to them. During 2007 the Company made good
progress towards achieving its objectives and achieved results in line with
our expectations, in what were generally favourable market conditions.

In March 2007, the Company also made a repayment of surplus capital
to shareholders of 142 pence per share, resulting in a total payment of just
over £300m.

Our focus in 2007 has been to prioritise growth in revenues and to
develop our electronic broking capabilities, and we took a number of actions
in pursuit of these objectives. Firstly, in January 2007 we completed the
acquisition of Chapdelaine at a cost of £49m. This has strengthened the
business in North America, in corporate bonds, mortgage backed securities and
credit derivatives. Secondly, we have hired a significant number of new
brokers which has expanded our presence in the faster growing sectors of our
market. Many of these have now started with the business. We have also hired a
new team to lead our important electronic broking initiative into the next
stage of its development. Thirdly, we have restructured our joint venture in
Tokyo which opens up significant opportunities for further expansion.

The benefit of these initiatives has started to show through in the
results for 2007, with further benefits expected to show in 2008 and beyond.

The results for 2007 overall, and particularly for the second half,
are encouraging. Revenue of £753.8m (2006: £654.1m) represents growth of 20%
for the year at constant exchange rates, with growth of 29% in the second
half. Operating profit of £131.8m (2006: £114.8m) has grown by 19% at constant
exchange rates. Operating margin at 17.5% is only slightly lower than the
17.6% for 2006 despite a significantly increased investment in the development
of electronic broking. The return on average capital employed was 37% (2006:
28%).

As a result of the return of capital to shareholders, the Company's
capital structure is significantly different from the previous year, and net
financing costs and, therefore profit before and after tax are not comparable
year on year. Nevertheless, adjusted profit before tax was £114.4m (2006:
£110.8m) with adjusted basic earnings per share of 33.5p (2006: 31.6p).

The Board is recommending a final dividend of 8p per share, making
the total dividend for the year 12p per share. The final dividend, if
approved, will be payable on 22 May 2008 to shareholders on the register on 2
May 2008.

The Company's overall objective is to maximise returns to
shareholders over the medium to long term, at an acceptable level of risk.
Total shareholder return for 2007 was negative by 4.7% which compares to the
return from the FTSE 250 index which was negative by 2.2% and the General
Financials sector index which was positive by 5.1%. Our TSR performance
reflects a relatively high share price at the start of the year and
significant volatility in the shareholder register in the periods both prior
to and after the demerger and return of capital. Over the last 2 years total
shareholder return (calculated using the Collins Stewart Tullett share price
at the start of 2006 up to the demerger and the Tullett Prebon share price
thereafter) was positive by 44%, which was 16 percentage points above the
return from the FTSE 250 index, although 5 percentage points below the General
Financials sector index over the same period.

Current market conditions are ideal for our business and trading so
far in 2008 has been encouraging. The Board continues to be confident that the
outlook is positive and that the actions being taken to develop the business
will create future value for shareholders.

Keith Hamill
Chairman
11 March 2008



BUSINESS REVIEW

Overview of 2007

Tullett Prebon is the world's second largest inter-dealer broker.
Following the acquisition of Prebon in October 2004, the focus of the business
in 2005 and 2006 was on integration of the two businesses, doubling operating
margins and delivering strong cash flows. Following those achievements our
objectives for 2007 were to grow revenue and to develop our electronic broking
capability.

We have taken a number of actions during the year to accelerate the
rate of revenue growth through a combination of broker hires, acquisitions and
product development.

We have been successful in recruiting new brokers to join the
business in all three geographic regions, which will enhance and broaden our
product coverage and deepen liquidity pools. During 2007 we signed up 125 new
brokers and over 100 of these have now started with the business, with the
remainder to join over the next 15 months as they complete their existing
employment obligations. Our recruitment has been particularly focused on
building our presence in the newer and more rapidly growing markets such as
credit, volatility and emerging markets. The revenue contribution in 2007 from
these new hires was £24m, with their annualised revenue expected to be around
£80m.

The acquisition of Chapdelaine was completed in January 2007 and
the business was quickly and successfully integrated into our existing
operations. The business in North America has benefited from the increased
scale and depth of liquidity that Chapdelaine provides in corporate bonds and
credit derivatives in particular. We restructured our joint venture in Tokyo
at the end of 2007, and we now have management control over an enlarged
business covering an increased range of products, which will enable us to
develop our activities in both Tokyo and across the Asia Pacific region.

We have continued to successfully develop and launch new broking
desks and services and during the year we started broking a number of new
products including biofuels, nuclear fuel derivatives, central European power,
coal and soft commodities.

We have invested £14.2m through the profit and loss in 2007 (2006:
£4.9m) in the development of our electronic broking capability, which supports
both pure electronic and hybrid models. In US dollar repo we operate a pure
electronic platform on which clients trade without any voice broker
intervention. We also provide clients in North America with a pure electronic
platform for on-the-run US Treasuries and agencies. In FX options, for which
our electronic capability has been implemented in all three operating regions,
we have adopted a hybrid model, under which clients can trade directly through
the platform, or through a voice broker who can also access the liquidity
available on the platform. Under the hybrid model our electronic broking
capability is supporting other voice broking activity in related products, and
is part of the set of tools that enable the voice brokers to provide a broking
service to clients. A new team with extensive experience in this area started
with the business in October to lead our electronic broking initiative in the
next stage of its development.

Our key financial and performance indicators for 2007 compared with
those for 2006 are summarised in the tables below.

                                                   Change
                                                           Constant
                                                           exchange
£m                            2007   2006     reported       rates*
 
Revenue          H1          371.6  348.0          +7%         +12%
                 H2          382.2  306.1         +25%         +29%
                 Full year   753.8  654.1         +15%         +20%
 
Operating Profit H1           64.8   62.5          +4%          +8%
                 H2           67.0   52.3         +28%         +31%
                 Full year   131.8  114.8         +15%         +19%
 
Operating Margin H1          17.4%  18.0% -0.6% points
                 H2          17.5%  17.1% +0.4% points
                 Full year   17.5%  17.6% -0.1% points


*calculated by translating the 2006 results for non-UK operations at the
exchange rates used for 2007

Our performance in 2007 reflects the impact of the acquisition of
Chapdelaine, the investments we have made in new broker hires and the
generally favourable market conditions. As expected, our performance in the
second half reflects the benefit of the investments we have made in broker
hires starting to be realised, together with the helpful market conditions.
Unlike most financial services businesses, the inter-dealer broker business
thrives on volatility in financial markets. During the first half of 2007
levels of activity were variable, with periods of relatively subdued trading
interspersed with periods of high volatility, particularly in June. This high
volatility continued throughout the summer and into autumn, only slowing
during December, in line with the usual seasonal trend. Our second half
performance was very strong, with revenues up 29% at constant exchange rates,
resulting in revenue in the second half exceeding that in the first half, the
reverse of the usual seasonal trend.

Operating margin of 17.5% for 2007 is slightly lower than the 17.6%
for 2006 reflecting the increased investment in the development of our
electronic broking capability. The investment in 2007 is equivalent to 1.9%
points of margin (2006: 0.7% points). Adjusting for this, underlying operating
margin is more than one percentage point higher than for 2006 reflecting the
reduction in broker employment costs as a percentage of revenue and improved
support cost efficiencies as we benefit from increased scale.

                                             2007     2006       Change
 
Broker Headcount (period end)               1,636    1,512          +8%
Average revenue per broker * (£'000)          463      398         +16%
Broker employment costs : broking revenue   56.4%    57.8% -1.4% points
Broking revenue per support staff           1,136      964         +18%
head * (£'000)
 
* at constant exchange rates

Broker headcount increased by 124 (+8%) during the year to 1,636 at
the year end. This increase reflects the new hires, the acquisition of
Chapdelaine and the inclusion of all of the headcount of the enlarged Tokyo
joint venture, net of ongoing reductions in headcount in some parts of the
business. As a result of the management of headcount, average revenue per
broker, a measure of front office efficiency, has increased by 16% at constant
exchange rates. The most significant cost in the business is broker employment
costs, and in 2007 these costs were equal to 56.4% of broking revenue compared
to 57.8% in 2006. Revenue per support staff head, a measure of back office
efficiency, increased by 18% at constant exchange rates.

Operating Review

The tables below analyse revenue and operating profit for 2007
compared with 2006. 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 meaningful analysis of performance,
the results for 2006 shown below are stated using translation exchange rates
consistent with those used for 2007, with revenue and operating profit growth
rates calculated on the same basis.

Revenue by product group        2007      2006    Change
                                  £m        £m
 
Treasury Products              204.0     185.0      +10%
Interest Rate Derivatives      180.1     160.3      +12%
Fixed Income                   210.8     173.6      +21%
Equities                        81.0      39.8     +104%
Energy                          63.2      57.2      +10%
Information Sales               14.7      13.2      +11%
At constant exchange rates     753.8     629.1      +20%
Translation                        -      25.0
Reported                       753.8     654.1      +15%

Revenues in all product groups increased by at least 10% in 2007
compared with 2006.

There was a significant pick up in the growth rate in Treasury
Products in the second half as we benefited from our strong position in FX
across all three regions during a period of high market volatility.

Interest Rate Derivatives also benefited from the increased
volatility in the second half and the strong underlying growth in emerging
market interest rate derivatives and interest rate options.

The growth in Fixed Income includes the impact of Chapdelaine. The
Fixed Income desks of Chapdelaine have been fully integrated into our existing
business and it is not possible to isolate the specific impact of the
acquisition. The government and agency Fixed Income markets in North America
remain challenging, but having declined in the first half, revenues from these
products increased by 5% in the second half. Fixed Income revenues in Europe
also grew strongly in the second half after a flat first six months.

Our Equities businesses in equity derivatives and equity arbitrage
have seen outstanding growth due to the sustained volatility in equity
markets, with revenues nearly doubling in the second half compared to 2006.
The overall growth rate is boosted by the inclusion of the cash equities
business acquired with Chapdelaine. Adjusting for the acquisition, revenue
growth in Equities was 58%.

Our Energy business continues to benefit from ongoing volatility in
Energy markets, the increasing use of derivatives, and the extension of our
product coverage.

Revenue growth in Information Sales reflects the broadening of the
data we provide to our largest customer and an increase in the number of
direct customers to whom we provide data feeds.

Revenue by region                2007      2006    Change
                                   £m        £m
 
Europe                          377.6     334.5      +13%
North America                   300.5     231.8      +30%
Asia Pacific                     75.7      62.8      +21%
At constant exchange rates      753.8     629.1      +20%
Translation                         -      25.0
Reported                        753.8     654.1      +15%

In Europe revenue increased by 13% despite a relatively subdued
first half, with the strong second half growth of 25% reflecting the
combination of the benefit of broker hires and the favourable market
conditions. The business continues to benefit from the focus on volatility
products as an asset class with particularly good progress in 2007 in building
our activities in equity derivatives and interest rate options. We have
recently strengthened our position in credit through a significant number of
hires who have now joined the business. In Energy products we broadened the
business into a number of new products such as coal, emissions, biofuels and
soft commodities. Although the vast majority of our revenues in Europe are
generated in London we also service clients from the other financial centres
in Europe and after a disappointing first half we appointed a new managing
director for those centres providing new focus and resulting in a much
improved performance in the second half.

In North America revenue increased by 30%, with growth in the
second half of 34%. Our activities in North America have benefited from the
successful integration of Chapdelaine, new broker hires in structured credit
and FX products, and a strong market for most product areas, particularly in
the second half. Corporate bonds and credit derivatives now represent over
half of our revenue in Fixed Income in the region as a result of the
acquisition of Chapdelaine and investment in broker hires. Our enlarged credit
activities performed well during the year with revenue and contribution in
line with the original acquisition and integration plans. Our Equities
activities now include the cash equities business acquired with Chapdelaine
but excluding this, our revenues from equity arbitrage and equity derivatives
increased by nearly 50%.

Our strong position in the growing markets in Asia Pacific was
reflected in revenue growth in the region of 21%, with growth in the second
half of 28%. The three largest centres in the region, Singapore, Hong Kong and
our joint venture in Tokyo, together account for over 75% of the revenue in
the region, and all increased revenue by at least 25% in the year. We
continued to build our presence in the region through broker hires and
broadening product coverage. Our equity derivatives business in Hong Kong more
than doubled in size. China's economic progress continues to stimulate the
other economies in the region, and our pioneering joint venture in Shanghai,
which started operations at the end of 2005, has well established market
shares and is benefiting from the development of the onshore market. We have a
smaller presence in Fixed Income in the region, but we hired a new credit
derivatives team who started in Singapore in October.

Operating profit by region       2007      2006    Change
                                   £m        £m
 
Europe                           75.5      65.9      +15%
North America                    46.8      40.6      +15%
Asia Pacific                      9.5       4.3     +121%
At constant exchange rates      131.8     110.8      +19%
Translation                         -       4.0
Reported                        131.8     114.8      +15%

Operating margin by region       2007      2006
 
Europe                          20.0%     19.7%
North America                   15.6%     17.5%
Asia Pacific                    12.5%      6.9%
                                17.5%     17.6%

The improvement in operating margin in Europe in 2007 reflects an
underlying increase in the voice broking margin of 1%, offset by the costs of
the development of electronic broking that have been incurred in the region.
In 2006 all the costs of the development of electronic broking were incurred
in North America. The underlying increase in margin reflects the benefit of
increased revenue on an unchanged support cost base.

The operating margin decline in North America in 2007 is due to the
increased investment in the development of electronic broking compared with
2006. Adjusting for this, operating margin in North America in 2007 is 19.3%,
similar to the margin for 2006. The margin has not increased over 2006
primarily due to the slight dilution effect from the integration of
Chapdelaine offsetting the benefit of increased scale.

In Asia Pacific the operating margin in 2007 has increased to 12.5%
as the growth in revenue has been delivered at the same time as reducing
broker compensation as a percentage of revenue, and with minimal increases in
support costs.

Financial Review

The results for the continuing operations for 2007 compared with
those for 2006 are shown in the table below.

                                          2007      2006
                                            £m        £m
 
Revenue                                  753.8     654.1
 
Operating profit                         131.8     114.8
Cash finance income/(expense)           (17.4)     (4.0)
Adjusted Profit before tax *             114.4     110.8
Tax                                     (43.5)    (43.9)
Associates                                 0.8         -
Minority interests                       (0.9)     (0.4)
Adjusted Earnings **                      70.8      66.5
 
Adjusted Earnings per share              33.5p     31.6p

* Adjusted PBT reconciles to reported PBT as follows:

                                          2007      2006
                                            £m        £m
 
Adjusted Profit before tax               114.4     110.8
Non cash finance income/(expense)        (0.6)      14.2
Reported Profit before tax               113.8     125.0

** Adjusted Earnings reconciles to reported Earnings as follows:

                                          2007      2006
                                            £m        £m
 
Adjusted Earnings                         70.8      66.5
Non cash finance income/(expense)        (0.6)      14.2
Deferred tax on non cash finance         (0.3)     (0.1)
income/(expense)
Prior year tax                             5.1       3.0
Capital tax                              (1.6)         -
Reported Earnings                         73.4      83.6

Finance Income/(Expense)

The increase in cash finance income/(expense) in 2007 compared to
2006 reflects the interest payable and fees amortisation on the facilities
entered into to finance the return of capital, partly offset by increased
interest receivable due to higher interest rates applicable to cash balances
and a one-off interest receipt on reclaimed tax.

The non-cash finance income/(expense) represents amounts relating
to the mark to market of derivative financial instruments, amortisation of
discounted deferred consideration and the expected return and interest on
pension scheme assets and liabilities. The non-cash finance income/(expense)
in 2006 includes a £13.4m mark to market gain on the equity swap taken out by
the group's Employee Share Ownership Trust in 2004 to hedge market risk on the
future purchase of own shares to satisfy the vesting of awards under share
option schemes. In 2007 the movement in the mark to market value of the equity
swap was a loss of £0.7m. The equity swap matured in December 2007.

Tax

The effective rate of tax on adjusted PBT is 38.0% (2006: 39.6%).
The reduction in the effective rate compared with 2006 results primarily from
the benefit of a restructuring of intra-group financing arrangements. The
effective rate is higher than the standard UK rate of 30% reflecting the
profits earned in the US, where the statutory rate is 46%, and the extent of
disallowable items.

Prior year tax items in both 2007 and 2006 reflect the reduction in
tax provisions made in previous years as tax matters are settled, and do not
relate to current period trading.

The capital tax charge of £1.6m in 2007 relates to potential
charges arising from the crystallisation of value for tax purposes due to the
restructuring of our joint venture in Tokyo.

Adjusted Basic EPS

Adjusted Basic EPS is calculated using underlying earnings shown in
the table above and the undiluted weighted average number of shares in issue
of 211.3m (2006: 210.7m).

Exchange and Hedging

The profit and loss accounts of the group's non-UK operations are
translated into sterling at average exchange rates. The most significant
exchange rates for the group are the US dollar and the Euro. The group's
current policy is not to hedge profit and loss account translation exposure.
The balance sheets of the group's non-UK operations are translated into
sterling using year end exchange rates. The major balance sheet translation
exposure is to the US dollar. The gross exposure at 31 December 2007 amounted
to US$187m, represented by US and Hong Kong net assets. The group has a cross
currency interest rate swap designated as a net investment hedge of US$117m of
US dollar denominated net assets, giving a net exposure of US$70m.

Average and year end exchange rates for the US dollar and the Euro
are shown below.

                         Average           Year End
                        2007   2006       2007   2006
 
US dollar              $2.00  $1.83      $1.99  $1.96
Euro                   €1.47  €1.46      €1.36  €1.48

Cash flow and financing

Net cash flow from continuing operations is summarised in the table
below.

                                          2007      2006
                                            £m        £m
 
Operating profit                         131.8     114.8
Share based compensation                   2.9       5.0
Depreciation and amortisation              7.2       8.0
EBITDA                                   141.9     127.8
 
Capital expenditure (net of NBV of       (6.4)     (3.7)
disposals)
Working capital                            5.0      12.8
Operating cash flow                      140.5     136.9
 
Interest                                (15.5)     (3.6)
Taxation                                (32.9)    (27.7)
Defined benefit pension scheme funding   (2.5)     (2.1)
Share option related cash flow          (10.9)    (14.6)
Transaction costs                        (1.0)     (2.2)
Dividends paid                          (21.1)    (33.8)
Dividends received from                      -     (0.2)
associates/(paid) to minorities
Acquisitions/investments                (30.2)         -
Net cash flow                             26.4      52.7


In 2007 the group has again delivered operating cash flow in excess
of operating profit. The net working capital inflow in 2007 of £5.0m reflects
the increase in payables, largely due to increased broker bonus accruals,
partly offset by increased receivable balances and net settlement balances due
to the higher level of activity compared with a year ago, and increased sign
on prepayments due to broker hires during the year.

The increase in interest payments reflects the interest paid on the
£300m term loan drawn down to finance the return of capital to shareholders.

The share option related cash flow reflects the cost of acquiring
shares to satisfy share options.

Transaction costs represent amounts paid relating to the demerger
of the Collins Stewart stockbroking business and the return of capital.

Dividends paid in 2007 represent the Tullett Prebon plc 2006 final
dividend of 6p per share plus the 2007 interim dividend of 4p per share. The
2006 payment reflects the Collins Stewart Tullett plc 2005 final and 2006
interim dividends totalling 16p per share.

Acquisition expenditure in 2007 includes the £29.7m initial payment
for Chapdelaine including associated transaction costs, the £0.9m cash cost of
acquiring equity in the restructured Tokyo joint venture company, less £0.7m
received from a claim made relating to the acquisition of Prebon.

The movement in net funds/(debt) is summarised below.

                                             £m
 
Net funds at 31 December 2006             111.2
Net cash flow                              26.4
Funds acquired with Chapdelaine/Tokyo       5.8
Return of capital to shareholders       (301.5)
Effect of movement in exchange rates      (0.7)
Movements in fair value/amortisation of   (1.2)
costs
Net (debt) at 31 December 2007          (160.0)


The group has moved from a net funds position at 31 December 2006
to a net debt position at 31 December 2007 due to the return of capital to
shareholders. At 31 December 2007 the group held cash, cash equivalents and
other financial assets of £290.5m (2006: £263.4m) and borrowings of £450.5m
(2006: £152.2m). The group is required to maintain cash balances within its
operating subsidiaries for clearing house deposits and regulatory purposes. At
31 December 2007 these requirements total £100m. In addition, the group
maintains significant cash balances for working capital purposes. The group's
borrowings comprise the £150m Eurobond, a term loan of £300m under new bank
facilities entered into to finance the return of capital, and a small amount
of finance leases. Borrowings on the balance sheet are shown net of
unamortised arrangement fees. The group's cash balances and financial assets
earn interest at short term floating rates. The Eurobond has a fixed coupon of
8.25%. The fair value of £64m of the bond is hedged by the cross currency
interest rate swap under which the group receives fixed rate sterling interest
and pays floating rate US dollar interest. The term loan carries interest at
floating rates based on sterling LIBOR. The new bank facilities include a
committed £50m revolving credit facility which was not drawn during the year.

Pensions

The deficits of the group's defined benefit pension schemes at 31
December 2007 under IAS19 total £3.9m (2006: £26.2m). The reduction in the
deficits mainly reflects the increase in the value of the schemes' assets over
the year.

The group has undertaken to ensure that the deficits of the
schemes, on an accounting basis, will be eliminated by 31 December 2010, and
in addition, has granted the trustees a first ranking charge over £50m of
gross assets of the group's principal UK operating subsidiaries. Our defined
benefit pension schemes are closed for future accrual.

The triennial actuarial valuation of the main scheme as at 30 April
2007 is currently underway.

Regulatory capital

The group has received a waiver from the consolidated capital
adequacy requirements of the Capital Requirements Directive effective from 1
January 2007 through to 31 December 2011. The group is subject to a financial
holding company test, whereby the aggregate financial resources of the group
are calculated by reference to the capital and reserves of the parent company,
Tullett Prebon plc, with the group's aggregate financial resources requirement
calculated as the sum of the requirements of all the group's subsidiaries. The
group maintained regulatory capital comfortably in excess of its requirement
throughout the year.

Return on capital employed

The return on capital employed of 37% has been calculated as
operating profit divided by average shareholders' funds plus net debt, and
adding back cumulative amortised goodwill and the post tax impact of
reorganisation costs.

Litigation

In July 2007 BGC agreed to settle Tullett Prebon's claims against
them in the Singapore litigation, on terms which are confidential.

Future Developments and Outlook

The short term outlook for financial markets continues be
characterised by uncertainty, and the volatility that we experienced in the
second half of 2007 has continued into the first two months of this year.
These conditions are ideal for our business, and as a result of the actions
taken during 2007, we are increasingly well placed to benefit from them. It is
not possible, however, to make accurate predictions about how long these
conditions are likely to prevail.

The development of our electronic broking capability is a key
element of the service we provide to our clients. The level of investment in
2008 is expected to be higher than in 2007, and this will dampen overall
operating margin improvement until the benefits of the investment begin to be
fully realised.

We will continue to invest in new broker hires in those product
areas which we believe have the best potential for future revenue growth, and
we will continue to actively pursue acquisition opportunities to broaden and
deepen our geographic and product coverage.

The outlook for Tullett Prebon is positive and we believe that the
actions being taken to develop the business will create future value for
shareholders.

Terry Smith
Chief Executive
11 March 2008



Consolidated income statement
for the year ended 31 December 2007
                                               Notes       2007     2006
Continuing operations                                        £m       £m
 
Revenue                                          3        753.8    654.1
 
Other operating income                           4         14.2     17.5
 
Administrative expenses                                 (636.2)  (556.8)
 
Operating profit                                          131.8    114.8
 
Finance income                                   5         21.1     30.4
Finance costs                                    6       (39.1)   (20.2)
 
Profit before tax                                         113.8    125.0
 
Taxation                                                 (40.3)   (41.0)
 
Profit of consolidated companies                           73.5     84.0
 
Share of results of associates                              0.8        -
 
Profit for the year from continuing                        74.3     84.0
operations
 
Discontinued operations
Profit for the year from discontinued                         -     44.3
operations
 
Profit for the year                                        74.3    128.3
 
Attributable to:
Equity holders of the parent                               73.4    127.6
Minority interests                                          0.9      0.7
                                                           74.3    128.3
Earnings per share
From continuing operations
Basic                                            7        34.7p    39.7p
Diluted                                          7        34.2p    38.9p
 
From total operations - continuing and
discontinued
Basic                                            7        34.7p    60.6p
Diluted                                          7        34.2p    59.4p
 
Adjusted earnings per share is disclosed in note 7


Consolidated statement of recognised income and expense
for the year ended 31 December 2007
                                                                 2007   2006
                                                                   £m     £m
 
Revaluation of available for sale assets                          0.1      -
Gain on net investment hedge                                      1.0    8.4
Effect of changes in exchange rates on translation of
foreign operations                                                0.2 (14.3)
Actuarial gains on defined benefit pension schemes               19.0    8.0
Taxation on items taken directly to equity - continuing
operations                                                      (3.7)    4.7
Taxation on items taken directly to equity - discontinued
operations                                                          -    4.5
Net income recognised directly in equity                         16.6   11.3
 
Profit for the year from continuing operations                   74.3   84.0
Profit for the year from discontinued operations                    -   44.3
Total recognised income and expense for the year                 90.9  139.6
 
Attributable to:
Equity holders of the parent                                     90.0  138.9
Minority interest                                                 0.9    0.7
                                                                 90.9  139.6


Consolidated balance sheet
as at 31 December 2007
                                                             2007       2006
                                                               £m         £m
Non-current assets
Goodwill                                                    355.9      311.7
Other intangible assets                                       2.8        1.7
Property, plant and equipment                                18.7       18.6
Interest in associates                                        2.6        2.6
Other financial assets                                        2.4        2.7
Deferred tax assets                                          15.0       28.2
Derivative financial instruments                              7.2        5.8
                                                            404.6      371.3
Current assets
Trade and other receivables                               6,923.4   12,627.0
Other financial assets                                       28.3       27.0
Cash and cash equivalents                                   262.2      236.4
Derivative financial instruments                                -        9.8
                                                          7,213.9   12,900.2
Total assets                                              7,618.5   13,271.5
 
Current liabilities
Trade and other payables                                (6,972.7) (12,667.2)
Interest bearing loans and borrowings                      (30.6)      (0.9)
Current tax liabilities                                    (26.5)     (31.4)
                                                        (7,029.8) (12,699.5)
Net current assets                                          184.1      200.7
 
Non-current liabilities
Interest bearing loans and borrowings                     (419.9)    (151.3)
Retirement benefit obligations                              (3.9)     (26.2)
Deferred tax liabilities                                    (0.3)      (1.3)
Long-term provisions                                       (14.7)      (7.8)
Other long-term payables                                   (17.5)      (3.1)
                                                          (456.3)    (189.7)
Total liabilities                                       (7,486.1) (12,889.2)
 
Net assets                                                  132.4      382.3
 
Equity
Share capital                                                53.2      690.1
Reverse acquisition reserve                             (1,182.3)  (1,182.3)
Other reserves                                               97.3      100.7
Retained earnings                                         1,162.1      772.1
Equity attributable to equity holders of the                130.3      380.6
parent
Minority interest                                             2.1        1.7
Total equity                                                132.4      382.3


The financial statements were approved by the board of
directors and authorised for issue on 11 March 2008 and are signed on its
behalf by:

Terry Smith
Chief Executive


Consolidated cash flow statement
for the year ended 31 December 2007

                                              Notes    2007    2006
                                                         £m      £m

Net cash from operating activities            9(a)     82.8   163.6
 
Investing activities
(Purchase)/sale of other financial assets             (0.3)    12.9
Interest received                                      13.2    15.5
Dividends from associates                               0.9       -
Dividends received from fixed asset
investments                                             0.2       -
Proceeds on disposal of property, plant and
equipment                                                 -     2.0
(Purchase)/sale of available for sale assets          (0.1)     7.2
Purchase of intangible fixed assets                   (1.1)   (0.6)
Purchase of property, plant and equipment             (5.5)   (5.0)
Acquisition of subsidiaries                          (25.9)   (4.4)
Repayment of acquisition consideration                  0.7       -
Derecognised on demerger of Collins Stewart               - (122.3)
Net cash used in investment activities               (17.9)  (94.7)
 
Financing activities
Dividends paid                                  8    (21.1)  (33.8)
Dividends paid to minority interests                  (0.9)   (0.2)
Return of capital                                   (301.5)       -
Purchase of own shares to meet share based
awards (net)                                         (10.9)  (15.6)
Taxation credit on share option exercises                 -     1.5
Drawdown of bank loan                                 297.2       -
Return of capital and demerger transaction
costs                                                 (1.0)   (4.5)
Repayment of obligations under finance leases         (0.5)   (0.5)
Net cash used in financing activities                (38.7)  (53.1)
 
Net increase in cash and cash equivalents              26.2    15.8
 
Net cash and cash equivalents at the
beginning of the year                                 236.2   234.2
 
Effect of foreign exchange rate changes               (0.3)  (13.8)
Net cash and cash equivalents at the end of
the year                                              262.1   236.2
 
Cash and cash equivalents                             262.2   236.4
Overdrafts                                            (0.1)   (0.2)
Net cash and cash equivalents                         262.1   236.2


The consolidated cash flow statement for the year ended 31 December
2006 reflects both the continuing (inter-dealer broking) operations and the
discontinued (stockbroking) operations whilst the consolidated cash flow
statement for the year ended 31 December 2007 reflects inter-dealer broking
operations only. Note 9(b) shows the cash flow for the year ended 31 December
2006 in respect of continuing operations.


Notes to the consolidated financial statement
for the year ended 31 December 2007

1. General information

Tullett Prebon plc is a company incorporated in England and Wales
under the Companies Act 1985.

In December 2006, Tullett Prebon plc became the holding company of
Collins Stewart Tullett plc in accordance with a court approved scheme of
arrangement under s425 of the Companies Act 1985. The acquisition of Collins
Stewart Tullett plc by Tullett Prebon plc constituted a group reconstruction
and was accounted for using the reverse acquisition accounting principles as
set out in IFRS 3: Business Combinations. The Group results for the year ended
31 December 2006 were prepared on the basis of the reverse acquisition
principles.

On 19 December 2006, in accordance with a court approved scheme of
arrangement under s425 of the Companies Act 1985, the Collins Stewart
stockbroking business was demerged from the Group. Results for Collins Stewart
for the year ended 31 December 2006 have been included in the consolidated
income statement as discontinued operations.

2. Basis of preparation of accounts

Basis of accounting

The financial information included in this document does not
constitute the Group's statutory accounts for the years ended 31 December 2007
or 2006, but is derived from those accounts. Statutory accounts for 2006 have
been delivered to the Registrar of Companies and those for 2007 will be
delivered following the Company's annual general meeting. The auditors have
reported on those accounts; their reports were unqualified and did not contain
statements under sections 237(2) or 237(3) of the Companies Act 1985.

The financial statements have been prepared on the historical cost
basis, except for the revaluation of certain financial instruments. The
financial statements are rounded to the nearest hundred thousand (expressed as
millions to one decimal place - £m), except where otherwise indicated.

Basis of consolidation

The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company made up to 31
December each year. Control is achieved where the Company has the power to
govern the financial and operating policies of an investee enterprise so as to
obtain benefits from its activities.

3. Segmental analysis

Continuing operations - geographical

                                                 2007   2006
                                                   £m     £m
 
Revenue
Europe                                          377.6  335.1
North America                                   300.5  252.8
Asia Pacific                                     75.7   66.2
                                                753.8  654.1
Operating profit
Europe                                           75.5   65.9
North America                                    46.8   44.3
Asia Pacific                                      9.5    4.6
                                                131.8  114.8
 
Finance income                                   21.1   30.4
Finance costs                                  (39.1) (20.2)
Profit before tax                               113.8  125.0
Taxation                                       (40.3) (41.0)
Profit of consolidated companies                 73.5   84.0
Share of results of associates                    0.8      -
Profit for the year from continuing operations   74.3   84.0

4. Other operating income

Other operating income represents receipts other than those earned
through broking activities, such as rental income, royalties, insurance
proceeds, gains on currency hedges, settlements from competitors, asset
disposal proceeds and business relocation grants. Costs associated with such
items are included in administrative expenses.

5. Finance income

Continuing operations                           2007   2006
                                                  £m     £m

Interest receivable and similar income          13.4   10.0
Hedge ineffectiveness on net investment hedge    0.2    0.5
Mark to market gain on equity swap                 -   13.4
Expected return on pension schemes' assets       7.5    6.5
                                                21.1   30.4

6. Finance costs

Continuing operations                                2007   2006
                                                       £m     £m

Interest payable on bank loans                       16.0      -
Interest payable on Eurobond                         12.4   12.4
Other interest payable                                0.9    1.2
Amortisation of debt issue costs                      1.5    0.4
Total borrowing costs                                30.8   14.0
Amortisation of discount on deferred consideration    0.9      -
Mark to market loss on equity swap                    0.7      -
Interest cost on pension schemes' liabilities         6.7    6.2
                                                     39.1   20.2

7. Earnings per share

Continuing operations
                                               2007   2006

Adjusted basic                                33.5p  31.6p
Basic                                         34.7p  39.7p
Diluted                                       34.2p  38.9p

The calculation of basic and diluted earnings per
share from continuing operations and total operations is based on the
following number of shares in issue:

                                                2007   2006
 
                                              No.(m) No.(m)
Weighted average shares in issue               211.3  210.7
Issuable on exercise of options                  3.1    4.3
Diluted weighted average shares in issue       214.4  215.0

The earnings used in the calculation of adjusted, basic and diluted
earnings per share, are as described below:

Continuing operations                                       2007   2006
                                                              £m     £m

Earnings                                                    74.3   84.0
Minority interests                                         (0.9)  (0.4)
Earnings for the purposes of the basic and diluted          73.4   83.6
earnings per share
Mark to market loss/(gain) on equity swap                    0.7 (13.4)
Gain arising on net investment hedge ineffectiveness       (0.2)  (0.5)
Expected return on pension schemes' assets                 (7.5)  (6.5)
Interest cost on pension schemes' liabilities                6.7    6.2
Amortisation of discount on deferred consideration           0.9      -
Tax on above items                                           0.3    0.1
Prior year tax                                             (5.1)  (3.0)
Capital tax                                                  1.6      -
Adjusted earnings                                           70.8   66.5

8. Dividends
                                                            2007   2006
                                                              £m     £m
Amounts recognised as distributions to equity holders in
the year:

Interim dividend for the year ended 31 December 2007 of      8.4      -

4p per share                                                       
Final dividend for the year ended 31 December 2006 of 6p    12.7      -
per share

Interim dividend for the year ended 31 December 2006 of        -   10.6
5p per share

Final dividend for the year ended 31 December 2005 of 11p      -   23.2
per share                                                      
                                                            21.1   33.8

In respect of the current year, the directors propose that the final dividend 
of 8p per share amounting to £16.9m will be paid on 22 May 2008 to all 
shareholders on the Register of Members on 2 May 2008. This dividend is
subject to approval by shareholders at the Annual General Meeting and has not
been included as a liability in these financial statements.

The trustees of the Tullett Prebon plc Employee Share Ownership
Trust and the trustees of Tullett Prebon plc Employee Benefit Trust 2007 have
waived their rights to dividends.

9. Notes to the cash flow statement

(a) Reconciliation of operating profit to net cash from operating
activities

                                                               2006       2006
                                                         Continuing      Total
                                                    2007 (Restated) (Restated)
                                                      £m         £m         £m

Operating profit                                   131.8      114.8      175.2
Adjustments for:
Profit on derivatives                                  -      (1.9)      (1.9)
Share based compensation                             2.9        5.0        6.9
Profit on sale of other non-current financial                 
assets                                                 -      (6.1)      (6.1)
Loss/(profit) on sale of property, plant and                  
equipment                                            0.2      (1.8)      (1.8)
Depreciation of property, plant and equipment        5.8        6.9        8.0
Amortisation of intangible assets                    1.4        1.1        1.1
Increase in provisions for liabilities and                      
charges                                              2.8        0.6        1.1
Outflow from retirement benefit obligations        (2.5)      (2.1)      (2.1)
Increase in non-current liabilities                    -        1.1        1.1
Operating cash flows before movement in working               
capital                                            142.4      117.6      181.5
(Increase)/decrease in trade and other                         
receivables                                       (15.1)       29.6       39.1
(Increase) in net settlement balances              (2.3)      (0.3)      (6.2)
Decrease in net long and short positions               -          -       14.3
Increase/(decrease) in trade and other payables     19.6     (16.3)      (9.9)
Cash generated from operations                     144.6      130.6      218.8
 
Income taxes paid                                 (32.9)     (28.0)     (41.1)
Interest paid                                     (28.9)     (13.6)     (14.1)
 
Net cash from operating activities                  82.8       89.0      163.6

The 2006 cash flow statement has been restated to reflect the
reclassification in the 2005 balance sheet of £7.7m net long and short
positions to net settlement balances in order to more fairly reflect the
nature of the underlying activities.

(b) Cash flow from continuing operations

The cash flow statement below shows cash flows from continuing
operations for both 2007 and 2006.
                                                        2007   2006
                                                          £m     £m

Net cash from operating activities                      82.8   89.0
Investing activities
(Purchase)/ sale of other non-current financial
assets                                                 (0.3)    7.4
Interest received                                       13.2   10.0
Dividends from associates                                0.9      -
Dividends received from fixed asset investments          0.2      -
Proceeds on disposal of property, plant and
equipment                                                  -    2.0
(Purchase)/sale of available for sale assets           (0.1)    7.2
Purchase of intangible fixed assets                    (1.1)  (0.6)
Purchase of property, plant and equipment              (5.5)  (4.1)
Acquisition of subsidiaries                           (25.9)      -
Repayment of acquisition consideration                   0.7      -
Net receipts from Collins Stewart                          -   11.2
Net cash from investment activities                   (17.9)   33.1
 
Financing activities
Dividends paid                                        (21.1) (33.8)
Dividends paid to minority interests                   (0.9)  (0.2)
Return of capital                                    (301.5)      -
Purchase of own shares to meet share based awards
(net)                                                 (10.9) (14.6)
Taxation credit on share option exercises                  -    0.3
Drawdown of bank loan                                  297.2      -
Return of capital and demerger transaction costs       (1.0)  (2.2)
Repayment of obligations under finance leases          (0.5)  (0.5)
Net cash used in financing activities                 (38.7) (51.0)
 
Net increase in cash and cash equivalents               26.2   71.1
 
Net cash and cash equivalents at the beginning of
the year                                               236.2  178.6
Effect of foreign exchange rate changes                (0.3) (13.5)
 
Net cash and cash equivalents at the end of the
year                                                   262.1  236.2

10. Analysis of net funds

Continuing                At 1    Cash Non-cash   Acquired    Exchange    At 31
operations 2007        January    flow    items       with differences December
                          2007                  subsidiary                 2007
                            £m      £m       £m         £m          £m       £m
 
Cash in hand and at      160.7    17.4        -          -       (0.7)    177.4
bank
Cash equivalents          73.4     8.6        -          -         0.4     82.4
Client settlement          2.3     0.1        -          -           -      2.4
money
Overdraft                (0.2)     0.1        -          -           -    (0.1)
                         236.2    26.2        -          -       (0.3)    262.1
 
Bank loans within one        -  (30.0)        -          -           -   (30.0)
year
Bank loans after one         - (267.2)    (0.7)          -           -  (267.9)
year
Loans due within one     (0.1)       -        -          -           -    (0.1)
year
Loans due after one    (148.7)       -    (0.5)          -           -  (149.2)
year
Finance leases           (3.2)     0.5    (0.2)          -       (0.3)    (3.2)
                       (152.0) (296.7)    (1.4)          -       (0.3)  (450.4)
 
Other financial assets    27.0     0.3        -        1.1       (0.1)     28.3
 
Total net funds          111.2 (270.2)    (1.4)        1.1       (0.7)  (160.0)


OTHER INFORMATION

The Annual General Meeting of Tullett Prebon plc will be held at
Level 37, Tower 42, 25 Old Broad Street, London EC2N 1HQ on 15 May 2008 at
3.00pm.