- Continued strong operational and financial performance in Q3
- Total income up 17 per cent on Q3 last year at £196.3 million (up 13 per cent on organic constant currency basis); 9 months year-to-date up 19 per cent, to £582.8m (up 18 per cent on organic constant currency basis)
- Post Trade Services total income increased 50 per cent, driven by further sequential (over Q2) growth in treasury management income from clearing operations
- Capital Markets revenues decreased 4 per cent with growth in annual fee income, derivatives revenues and Italian cash equities trading offset by lower IPO activity and weaker fixed income and UK cash equities trading
- Information Services revenues rose 24 per cent in total, reflecting operational growth and the initial benefits of the FTSE acquisition which includes adjustment to royalties previously recognised 3 months in arrears; organic growth was good at 4 per cent, with increases in both real time data income and revenue from other information products
- Technology Services revenues up 15 per cent, mostly driven by growth from MillenniumIT
- Acquired the outstanding 50 per cent of FTSE, giving the Group full control of this strategically important, high growth global indices business - FTSE EBITDA for the year ended 31 December 2011 grew 34 per cent to £53.6 million
- Exclusive discussions with LCH.Clearnet and broader related stakeholder engagement continue
Commenting on performance in the past quarter, Xavier Rolet, Chief Executive, said: "This has been another good quarter, with strong momentum and top line growth of 17 per cent. As well as a very positive organic performance, we successfully completed our acquisition of FTSE. The new opportunities that come with full control of this high quality, fast-growing international business are significant, and we look forward to developing these with our customers.
"Our diversification strategy continues to pay dividends and the breadth and balance of our offering gives our portfolio a good element of natural hedge, making us well-placed to drive the ongoing performance of the Group. We remain firmly committed to enhancing the Group's competitiveness, focusing on our customers and to developing our wide range of products and services."
During Q3 there was a net outflow of cash, including £428 million for the acquisition of the 50 per cent of FTSE International Limited that the Group did not own, £53 million (€62 million) for the purchase of a 13.6 per cent stake in CC&G from Unicredit S.p.A and £15 million for acquisition of the FSA's transaction reporting service, TRS.
At the end of December 2011, Group net debt had increased to £582 million (or £747 million after setting aside the cash held for regulatory and operational support purposes). As reported at the time of the FTSE transaction, the pro forma leverage of the Group has increased to 1.6 times net debt:adjusted EBITDA, based on EBITDA to 30 September 2011 and on a pro forma basis to include 12 months FTSE EBITDA. We expect that our positive net cash generation will start to reduce our leverage.
To underpin the Group's financial flexibility in connection with our ongoing discussions with LCH.Clearnet, a new £350 million committed revolving credit facility was signed on 15 December 2011. This facility expires if these discussions are terminated.
Although there was little change to the euro:sterling rate in Q3 compared with the equivalent period last year, the euro has weakened in recent weeks. To illustrate our exposure to movements in this exchange rate, a €0.05 decrease in the average euro:sterling rate would have resulted in a reduction to total income of c£4.3 million for Q3.
FTSE International Limited
Financial results (unaudited) for FTSE International Limited, for the 12 months ended 31 December 2011, confirm a continuation of strong growth. Revenue increased 21 per cent to £119.1 million and EBITDA grew 34 per cent to £53.6 million
Current trading and Outlook
The Group is well positioned and continues to make progress in executing its stated strategy to 'get in shape, leverage assets, and seek opportunities'. The Board expects continuing good overall Group performance during the final quarter of the financial year, reflecting the resilience of the business and strength of the portfolio's offering.
However, the Group is not immune to the current weak market conditions. The fourth quarter has started with subdued secondary market trading, with average daily value traded in UK cash equities down 3 per cent on Q3 although volume traded in Italian cash equities is up 4 per cent on Q3. MTS fixed income trading and IDEM derivative volumes are down on average daily levels in the prior quarter. Information Services, Technology Services and Post Trade Services are all performing well, with net treasury income unaffected by slowing trading levels so far in January.
The Board remains committed to delivering growth through leveraging the many assets within the business, whilst maintaining focus on improving competitiveness, cost management and efficiency.
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