London Stock Exchange Group plc ("the Group") today reports results for the six months ended 30 September 2009.
- Revenue of £310.9 million (H1 FY2009: 342.5 million), down four per cent sequentially on H2 last year and nine per cent on the corresponding period last year reflecting continuing competitive and difficult markets in cash equity trading
- Underlying operating expenses(1) of £180.2 million (H1 FY2009: £165.6m); down eight per cent against same period last year and down four per cent on H2 last year in constant currency and excluding £20.4 million of non-recurring costs following acquisition of MillenniumIT
- Operating profit(1) of £134.8 million (H1 FY2009: £181.0 million), partly reflecting inclusion of £20.4 million (of a total £31 million) non-recurring MillenniumIT related costs
- Profit before tax of £79.4 million (H1 FY2009: £127.0 million)
- Basic EPS of 18.5 pence (H1 FY2009: 30.3 pence) and adjusted basic EPS of 29.0 pence (H1 FY2009: 39.3 pence); the £20.4 million non-recurring MillenniumIT related costs equate to 5.5 pence of EPS dilution in both cases
- Interim dividend of 8.4 pence per share, unchanged from last year's interim payment
- Strong net cash flow from operating activities of £106.8 million; net cash generated after return to shareholders of £37.6 million - gross drawn debt of £608 million, with £950 million of committed borrowing facilities through to 2012 or beyond
1) before impairment, amortisation of purchased intangibles and exceptional items
Capital Markets (47 per cent of Group revenue): £43.5 billion of new capital raised by companies on or coming to the Group's primary markets, continuing the trend of re-equitisation. In secondary markets activity trends were mixed reflecting the Group's diverse portfolio of products:
- average daily UK equity value traded decl declined 16 per cent vs H2 last year;
- average daily equity trades in Italy grew five per cent over the immediately preceding six months; and
- the volume of trading in the Group's fixed income (cash) and derivatives markets increased 37 and 15 per cent respectively over the immediately preceding six months
Post Trade Services (19 per cent of Group revenue): resilient performance with revenue up 16 per cent over the corresponding period last year albeit down slightly on H2 last year due to lower interest spreads, with continuing sequential increases in clearing and settlement contract volumes (up 14 and 11 per cent respectively on H2 last year)
Information & Technology Services (33 per cent of Group revenue): demand for the Group's real time data by professional users declined as expected, but mostly offset by growth in other information and technology products, particularly reference data products and FTSE, where revenues were up ten per cent compared with corresponding period last year
Benefits starting to flow from actions taken to meet market challenges and position for growth:
- management structure streamlined and total headcount reduced by 12 per cent to give annualised cost savings of £11 million
- business increasingly client focused
- Millennium Information Technologies Ltd ("MillenniumIT") acquired in October to provide a competitive, high performance trading system, which will also deliver at least £10 million annual cost savings from FY 2012
Commenting on the six months, Xavier Rolet, Chief Executive said: "Despite testing markets, there are some encouraging elements within our first half results. Both the Post Trade and the Information & Technology divisions performed well and in our primary markets business there was a continued flow of capital raising activity. The overall Group performance reflected market conditions depressed by the fall out from turmoil in financial markets last year and increased competition, particularly in UK cash equities trading which, as expected, resulted in a weaker performance in the Capital Markets division.
"The Group is taking a number of actions to diversify, strengthen and grow the business. The acquisition of MillenniumIT is a strategically important first step. As well as providing a high performance trading platform to enable us to compete more effectively, it will help to lower our cost base as part of an ongoing focus on cost reduction and provide further growth opportunities through technology sales in the global exchange market.
"Throughout the Group we are focusing on projects to leverage our considerable asset base and to drive efficiency as we operate in highly competitive and still somewhat uncertain market conditions."