London Stock Exchange Group PLC interim management statement for the period to 17 July 2012.
• Good Group performance achieved against backdrop of testing markets - total income up 10 per cent on Q1 last year at £209.5 million
• Information Services revenues rose 68 per cent, reflecting the benefits of the FTSE acquisition; up 2 per cent on an organic constant currency basis, with increased revenue from other information products offsetting declines in real time data income
• Post Trade Services total income remained resilient (and on a constant currency basis increased 8 per cent), reflecting good growth in treasury management income offset by a reduction in clearing and settlement revenues following lower trading in the period
• Capital Markets revenues decreased 15 per cent following subdued primary market activity (compared with a strong equivalent quarter last year), together with a slowdown in secondary market trading as markets continued to be affected by macro economic uncertainties
• MillenniumIT successfully went live on three markets in three continents during the period: five different trading platforms, including cash equities, fixed income and structured products at Borsa Italiana, now hosted in Milan, successfully migrated to Millennium Exchange; Johannesburg Stock Exchange and the Mongolian Stock Exchange also went live on MillenniumIT
• Regulatory and anti-trust processes are continuing in respect of the shareholder approved acquisition of 60 per cent stake in LCH.Clearnet; the competition authorities in the UK, Spain and Portugal are reviewing the proposed transaction.
Commenting on performance in the past quarter, Xavier Rolet, Chief Executive, said:
"We have delivered a good overall performance, reflecting our broad suite of products and services and the increased diversification of the Group.
"In particular, we have seen a strong contribution from FTSE, which continues to demonstrate good growth. In addition, this has been a great quarter for MillenniumIT which successfully saw Borsa Italiana, Johannesburg Stock Exchange ak Exchange and the Mongolian Stock Exchange all go live on its ultra-low latency trading technology. MillenniumIT technology has now been contracted by over thirty exchanges or other securities platform customers across Europe, Asia, Africa and the Americas.
"Our focus remains on developing partnerships with our customers, executing on our strategy and delivering on cost control and benefits from recent transactions."
Financial Position
The amount the Group sets aside to meet regulatory, clearing and commercial requirements has increased as expected from £165 million to £200 million, reflecting an increase in the regulatory capital requirements of CC&G following previously disclosed discussions with Banca d'Italia. The additional amount will be met from the Group's existing cash resources. The Group also continues to review and contribute to a wide range of on-going EU and US draft regulatory proposals.
The Group reduced its net debt in the quarter with net cash generation resulting from normal seasonal inflows from charges for annual services invoiced at the start of the financial year. There are no other material changes to the Group's financial position since financial year end.
The average €:£ exchange rate weakened by 9 per cent in Q1 compared to the same period last year, from €1:13 to €1.23. Each €0.05 movement in the average €:£ rate would have changed the Group's operating profit by approximately £12 million in the last financial year.
Current Trading and Outlook
The Group has made a good start to the new financial year, although market conditions have remained weak and the summer period is expected to be quiet.
Notwithstanding continuing market and economic uncertainties, the Group remains well positioned and will continue to focus on delivering benefits from recent transactions and its more diversified range of products and services.