31 July 2014

LSE posts 16% Q1 income rise

16 July 2014  |  689 views  |  0 Source: London Stock Exchange Group

Strong financial performance - Q1 total income up 16 per cent to £323.9 million Revenue increased 20 per cent overall and 12 per cent on an organic and constant currency basis, with growth across nearly all business segments

  • Capital Markets revenues up 16 per cent, with strong growth in primary markets as the number of new issues more than doubled; secondary markets benefitted from improvements in fixed income trading and Italian cash equity volumes
  • Post Trade Services (Italy) revenues up 4 per cent, and up 8 per cent on an organic and constant currency basis with increases in clearing volumes and within settlement and custody
  • LCH.Clearnet total income up 14 per cent on a pro forma, constant currency basis, with good growth in OTC and commodities revenues
  • Information Services revenues up 5 per cent, reflecting good performances from FTSE and a number of other services
  • Technology Services revenues declined 8 per cent, mainly as the result of the phasing of customer deliveries
  • The Group announced the proposed acquisition of Frank Russell Company on 26 June 2014; preparation of a Circular for a shareholder meeting and a Prospectus for the accompanying rights issue is underway, with posting expected in late August

 Commenting on performance in Q1, Xavier Rolet, Chief Executive, said:

"We have made good progress in the first quarter, delivering a strong financial performance reflecting organic growth and inorganic revenues across the Group. We have been pleased by the continued resurgence in the IPO market with an increase both in the number of companies joining our markets and the amount of money raised.

"The proposed acquisition of Russell Investments will also help to expand the global footprint of the Group, particularly in the key U.S. market. This is a strong strategic acquisition for the Group, which will accelerate development in one of our core strengths, intellectual property, and offers significant growth potential.  In the coming months, we will focus on obtaining the necessary approvals to complete the acquisition and to deliver the financial benefits of the transaction to the Group."

Financial Position

Prior to the announcement of the proposed acquisition of Frank Russell Company, the Group put in place new, committed, multicurrency revolving credit facilities of £600 million for a term of up to 3 years. The new facilities have been arranged on similar terms to the Group's existing £700 million syndicated deal, signed in July 2013, and are available for part financing the Russell transaction.  Other than these new arrangements, and normal scheduled coupon payments on longer term debt in the quarter, there are no material changes to the Group's financial position since the financial year end.

The euro weakened against sterling compared with the same period last year, from €1.18 to €1.23. To illustrate our exposure to movements in this exchange rate, a €0.05 change in the average euro:sterling rate would have resulted in a change to total income of c£7.3 million for Q1

Current trading and outlook

The Group has made good progress in the start to the new financial year.  As we enter the seasonally quieter summer period, the Group remains well placed to benefit from continued positive market trends through its increasingly diversified businesses and from the work to realise the previously announced integration synergies at LCH.Clearnet Group.

 The Group expects to provide interim financial results for the period to 30 June 2014 at the time of the release of the Prospectus in connection with the acquisition of Frank Russell Company.

 Further information is available from:

London Stock Exchange Group plc

Gavin Sullivan - Media

Paul Froud - Investor Relations

+44 (0) 20 7797 1222

+44 (0) 20 7797 3322

 

 

 

RLM Finsbury

David Henderson / Mike Turner

+44 (0) 20 7251 3801

 

 

A conference call for analysts and investors will be held at 9:00 (UK time) on Wednesday 16th July.  On the call will be David Warren (CFO) and Paul Froud (Head of Investor Relations).

To access the Telephone conference call dial 0800 376 7922 or +44 (0) 2071 928 000

Conference ID: 7330 9625

Q1 Revenue Summary

Revenues for three months ended 30 June 2014, with comparatives against performance for the same period last year, are provided below.  Growth rates for performance are also expressed on an organic and constant currency basis.  All figures are unaudited.

 

Organic and

Three months   ended

constant

30 June

currency

2014

2013

Variance

variance1

£m

£m

%

%

Revenue

Capital   Markets

87.0

75.0

16%

14%

Post   Trade Services

26.0

25.1

4%

8%

LCH.Clearnet   2

83.2

49.0

70%

21%

Information   Services

88.0

83.9

5%

7%

Technology   Services

14.3

15.5

(8%)

(2%)

Other

1.4

1.2

17%

17%

Total   revenue

299.9

249.7

20%

12%

Net   treasury income through CCP business

CC&G

7.5

16.7

(55%)

(53%)

LCH.Clearnet 2

15.1

11.7

29%

(13%)

Other   income

1.4

2.1

(33%)

(30%)

LCH.Clearnet   unrealised gain / (loss)

0.7

(1.2)

-

-

Total   income including unrealised

324.6

279.0

16%

7%

Total   income excluding unrealised

323.9

280.2

16%

7%

1Exchange rates for the relevant period are detailed at the end of this section
 Adjustments to calculate organic growth:

1)      Removal of EuroTLX and Bonds.com revenue (Capital Markets - Fixed Income)

2)      LCH.Clearnet pro forma for three months

3)      MTS Indices remove from Capital Markets Fixed Income revenue and include in Information Services FTSE revenue

2LCH.Clearnet represents two months ended 30 June 2013

More detailed revenues by segment are provided in tables below:

 

Capital Markets

Organic and

Three months   ended

constant

30 June

currency

2014

2013

Variance

variance1

Revenue

£m

£m

%

%

Primary   Markets

Annual   fees

11.0

10.0

10%

11%

Admission   fees

14.3

9.5

51%

52%

 

25.3

19.5

30%

31%

Secondary Markets

Cash   equities UK & Turquoise

24.5

24.2

1%

1%

Cash   equities Italy

10.0

8.6

16%

20%

Derivatives

4.9

5.0

(2%)

2%

Fixed   income

19.9

15.5

28%

10%

 

59.3

53.3

11%

7%

Other

2.4

2.2

9%

14%

Total   revenue

87.0

75.0

16%

14%

 

1 Removal of EuroTLX and Bonds.com revenue (Capital Markets - Fixed Income) and

MTS Indices removed from Capital Markets Fixed Income revenue and included in Information Services FTSE revenue

 

Post Trade Services

Three months   ended

Constant

30 June

currency

2014

2013

Variance

variance

£m

£m

%

%

Revenue

Clearing

10.2

10.1

1%

5%

Settlement

5.0

4.4

14%

19%

Custody   & other

10.8

10.6

2%

6%

Total   revenue

26.0

25.1

4%

8%

Net   treasury income

7.5

16.7

(55%)

(53%)

Total   income

33.5

41.8

(20%)

(17%)

 

 LCH.Clearnet

Organic and

Three months   ended

constant

30 June

currency

2014

20132

Variance

variance1

Revenue

£m

£m

%

%

OTC

SwapClear

26.8

14.9

80%

25%

ForexClear   / CDSClear

7.3

2.7

170%

85%

 

34.1

17.6

94%

34%

Non-OTC

Fixed   income

11.6

5.4

115%

53%

Commodities

14.1

4.4

220%

164%

Listed   derivatives

9.5

12.4

(23%)

(48%)

Cash   equities

8.4

6.2

35%

(3%)

 

43.6

28.4

54%

9%

Total   Clearing fee revenue

77.7

46.0

69%

19%

Other

5.5

3.0

83%

63%

Total   revenue

83.2

49.0

70%

21%

Net   treasury income

15.1

11.7

29%

(13%)

Unrealised   gain / (loss)

             0.7

(1.2)

-

-

Total   income including unrealised

99.0

59.5

66%

16%

Total   income excluding unrealised

98.3

60.7

62%

14%

1Pro forma represents three months ended 30 June 2013

2LCH.Clearnet 2013 represents two months ended 30 June 2013

 

Information Services

Organic and

Three months   ended

constant

30 June

currency

2014

2013

Variance

variance1

£m

£m

%

%

Revenue

FTSE

44.4

41.7

6%

8%

Real time data

21.3

22.4

(5%)

(3%)

Other information services

22.3

19.8

13%

14%

Total   revenue

88.0

83.9

5%

7%

1 MTS Indices removed from Capital Markets Fixed Income revenue and included in Information Services FTSE revenue

 

Technology Services

Organic and

Three months   ended

constant

30 June

currency

2014

2013

Variance

variance

£m

£m

%

%

Revenue

MillenniumIT

6.0

7.4

(19%)

(9%)

Technology

8.3

8.1

2%

4%

Total   revenue

14.3

15.5

(8%)

(2%)

 

Basis of Preparation

Results for Borsa Italiana and LCH.Clearnet for the period ended 30 June 2014 have been translated into Sterling using the average monthly exchange rate for the period of €1.23: £1.  Constant currency growth rates have been calculated by translating prior period results at the average exchange rate for the current period.

Average   €:£ rate 
  3 months ended 
  30 June 2014

Closing   €:£ rate at 30 June 2014

Average   €:£ rate 
  3 months ended 
  30 June 2013

Closing   €:£ rate at 30 June 2013

 

 

 

 

€   1.23

€   1.25

€   1.18

€   1.18

 

Appendix - Key performance indicators

Capital   Markets - Primary Markets 

Three months ended

30 June

Variance

2014

2013

%

New Issues

UK Main Market, PSM & SFM

33

12

175%

UK AIM

38

18

111%

Borsa Italiana

7

3

133%

Total

78

 

33

136%

Company Numbers (as at period end)

UK Main Market, PSM & SFM

1,371

1,365

0%

UK AIM

1,104

1,085

2%

Borsa Italiana

297

283

5%

Total

2,772

 

2,733

1%

Market Capitalisation (as at period end)

UK Main Market (£bn)

2,270

2,088

9%

UK AIM (£bn)

78

62

26%

Borsa Italiana (€bn)

499

354

41%

Borsa Italiana (£bn)

400

300

33%

Total (£bn)

2,748

 

2,450

12%

Money Raised (£bn)

UK New

7.6

2.0

280%

UK Further

4.8

2.6

85%

Borsa Italiana new and further

7.5

0.3

2400%

Total (£bn)

19.9

 

4.9

306%

 

Capital   Markets - Secondary Markets 

Three months ended

30 June

Variance

Equity

2014

2013

%

Totals for period

UK value traded (£bn)

265

275

(4%)

Borsa Italiana (no of trades m)

16.9

14.3

18%

Turquoise value traded (€bn)

241.4

175.1

38%

SETS Yield (basis points) 

0.66

0.66

0%

Average daily

UK value traded (£bn)

4.2

4.4

(5%)

Borsa Italiana (no of trades '000)

272

227

20%

Turquoise value traded (€bn)

3.83

2.74

40%

Derivatives (contracts m)

LSE Derivatives

2.8

3.7

(24%)

IDEM

8.8

8.1

9%

Total

11.6

 

11.8

(2%)

Fixed Income

MTS cash and Bondvision (€bn)

1,098

807

36%

MTS money markets (€bn term adjusted)

19,997

19,491

3%

MOT number of trades (m)

1.43

1.75

(18%)

 

Post   Trade Services 

CC&G and Monte Titoli

Three months ended

30 June

Variance

2014

2013

%

CC&G Clearing (m)

Equity clearing (no of trades)

17.6

15.2

16%

Derivative clearing (no of contracts)

8.8

8.1

9%

Total

26.4

 

23.3

13%

Open interest (contracts as at period end)

4.4

3.9

13%

Initial margin held (average €bn)

10.3

12.4

(17%)

Monte Titoli

Pre Settlement instructions (trades m)

8.5

7.0

21%

Settlement instructions (trades m)

9.9

7.4

34%

Total Settlement

18.4

 

14.4

28%

Custody assets under management (average €tn)

3.40

3.28

4%

 

LCH.Clearnet 

Three months ended

30 June

Variance

2014

2013

%

OTC derivatives

SwapClear

IRS notional outstanding ($trn)

419

391

7%

IRS notional cleared ($trn)

181.3

127.2

43%

SwapClear members

106

83

28%

CDSClear

Open interest (€bn)

31.0

13.2

135%

Notional cleared (€bn)

19.5

44.5

(56%)

CDSClear members

9

11

(18%)

ForexClear

Notional value cleared ($bn)

212.2

263.3

(19%)

ForexClear members

20

 

15

33%

Non-OTC

Fixed income - Nominal value (€trn)

18.6

18.6

0%

Commodities (lots m)

46.3

34.3

35%

Listed derivatives (contracts m)

42.7

42.6

0%

Cash equities trades (m)

103.8

 

89.9

15%

Average cash collateral (€bn)

46.5

41.5

12%

 

Information   Services

As at

30 June

Variance

2014

2013

%

UK Terminals

Professional - UK

32,000

33,000

(3%)

Professional - International

47,000

48,000

(2%)

Total

79,000

 

81,000

(2%)

Borsa Italiana Professional Terminals

132,000

138,000

(4%)

FTSE ETFs assets under management benchmarked ($bn)

213

163

31%

Total Income - Quarterly

FY 2014

FY 2015

£ millions

Q1

Q2

Q3

Q4

FY 2014

Q1

Annual   Fees

10.0

10.3

10.2

10.7

41.2

11.0

Admission   Fees

9.5

7.6

12.8

10.0

39.9

14.3

Cash   equities UK & Turquoise

24.2

22.2

21.7

26.4

94.5

24.5

Cash   equities Italy

8.6

8.6

9.0

9.9

36.1

10.0

Derivatives

5.0

4.7

4.9

5.0

19.6

4.9

Fixed   Income

15.5

14.5

18.4

19.7

68.1

19.9

Other

2.2

2.3

3.1

2.5

10.1

2.4

Capital Markets

75.0

70.2

80.1

84.2

309.5

87.0

Clearing

10.1

9.0

10.4

10.5

40.0

10.2

Settlement

4.4

3.4

4.2

4.4

16.4

5.0

Custody   & other

10.6

10.6

10.6

10.2

42.0

10.8

Post Trade Services

25.1

23.0

25.2

25.1

98.4

26.0

2 months

OTC   - SwapClear

14.9

26.3

24.5

25.8

91.5

26.8

OTC   - ForexClear / CDSClear

2.7

4.0

4.0

7.4

18.1

7.3

Fixed   income

5.4

8.4

7.0

11.0

31.8

11.6

Commodities

4.4

9.1

9.3

11.3

34.1

14.1

Listed   derivatives

12.4

11.2

11.5

12.9

48.0

9.5

Cash   equities

6.2

8.2

8.7

9.3

32.4

8.4

Other

3.0

(5.0)

(3.8)

        12.9

7.1

          5.5

LCH.Clearnet

49.0

62.2

61.2

90.6

263.0

83.2

FTSE

41.7

42.2

44.2

45.9

174.0

44.4

Real   time data

22.4

22.1

23.0

23.3

90.8

21.3

Other information

19.8

20.1

21.2

22.8

83.9

22.3

Information Services

83.9

84.4

88.4

92.0

348.7

88.0

MillenniumIT

7.4

5.7

7.9

10.5

31.5

6.0

Technology

8.1

8.2

8.1

8.1

32.5

8.3

Technology Services

15.5

13.9

16.0

18.6

64.0

14.3

Other

1.2

0.8

1.4

1.3

4.7

1.4

 

 

 

 

 

 

 

Total Revenue

249.7

254.5

272.3

311.8

1,088.3

299.9

Net treasury income through CCP:

CC&G

16.7

11.4

10.1

9.4

47.6

7.5

LCH.Clearnet

11.7

18.8

17.6

14.1

62.2

15.1

Other   income

2.1

2.2

8.9

1.8

15.0

1.4

LCH.Clearnet   unrealised gain / (loss)

(1.2)

(0.8)

(0.9)

(0.6)

(3.5)

          0.7

Total income including unrealised

279.0

286.1

308.0

336.5

1,209.6

324.6

Total income excluding unrealised

280.2

286.9

308.9

337.1

1,213.1

323.9

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