Final Results

14th February 2011

Fidessa group plc

Preliminary results for the year ended 31st December 2010

Fidessa delivers a strong performance despite challenges in the financial markets

Highlights for the year ended 31st December 2010:

·; Revenue up 10% with 81% of total revenue recurring.

·; Cash of £63m and no debt.

·; Special dividend of 45.0p per share proposed in addition to annual dividend of 33.0p per share.

·; Adjusted operating profit up 11% and higher margin maintained.

·; Over 100 new clients signed with progress across all regions.

·; Increased market share illustrated through range of metrics.

Commenting on these results, Chris Aspinwall, Chief Executive, said:

"Fidessa has delivered good growth throughout 2010 with progress across all regions, despite the challenges still remaining in the financial community. These challenges include uncertainty with regard to regulation and the macroeconomic environment as well as structural pressure on many participants running over from the financial crisis. However, the quality of our products and our leading position in the market have enabled us to continue to sign significant new business whilst also being able to maintain our existing customers through helping them to manage their costs. This has enabled us to deliver a strong performance with good growth for the year.

The strength of our business has been reflected in a number of key metrics, including an increase of around 25% in the value of transactions going through our network, and our cash balance which has reached £63.0 million (2009: £45.5 million) after paying a special dividend of 40 pence per share (£14.2 million) during 2010. The strength has also been reflected in a series of industry awards confirming that Fidessa is the platform of choice within the financial markets. These awards included the best trading system for our sell-side offering as well as best front office provider and best compliance solution for our buy-side product suite."

Commenting on current trading, Chris Aspinwall continued:

"Looking ahead, we believe our markets will remain difficult for some time to come, although we believe there will still be growth opportunities. In particular we are already seeing an increase in the level of consultancy we are providing, which is often a lead indicator, and we have a sound sales pipeline coming into 2011. As a result, we believe that the strength of our business will enable us to deliver further good growth in 2011, with this growth likely to be at similar levels to that which we have seen during 2010. We also believe that on an approximate 24 month timeframe, we will see improvements in market sentiment starting to come through as financial firms adjust to the new environment, and regulation and market structure become clearer. As a result of this anticipated improvement, we are starting to cautiously increase our development spending and therefore expect that our margin is likely to reduce slightly in 2011, although we expect it will continue to be above historic levels.

Looking further ahead, we believe that Fidessa will play an increasingly important role in providing the solutions that the industry needs and will continue to be an important participant within the financial community. We expect that as the markets develop, this will result in further significant growth opportunities, and we will maintain our strategy of investment in the business to bring the right solutions to our customers across all the regions in which we operate."

Financial Summary

In 2010, Fidessa delivered good growth in revenue, up 10% to £262.3 million (2009: £238.5 million). The growth in recurring and non-recurring revenue was consistent so recurring revenue continues to represent 81% of total revenue, being £213.5 million (2009: £193.9 million).

The breakdown of recurring revenue generated for the year by market sector is £133 million (2009: £122 million) from sell-side trading, £14 million (2009: £14 million) from buy-side trading, £43 million (2009: £37 million) from connectivity and £23 million (2009: £21 million) from market data. On a regional basis, Asia showed the strongest growth with an increase of 22% and now represents 15% of total revenue, whilst Europe grew by 10% and represents 51% of total revenue and North America grew by 5% and represents 34% of total revenue.

The ongoing turbulence arising from the global financial crisis has resulted in some continued impact on the growth rate because of insolvencies, consolidation and cost cutting across the market. We have also observed a slight increase in this activity within our customer base during 2010. In the absence of these events the growth in 2010 could have been at least seven percentage points higher. Further, looking at the effect of the events that have already occurred and the time delay in them being fully reflected in revenue, from what we can currently see, it is likely that the impact on revenue growth in 2011 will be at least five percentage points.

The deferred revenue in the balance sheet at the end of the year was £47.5 million (2009: £47.7 million). As reported in the interim results, the deferred revenue decreased during the first half of the year due to a change in the timing of billing for data services. During the second half of the year the deferred revenue balance has increased in parallel with group revenue.

Strong growth in EBITDA (earnings before interest, tax, depreciation and amortisation) and operating profit has also been achieved. EBITDA has increased by 14% to £49.6 million (2009: £43.5 million), representing an EBITDA margin of 18.9% (2009: 18.2%). The adjusted operating profit was up 11% to £39.8 million (2009: £36.0 million). This represents an operating margin of 15.2% for the year, consistent with the margin achieved in 2009. The adjusted operating profit has been measured before the amortisation of acquired intangibles. The unadjusted operating profit was up 25% to £37.3 million (2009: £29.9 million). Staff numbers have increased in the period but at a slower rate than revenue growth. The average headcount for the year was up 6% at 1,532 (2009: 1,442).

The exchange rates for the countries in which we primarily operate have been relatively stable and for the year as a whole had no material impact on the reported revenue and operating profit.

In 2008, the disposal of the investment in Touchpaper resulted in a material one-off gain. The disposal incorporated retentions in escrow for potential claims against indemnities and warranties in the sale agreement. The period for such claims to be made expired in the year without any material claims being received and resulted in a gain of £2.2 million and interest income of £0.1 million in the year. All proceeds from the escrow have been received and no further income is expected from the Touchpaper disposal.

The underlying tax rate has improved to 31.9% (2009: 33.3%), benefiting from the effect of lower future UK tax rates on deferred tax balances and the mix of earnings from overseas operations. This measure excludes the effect of the majority of the Touchpaper gains being non-taxable. The effective tax rate including these gains is 30.1% (2009: 32.2%). The cash tax rate continues to be materially lower than the charge in the income statement and was 27.9% (2009: 28.5%).

Diluted earnings per share, adjusted to exclude the amortisation of acquisition intangibles, Touchpaper gains and notional interest charge, was up 8% to 74.4 pence (2009: 68.8 pence). The directors believe this measure of earnings per share provides a better indication of the underlying performance of the business. The unadjusted diluted earnings per share was up 28% at 75.6 pence (2009: 58.9 pence).

The business continues to be strongly cash generative, closing the year with a cash balance of £63.0 million (2009: £45.5 million) and no debt. During the year dividends of £25.3 million (2009: £9.3 million) were paid, which included the payment of the 2009 special dividend of £14.2 million (2009: nil). The cash generation was helped by the receipt of the Touchpaper escrow monies and capital expenditure being lower than normal at only 3% of revenue. At the height of the global financial crisis cash collections suffered and the improvement in collections seen towards the end of 2009 has continued throughout 2010. The net cash generated from operating activities was £62.4 million, representing an operating cash conversion rate of 157%.

The ordinary dividend for the full year is being increased by 10% to 33.0 pence (2009: 30.0 pence). The final dividend, if approved by shareholders, will be 22.0 pence, to be paid on 13th June 2011 to shareholders on the register on 13th May 2011, with an ex-dividend date of 11th May 2011. In addition, a special dividend of 45.0 pence (2009: 40.0 pence) is proposed and, if approved by shareholders, will be paid at the same time as the final dividend.

Market Review1

Introduction

As expected, market conditions during 2010 have remained challenging as financial firms come to terms with tighter market conditions at the same time as having to deal with an unclear and potentially difficult regulatory environment. For Fidessa's customers this has resulted in pressure on their revenue and, for some, it has also resulted in a lack of clarity about the likely structure of their operations in the future. The investments that Fidessa has made in a range of products that can assist its customers to reduce their costs and manage their operations more effectively, have left it well positioned to weather the challenges and continue to deliver growth. However, the pressure being felt by customers has delayed some decisions and resulted in some consolidation within Fidessa's customer base. This has made it more difficult for Fidessa to progress some of its newer initiatives as quickly as would normally be expected.

1 The Market Review addresses the structure of the marketplace and therefore differs from the segment reporting which reflects the structure of the business operations focused on the method of delivery to the marketplace.

Fidessa has continued to make good progress in new regions with deals signed in Latin America, the Middle East and the Nordics. This has been on top of further strong growth throughout Asia, where Fidessa has opened a new office in Singapore, as well as solid progress in the core markets in North America and Europe. The number of customers using Fidessa's services has continued to increase with 900 firms taking solutions from Fidessa and over 26,0002 users.

Whilst market conditions for the financial community are still challenging, there is a growing realisation that the markets are stabilising and the level of business firms are seeing is perhaps the new normal. As a result, more customers are looking at how they move forward in the current environment and this is starting to create new opportunities. Fidessa expects this cycle to continue during 2011 and will combine with the growing clarity around regulation and market structure. As a result, Fidessa believes that on an approximate 24 month timeframe it will see improvements in market sentiment starting to come through. In anticipation of this Fidessa is now starting to slowly increase its development spending and, among other initiatives, has invested in more development resource in Asia and announced the expansion of its Belfast development centre. It is expected that this increase in development spending will have a small impact on margin for 2011, although the margin is still expected to stay above historic levels.

2 Fidessa expects to review its total user count during 2011 to take account of differences in the calculation of enterprise and Software-as-a-Service (SaaS) users and also to reflect the growing number of users of Fidessa's web portal services (not included in the current number).

Buy-side Trading

The buy-side business has been challenging during 2010 with difficult market conditions. The gentle improvement in market sentiment seen during the first half of 2010 did not translate into significant new sales and this slowed progress both with existing products and the newer propositions. The exception to this has been in the area of compliance where Fidessa has continued to make progress as firms ready themselves for increased regulation, and the first sale of the Sentinel compliance product has been made in the Japanese market. In addition, the important element of recurring revenue strengthened in the second half of 2010, and good growth is expected to return to the business during 2011.

During 2010, Fidessa has changed the management within the buy-side business and has focused on developing the business as a high quality strategic partner with a robust delivery methodology. In doing this, it is moving away from the entrepreneurial start-up that was acquired in 2007 to a more mature business model consistent with Fidessa's sell-side operations. This is a natural evolution for the business and aligns with a growing trend that Fidessa is seeing for larger customers to look for long-term strategic relationships that can deliver cost effective, cross asset, global solutions. Broadening the scope of the relationship and taking increased responsibility in implementing the sophisticated products in this way both increases the effectiveness of the end solution, whilst also significantly reducing the total cost of ownership. This activity has already delivered some significant success, with around 10 partnership deals signed with existing major enterprise customers. These cover strategic product development, fully managed upgrades and outsourced operational services in both Europe and North America. In Asia it has resulted in the successful go live of our first customer in mainland China.

Fidessa has continued to win deals with over 30 new buy-side clients signed. A significant number of these deals have been in the workstation and connectivity services space reflecting an appetite towards lower cost and outsourced solutions. This is an area where Fidessa will increase its development focus over the next period.

The strength of Fidessa's portfolio of buy-side products has been recognised in the industry with a number of awards including best compliance solution for Sentinel at the Buy-Side Technology awards, and best front office provider at the annual Funds Europe Awards. These awards confirm that Fidessa continues to be seen as a provider of market leading solutions to buy-side firms and is well positioned for when market conditions improve.

Despite the challenges in 2010, Fidessa expects that its strategy of developing the business model by working with its largest clients and expanding its workstation and operational services, will build on the sound foundation that it has established. As a result, Fidessa believes that the buy-side business will deliver good overall growth in 2011.

Global Connectivity and Market Data

Challenging conditions have continued to affect the financial community throughout 2010. Despite these factors, the demand for fast, reliable information and market connectivity has remained, and the strength of Fidessa's market-leading connectivity services meant its share of global trading volume has continued to increase.

Buy-side firms continue to trade more asset classes electronically across more international markets, as they search for alpha and for ways to remain competitive. This means that globally they require access to more brokers than ever before. At the same time the sell-side brokers need more than ever to protect their transactional business flows, and so compete to diversify and offer more sophisticated services across more asset classes to more global venues. The venues themselves are also fighting to retain and attract order flow as fragmentation continues to dominate, and so are expanding the trading services that they offer and the asset classes that they support.

Against this backdrop lies an ever-evolving regulatory environment, which in recent years has driven a proliferation of new, alternative trading venues and caused trading liquidity to fragment. However, there are now clear signs that venues are consolidating, pooling their resources to improve their efficiency and compete more effectively.

Fidessa's connectivity solutions allow all these entities to communicate by providing low-latency access direct to exchanges, dark pools and other trading venues. It then allows buy-side investment firms to smart-route their orders to a broad spectrum of brokers and provides the tools needed to monitor and manage all their connectivity on a global basis.

During 2010 Fidessa's network community has continued to grow and it now supports over 13,000 connections carrying an order flow value of around $800 billion every month representing a 25% increase on a year ago. Advanced trading strategies, such as algorithmic and high frequency trading, have also helped drive network activity, as well as drive demand for faster trading links.

Despite already offering a global footprint to clients, new trading venues are still appearing, and interest in emerging regions is increasing. As such Fidessa has continued to extend its network reach by adding further markets in South-East Asia, Latin America and Japan. Investment in the infrastructure has also continued with new network hubs opened in Singapore and planned in Scandinavia.

As well as providing access to traditional equity markets, the demand for more exotic instruments, such as derivatives, continues to grow and 20% of destinations on the Fidessa network now support these asset classes too. In the US, in particular, more and more brokers are now receiving US equity options flow across the network, and the interest in trading derivatives contracts generally within the Fidessa community has increased.

Alongside global connectivity comes the need for fast, accurate market data, and Fidessa has continued to expand its capabilities in this area. New markets are always being added and technology upgraded to cope with increased data traffic. With data handling "ticker plants" located in key financial centres around the world, Fidessa's market data content is rapidly becoming a valuable asset in its own right. Although market data has been a core part of Fidessa's trading products for some time, a standalone, direct "datafeed" solution was launched in 2010, with eight clients signed to take this new service. This clearly demonstrates the independent value that Fidessa's investment in data collection has provided.

Looking forward, new regulations such as Dodd-Frank in the US and MiFID II in Europe are expected to fuel initiatives at trading venues, as they take advantage of the opportunities created. Although not yet certain, a focus on derivatives instruments in particular is anticipated as trading in these instruments may be forced "on exchange" and demand will grow for fast and comprehensive access to these evolving markets around the world.

The connectivity and data services that Fidessa now offers remain key and integrated parts of the trading solutions available, as well as valuable standalone services in their own right. The immense value of the trading community now connected through these services is clearly evident, and the desire to be a part of this community is now proving to be a draw in its own right.

Sell-side Trading

Pressure on the sell-side financial community has continued in 2010, with trading volumes still down on historical highs across much of the world. Overall headcount within many trading firms has remained generally flat, as firms attempt to leverage the people they have and find ways to do more with less. Both large and small firms are under consistent pressure to focus on reducing their costs and improving their efficiency as they face a tighter market with lower commissions, and all are striving to offer more and better services in order to remain competitive.

Against this backdrop Fidessa has continued to make steady progress, as its market-leading products position it firmly as a key supplier in the space. New clients have come on board to take advantage of the efficiencies that a complete trading workflow solution can achieve, and new and existing clients alike have looked to develop new services and expand their offerings into new niche areas.

For many firms, a drive to look outside their domestic markets is clearly apparent. Larger firms have been expanding into new regions over the last few years, particularly into Asia, and this theme is now being followed by smaller firms who are seeing a similar opportunity. In total Fidessa has signed over 80 new clients in the year for its trading solutions with these clients spread across the world.

In EMEA, additional clients were signed in Scandinavia and Germany, as well as Fidessa's first large sell-side client in the Middle East. In Europe, the fragmentation of liquidity away from traditional exchanges and onto new venues has continued, which has driven a preference for regional or international trading solutions over purely domestic systems, as well as the desire for advanced trading tools such as Smart Order Routing (SOR). The spread of technology across the central market landscape is also set to continue with the Oslo exchange in Norway migrating onto London market technology, Warsaw planning to migrate to NYSE technology and fragmentation developing in Scandinavia.

In North America Fidessa saw significant new business during the year with over 30 new clients signing for Fidessa's Software-as-a-Service (SaaS) trading solution. In the US a key driver has been in the equity options space, where firms want to handle the options and underlying cash instruments in a single integrated solution. In Canada, the marketplace has been rapidly embracing new trading venues and the liquidity fragmentation that ensues. This has driven the demand for sophisticated trading workflow systems which Fidessa, through its growing regional presence, has been well positioned to support. In the light of this growth and in order to provide the best possible service to the Canadian market, Fidessa has announced plans to open two new data centres in Canada during the first half of 2011.

Interest in Asia remains strong with many international firms, including the large domestic Japanese banks, setting up operations in Hong Kong which is seen as the logical gateway to the region. With Hong Kong being by far the largest IPO market in 2010, there is a strong anticipation that this market is likely to deliver further opportunities. As would be expected, volumes in the region have been picking up and this is attracting more alternative trading venues which, if successful, are likely to create requirements for more sophisticated execution tools. In Japan the launch of the Tokyo Stock Exchange's (TSE) new Arrowhead exchange platform has also fuelled opportunities, driving demand from tier two firms for more sophisticated trading platforms. The high performance nature of the new TSE system has also driven demand for High Frequency Trading (HFT) tools which Fidessa's advanced architecture is ideally placed to deliver. During 2010, Fidessa was named the best sell-side trading platform in the Asian Banker Markets and Exchanges awards confirming its growing presence and reputation in the region.

In 2010 Fidessa celebrated 10 years of providing Software-as-a-Service (SaaS) trading services and was recognised for its achievements winning Best Sell-side Trading Platform and Best Order Management System from the Financial News and Banking Technology respectively. From small beginnings with a single client in London, Fidessa's SaaS solution has developed into a world leader serving over 230 brokers located in financial centres all around the globe.

Looking forward, the markets are expected to evolve across a number of different themes. Although much of it has still to be finalised, regulation is expected to be a significant driver for change and open up a number of potential opportunities. In Asia Pacific, the Australian market is set for change as the local regulator (ASIC) looks to open up the market to alternative trading venues and so alter the trading landscape by introducing new competition. In Europe MiFID II is expected to address new asset classes, although this is not expected to materialise until the end of 2011. In the US, the Volker Rule already appears to be forcing some larger institutions to spin out their proprietary trading businesses into separate entities, and the SEC's ruling, banning buy-sides from "naked access" to markets, is forcing brokers to have high performance systems in place which can manage real-time risk and exposure control.

Fidessa believes the trend for multi-asset systems is likely to continue, with particular interest around derivatives. Fidessa's investment in this area over recent years has positioned it well to take advantage of this opportunity, and Fidessa believes that the momentum will increase over the next few years, spurred on by a number of key drivers. The current regulatory trend is likely to demand greater transparency across derivative trading and this is likely to drive some Over The Counter (OTC) trading onto exchanges and other lit liquidity venues, significantly increasing the volumes traded in this way. The derivative market is also shaping up to be a key battleground for the primary exchanges as they battle with other liquidity venues for market share, and more of these venues are already investing in the infrastructure required to enable them to trade derivative instruments. Sell-side firms themselves are keen to realign their technology away from asset-centric silos, driven by the need to get more value from their technology investment and deliver greater efficiency. Fidessa believes that all of these trends should play towards its strengths, enabling it to realise the investment it is making in a world leading derivative trading platform.

Whilst the exact timing of developments within the market is always difficult to predict, Fidessa expects that it will see increasing opportunities for expansion and growing requirements for new products across its customer base.

2010 Important Events

During 2010 the key event in the Group's development has been the implementation of the Group's business plan against the background of challenging markets and an unstable macroeconomic environment. The unpredictable nature of the markets has increased the level of risk faced by the Group compared to prior years. Despite this environment, the Group has continued to deliver good growth through focus on market requirements, delivering lower cost of ownership whilst still allowing customers to maintain their position in the market. In particular, the Group has provided solutions allowing its customers to participate within the more fragmented liquidity environment and increase their connectivity to electronic trading flows whilst developing their operations within new regions.

Other important events are as noted elsewhere in this results announcement.

Risk Factors

As with all businesses, the Group is affected by certain risks, not wholly within its control, which could have a material impact on the Group's performance and could cause actual results to differ materially from forecast and historic results.

The principal risks and uncertainties facing the Group include: the current state of the world's financial markets, regulatory issues affecting Fidessa and/or its customers, customers' financial stability and ability to pay, M&A activity within the customer base and within the technology sector, dependence on Fidessa's core technology, competition, levels of operational spending versus revenue, other economic and market conditions, volatile exchange rates, continued service of executive directors and senior managers, hiring and retention of qualified personnel, product errors or defects, lawsuits and intellectual property claims.

In addition to the foregoing, the primary risk and uncertainty related to the Group's performance for 2011 is the challenging macroeconomic environment caused by the global financial crisis, which could have a material impact on the Group's performance over the year and could cause actual results to differ materially from expected and historical results. A continued downturn in buy-side trading or in company market valuations, or an increase in discount rates, could result in an impairment to the carrying value of goodwill from the LatentZero acquisition.

Outlook

Fidessa believes that its market will remain difficult for some time to come, although it expects there will still be growth opportunities. In particular Fidessa is already seeing an increase in the level of consultancy it is providing, which is often a lead indicator, and there is a sound sales pipeline coming into 2011. As a result Fidessa believes that the strength of its business will enable it to deliver further good growth in 2011, with this growth likely to be at similar levels to that seen during 2010. Fidessa also believes that on an approximate 24 month timeframe, there will be improvements in market sentiment starting to come through as financial firms adjust to the new environment, and regulation and market structure become clearer. As a result of this anticipated improvement, Fidessa is starting to cautiously increase its development spending and expects that the margin is likely to reduce slightly in 2011, although it is still expected to be above historic levels.

Looking further ahead, Fidessa believes that it will play an increasingly important role in providing the solutions that the industry needs and will continue to be an important participant within the financial community. Fidessa expects that as the markets develop, this will result in further significant growth opportunities, and it will maintain its strategy of investment in the business to bring the right solutions to its customers across all the regions in which it operates.

Enquiries:

Consolidated income statement

for the year ended 31st December 2010

Consolidated statement of comprehensive income

for the year ended 31st December 2010

Consolidated balance sheet

at 31st December 2010

Consolidated statement of changes in shareholders' equity

Consolidated cash flow statement

for the year ended 31st December 2010

Notes to the consolidated financial statements

1 Preparation of the Preliminary Announcement

The preliminary results announcement for the year ended 31st December 2010 has been prepared by the directors based upon the results and position which are reflected in the statutory accounts. The statutory accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("Adopted IFRS").

The financial information for the year to 31st December 2010 and 2009 do not constitute statutory accounts and has been extracted from the Company's consolidated accounts for the year to 31st December 2010.

Statutory accounts for 2009 have been delivered to the Registrar of Companies, and those for 2010 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain statements under section 498(2) or 498(3) Companies Act 2006.

2 Segment reporting

The Market Review accompanying these annual financial statements reports on the marketplace that Fidessa addresses and therefore the sub-headings within that section of the report reflect the structure of the marketplace. The segment reporting reflects the structure of the business operations which are focused on the method of delivery to the marketplace.

The business is structured into three business units: Enterprise, Hosted and Buy-side. Shared and support services such as core product development, office costs and overhead functions, are controlled and monitored centrally. The primary management and performance monitoring is undertaken by the Operating Board which comprises the heads of the business units and global functional heads.

The Enterprise business unit is focused on providing tailored solutions for large sell-side customers, packaging and integrating our products, services and consultancy and working with our customers to deliver a complete solution. The Hosted business unit is focused on the software as a service (SaaS) delivery model allowing rapid deployment of complex workflow across a wide sell-side customer base. The Buy-side business unit is primarily focused on providing tailored solutions for large buy-side customers, packaging and integrating our products, services and consultancy and working with our customers to deliver a complete solution. All segments leverage our products in the areas of connectivity and market data across our sell-side and buy-side customer base. The Hosted business unit has responsibility for the provision of the connectivity and market data services. The inter-business unit revenue relates to the provision of the connectivity and market data services and the provision of components of the hosted service for implementation to enterprise customers.

Revenue and direct costs are reported by business unit to present a profit contribution for each unit, such revenue and costs being measured and reported to the Operating Board. The Operating Board monitors overall operating profit excluding amortisation of acquisition intangibles and product development capitalisation and amortisation, which is not an IFRS measure. Finance income, finance costs, assets and liabilities are not reported by business unit.

No single external customer accounts for 10% or more of the Group revenue. Recurring revenue reflects the periodic fees for software and related services that is charged on a rental or subscription basis. Non-recurring revenue comprises the consultancy fees for implementation, configuration and ongoing support activity.

A reconciliation of business unit profit contribution to profit before income tax is provided as follows:

Other segmental disclosures:

Individual countries within Asia do not meet the disclosure requirements of IFRS8 Operating Segments but in aggregate their revenues are sufficiently material that disclosure has been made. Revenue is attributed to a country based on the ownership of the customer contract and where the work is being performed.

3 Operating expenses

4 Staff numbers

The average number of people employed by the Group during the year was as follows:

The number of people employed by the Group at 31st December each year was as follows:

5 Finance income

6 Income tax expense

7 Earnings per share

Earnings per share have been calculated by dividing profit attributable to shareholders by the weighted average number of shares in issue during the year, details of which are below. The diluted earnings per share have been calculated using an average share price of 1411p (2009: 1017p) for the year.

Basic and diluted earnings per share have been adjusted to exclude the amortisation of acquisition intangibles, notional interest charge and gains relating to Touchpaper. Management consider that earnings per share after these adjustments provide a better year to year comparison of performance.

8 Sale of investment in Touchpaper in 2008

In July 2001 the royalblue technologies help desk and call centre software business was divested by the Company with a minority stake being retained. The business subsequently changed its name to Touchpaper Group Limited ("Touchpaper"). Following the divestment, the Company held financial assets in Touchpaper comprising preference shares, ordinary shares, warrants to subscribe for ordinary shares and loan notes. Since July 2001 the Company had no financial influence or operational involvement in the Touchpaper business and their results had not been consolidated into Fidessa's performance. In the year to 31st December 2007 Touchpaper had reported revenue of £17.5 million, profit before tax of £0.4 million and gross assets of £9.4 million under UK GAAP.

On 30th June 2008 Avocent Ireland Holdings Limited acquired the entire share capital of Touchpaper and the preference shares and loan notes were redeemed. The Company received proceeds in 2008 of £11,035,000 for the sale and redemption of the ordinary and preference shares, £1,900,000 for the redemption of the loan notes and £488,000 for the accrued interest on the loan notes.

The sale agreement provided for amounts held in escrow in respect of working capital at completion as well as indemnities and general warranties. During 2009, £346,000 was received in settlement of the working capital at completion escrow. The period for indemnity and general warranty claims expired on 30th June 2010. £1,180,000 of the value of this escrow was recognised in 2009 and a further £2,179,000 has been recognised in 2010. All cash in respect of the indemnities and general warranties escrow has been received during 2010 and no further proceeds are expected.

9 Trade and other receivables

10 Trade and other payables

11 Dividends

On 29th March 2010 the 2009 second interim dividend of 20.0 pence per share, £7,110,000, (2009: final dividend for 2008 of 17.0 pence per share, £5,988,000) was paid. Also, on 29th March 2010 a special dividend of 40.0 pence per share, £14,219,000, was paid. On 27th September 2010 an interim dividend of 11.0 pence per share, £3,926,000, (2009: 10.0 pence per share, £3,543,000) was paid.

The directors propose a final dividend of 22.0 pence per share, £7,893,000, and a special dividend of 45.0 pence per share, £16,145,000. These will be payable on 13th June 2011 to shareholders on the register on 13th May 2011, with an ex-dividend date of 11th May 2011. These dividends are subject to approval by shareholders at the Annual General Meeting and have not been included as a liability in these financial statements.