London Stock Exchange Group interim management statement for the period to 23 January 2013, including revenues and KPIs for the three months ended 31 December 2012.
- Good operational and financial performance in Q3 as the Group continues to benefit from diversified range of businesses
- Total income up 6 per cent on Q3 last year at £208.9 million; 9 months year-to-date up 9 per cent, to £632.5 million
- Information Services revenues up 44 per cent, reflecting both inclusion of FTSE and growth across other information services with revenue up 5 per cent on organic, constant currency basis
- Post Trade Services total income declined 14 per cent, partly reflecting lower trading activity. Treasury management income was good at £27.8 million, compared with a particularly strong period last year (Q3 FY 2012: £33.5 million)
- Capital Markets revenues decreased 4 per cent, with good growth in admission fee income and fixed income trading offset by subdued derivatives and cash equities trading across global markets
- Technology Services revenues up 5 per cent, driven by growth from MillenniumIT
- The Group continues to work towards completion of the acquisition of up to 60 per cent of LCH.Clearnet following clearance by the UK OFT and provisional agreement on a revised offer; shareholder votes to take place following announcement of full terms and conditions of the transaction
Commenting on performance in the past quarter, Xavier Rolet, Chief Executive, said: "This has been another good quarter. The Group has continued to benefit from a more diversified range of businesses with particularly strong performances from our Information Services and our Technology operations.
"We are also pleased with the progress made on our transaction with LCH.Clearnet, having secured competition clearances and agreed a provisional revised offer. We are now focused on obtaining shareholder approval and completing the transaction.
"We look forward to continuing to develop further growth opportunities and innovating across platforms, productss, products and geographies in partnership with our customers."
At the end of December 2012, Group net debt had reduced to £394 million (or £594 million after setting aside the cash held for regulatory and operational support purposes). Since the quarter end, the Group has paid its interim dividend and the semi-annual coupon on its 2016 bonds.
In November 2012, the Group successfully issued a £300 million, 4.75% 9 year sterling fixed rate bond on the Group's ORB platform, providing a more diversified source of longer term financing and extending average debt maturities to over 6 years. As a result, at 31 December 2012, the Group has committed debt and credit lines available for general corporate purposes totalling £1.65 billion, with £1,050 million extending to 2015 or beyond.
The euro weakened against sterling compared with the same period last year. 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£3.9 million for Q3.
On 24th December 2012, the Group announced that it has provisionally agreed that it will make a revised offer for a majority stake of up to 60% of LCH.Clearnet at a price of €15 per share, comprising:
a) €14 per share in cash payable on completion of the transaction; and
b) Up to €1 per share in cash payable on 30 September 2017.
This revised price is based on an assumption of a €300 million capital raise required by LCH.Clearnet to which the Group would subscribe on a pro-rata basis, based on its post transaction shareholding in LCH.Clearnet.
Nearly all regulatory approvals have now been achieved. Clearances were received from competition authorities in the UK and Portugal in December 2012. Clearances were received earlier in Q3 from the Spanish competition authority and the French regulator, ACP. Clearance from the Dutch regulator and from the FSA remain the only outstanding required regulatory approvals.
We continue to work towards finalising an agreement and to provide full terms and conditions of the revised transaction, for which the Group will seek support from shareholders. Shareholder meetings to approve new terms are expected to take place in due course.
Current trading and Outlook
The Group has made good overall progress to date against a backdrop of challenging markets. While early in the new quarter, the Capital Markets businesses have made a positive start to the fourth quarter of the financial year: in primary markets there are good indications of forthcoming new and further capital raising activity; in secondary markets, cash equity, derivative and fixed income trading in Italy is running ahead of the same period last year and average levels for Q3 while UK equity trading is above prior quarter average levels. Any continued improvement in Italian secondary markets should be beneficial for Post Trade operations.
As previously indicated, net treasury income is expected to reduce in Q4 as CC&G takes steps to move cash margin into secured investments. At the start of January, €4.9 billion was invested on a fully collateralised basis.
New product launches and development continues. On 21 January, a future on durum wheat was launched on Agrex, a new segment of the IDEM Italian derivatives business dedicated to agricultural commodities.
The Group is well placed to continue to develop and capitalise on a more diversified asset base. The immediate focus remains on progressing the transaction with LCH.Clearnet, delivering operational efficiencies as well as advancing further growth opportunities.
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