Source: London Stock Exchange
LSEG - Preliminary Results for the year ended 31 December 2016.
Unless stated otherwise, all figures in the highlights below refer to continuing operations1 for 12 months to 31 December 2016 and comparisons with the prior 12 month period on the same basis.
• Continued execution against strategic objectives and investment drives multiple growth opportunities across each of our market-leading businesses
• Strong financial performance across all business areas with good control of underlying costs - positioned for delivering strong operational leverage
• Successful strategy based on customer partnership, innovation and an Open Access model makes the Group strongly positioned to make further progress as a well diversified financial markets infrastructure business with a global footprint
• Total income up 17% to £1,657.1 million (2015: £1,418.6 million)
• Total revenue up 14% to £1,515.6 million (2015: £1,324.7 million)
• Adjusted operating expenses2 continue to be well controlled, at £791.6 million - up 4% on an organic and constant currency basis as the Group invests in growth and efficiency projects
• FTSE Russell delivered strong growth and integration synergies of US$78 million p.a. are ahead of schedule; on track to reach €40 million of annual cost savings at LCH by end of 2017
• Adjusted operating profit2 up 17% at £685.8 million (2015: £584.7 million); operating profit of £426.8 million (2015: £404.4 million); adjusted profit before tax2 up 21% at £623.1 million (2015: £516.4 million)
• Adjusted EPS2 up 21% at 124.7 pence (2015: 103.4 pence); basic EPS of 63.8 pence (2015: 74.8 pence)
• Proposed final dividend increased to 31.2 pence per share - a 20% increase in the full year dividend to 43.2 pence per share - reflecting the strong outlook for the Group
• New initiatives and achievements in the year include:
• SwapClear saw a 25% increase in clearing volumes at over US$665 trillion notional and provided record compression of US$384 trillion; new portfolio margining service, LCH Spider, launched on an open access basis
• CurveGlobal, a new listed interest rate futures platform, successfully launched in partnership with major dealer banks and CBOE - onboarding a growing number of clients and increased trading flow
• Continued volume growth at CDSClear and ForexClear - driven by regulatory changes
• FTSE Russell launched a Low Carbon Economy data model and accompanying Green Revenue Index Series
• Announced acquisition of Mergent Inc., a leading US provider of business and financial information on companies, to further build the Information Services portfolio
• ELITE, our platform for high growth companies, now operational in 25 countries with nearly 500 companies
• Sale of Russell Investment Management successfully completed, for gross proceeds of US$1,150 million - resulting in an implied multiple of 18x EBITDA (pre synergies) for the retained, high growth Russell Indices business, now integrated with FTSE
• The Group continues to work hard on its proposed merger with Deutsche Börse AG - awaiting outcome of the European Commission Phase II process on or before 3 April 2017
1 continuing operations exclude businesses sold, being Russell Investment Management and Proquote.
2 before amortisation of purchased intangible assets and non-recurring items.
Organic growth is calculated in respect of businesses owned for at least 12 months in either period and so excludes Exactpro, Proquote, Russell Investment Management, SwapMatch and XTF. The Group’s principal foreign exchange exposure arises from translating our European-based Euro and US based US Dollar reporting businesses into Sterling.
Commenting on performance for the year, Xavier Rolet, Group Chief Executive, said:
“The Group continues to execute against its strategic objectives, driving both short and longer term growth through organic investment and selective inorganic opportunities. This has resulted in another year of strong financial performance, with continued revenue growth, control of underlying expenses and a 21% increase in adjusted earnings per share. Each of our business areas delivered year-on-year growth, highlighting the strength in the diversity of our business, launching new products such as LCH Spider, new services in partnership with customers such as CurveGlobal and Turquoise Plato, and expanding our global footprint with acquisitions such as Mergent Inc.
“FTSE Russell produced another good top line performance and the integration savings are now mostly achieved, ahead of schedule. The LCH OTC clearing services performed well, particularly SwapClear and its compression services. We remain well positioned across all our businesses, underpinned by our Open Access approach and strong customer partnerships.”