London Stock Exchange Group is publishing interim results for the three months ended 30 June 2014 (Q1), to provide latest financial information in connection with the Group's proposed acquisition of Frank Russell Company and associated fully underwritten rights issue.
- Strong financial performance - Q1 adjusted total income1 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
- Adjusted operating expenses1 up 8 per cent to £175.7 million, reflecting inclusion of acquisitions, including LCH.Clearnet (Q1 FY 2014: £162.1 million)
- Core operating expenses1, excluding impact of acquisitions and FX, decreased 3 per cent
- Strong operational leverage with adjusted operating profit1 up 25 per cent at £148.2 million (Q1 FY 2014: £118.2 million); operating profit up 36 per cent at £102.0 million (Q1 FY 2014: £74.8 million)
- Adjusted profit before tax1 up 26 per cent at £129.8 million (Q1 FY 2014: £103.1 million); profit before tax of £83.6 million (Q1 FY 2014: £59.7 million)
- Adjusted basic EPS1 up 18 per cent at 31.9 pence (Q1 FY 2014: 27.0 pence); basic EPS of 19.2 pence (Q1 FY 2014: 13.1 pence)
- 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 (CC&G and Monte Titoli) 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 Frn of Frank Russell Company on 26 June 2014; a Circular for a shareholder meeting and a Prospectus for the accompanying rights issue is expected to be posted later today
Commenting on performance of the Group, Xavier Rolet, Chief Executive said: “We continue to make good progress, delivering a strong financial performance this quarter with an increase in operating profit, reflecting organic growth and inorganic revenues across the Group. We have seen a resurgence in the IPO market with an increase in both the number of companies joining our markets and the amount of money raised. While the summer period is seasonally slower, our diversified business is very well positioned for further growth.
“As previously stated, the proposed acquisition of Russell Investments will 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. We continue to make good progress on obtaining the necessary approvals to complete the acquisition and to deliver the financial benefits of the transaction to the Group.”
Current trading and outlook
In primary markets, new issues remained strong in July with 28 new issues on the Group’s UK and Italian markets, compared with a total of 25 in July last year. The amount of money raised in the month also rose, doubling to £5.2 billion. New issue activity has continued in August, with 7 IPOs so far in what is normally a seasonally quiet period.
In secondary markets, cash equities trading in London increased 6 per cent in July compared with the same month last year. Trading in July in Italy was also good with a 25 per cent rise year on year in the number of trades, and Turquoise delivered a 23 per cent increase in pan-European value traded. In fixed income markets, MTS saw year on year growth in both cash and repo trading in July, up 27 and 4 per cent respectively. Fixed income and equities trading across the Group’s markets to date in August has been good with average daily volumes above the levels for the same month last year. Both FTSE and LCH.Clearnet have continued to perform well since the quarter end.
The Group has made good progress so far in the financial year. Activity in both primary and secondary markets so far in the current quarter has been good and the pipeline of companies seeking to raise capital on the Group’s markets remains encouraging. Overall, 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 a pre-close update for the five month period to 30 August 2014 on 10 September 2014
1 before amortisation of purchased intangibles, non-recurring items and unrealised net investment gains/losses at LCH.Clearnet.
All comparisons are against the same corresponding period in the previous year unless stated otherwise.
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