November 16, 2011

London Stock Exchange Group Interim Results for the Six Months Ended 30 September 2011

  • Strong financial performance, increased revenues across all business segments, continued cost discipline
  • Successful diversification strategy delivering tangible results, providing growth, performance and resilience
  • Total income up 20 per cent at £386.5 million (H1 FY 2011: £321.1 million); revenue of £328.1million up 9 per cent (H1 FY2011: £300.6 million)
  • Profit before tax up 79 per cent at £179.7 million (H1 FY 2011: £100.2 million); adjusted operating profit1 up 38 per cent at £214.3 million (H1 FY 2011: £154.8 million)
  • Basic EPS up 86 per cent at 43.1 pence (H1 FY 2011: 23.2 pence); Adjusted EPS up 48 per cent at 47.6 pence (H1 FY 2011: 32.2 pence)
  • Interim dividend of 9.3 pence per share, up 6 per cent (H1 FY 2011: 8.8 pence per share)

1 before amortisation of purchased intangibles and non recurring items.
All comparisons are against the same corresponding period in the previous year unless stated otherwise.

Commenting on performance of the Group, Xavier Rolet, Chief Executive said:

"Our diversification strategy is delivering. Today I am pleased to be reporting a strong first half performance across the Group with a 20 per cent rise in total income and a 79% per cent increase in profit before tax.

"Key highlights include a very good performance from Post Trade, an area we highlighted in 2009 as a core focus for us and which is now making a significant contribution to both Group revenue and growth. During the period we also successfully launched Turquoise Derivatives, launched MTS Gilts and a number of other new indices, secured new MillenniumIT contracts, continued to drive momentum in our UK Order Book for Retail Bonds and agreed to acquire the FSA’s trade reporting service, TRS. In addition, we also remain actively engaged in exclusive discussions with LCH.Clearnet about a potential transaction.

"Our balanced and diversified business, with a well-hedged, inversely-correlated portfolio of products and services, makes us strongly placed to take advantage of growth opportunities that the changing market and regulatory environment is presenting. Partnering with our clients to drive innovation and new services, strong cost control and our continued focus on new opportunities to grow the scale, scope and efficiency of the Group remain core. We are well placed to propel our business forward and successfully deliver on our growth strategy." 

Financial Highlights:

  • Total income up 20 per cent at £386.5 million (H1 FY 2011: £321.1 million); revenue of £328.1million (H1 FY2011: £300.6 million), up 9 per cent
  • Adjusted operating expenses on a constant currency basis and excluding one-off effects in H1 last year, were flat in real terms on the prior year; Operating expensesup 4 per cent at £174.5 million (H1 FY 2011: £167.9 million)
  • Adjusted operating profit1 up 38 per cent at £214.3 million (H1 FY 2011: £154.8 million)
  • Profit before tax up 79 per cent at £179.7 million (H1 FY 2011: £100.2 million)
  • Adjusted basic EPS up 48 per cent at 47.6 pence (H1 FY 2011: 32.2 pence); Basic EPS up 86 per cent at 43.1 pence (H1 FY 2011: 23.2 pence)
  • Interim dividend of 9.3 pence per share, up 6 per cent (H1 FY 2011: 8.8 pence per share)
  • Strong net cash inflow from operating activities of £154.2 million; adjusted net debt down £80 million in the period to £290 million

1 before amortisation of purchased intangibles and non recurring items.
All comparisons are against the same corresponding period in the previous year unless stated otherwise.

Operational Highlights:

  • Post Trade Services’ total income up 68 per cent on an organic basis and at constant currency, driven by growth in clearing volumes and increased treasury income from the central counterparty business arising from higher quantum of margin held and improved spreads achieved on cash collateral put on deposit
  • Number of new issues on the Group’s primary markets increased 15 per cent to 102, including 24 international companies; total capital raised up 32 per cent at £23 billion
  • Revenue from fixed income trading increased 29 per cent with trading volumes on Group’s MTS fixed income (cash) markets up 6 per cent; derivatives trading volumes on IDEM up 6 per cent and volumes on Turquoise Derivatives up 26 per cent
  • Trading of FTSE 100 Index Futures and Options successfully launched during the period, with further product additions planned in coming period
  • Our new retail bond market in the UK, ORB, continues its strong steady growth, welcoming new issuer Places for People which raised £140 million and National Grid which raised £282.5 million; ORB has successfully raised in excess of £1.3 billion for companies through the retail investor community since it launched in 2010
  • Good growth in trading on Turquoise – share of trading more than doubled since acquisition in 2010; Turquoise was the number two European MTF in lit and dark markets
  • Revenue from other information products up 8 per cent, with good demand particularly for SEDOL, FTSE and UnaVista services; professional users of London Stock Exchange real time data stable since last year at 93,000 and down four per cent at Borsa Italiana
  • Technology Services performing well, with MillenniumIT revenue up 10 per cent at constant currency, commencement of technology deliveries to Mongolia and Tullett Prebon; confirmation that MillenniumIT trading system is to be used by Oslo Bors
  • Acquisition of the FSA’s trade reporting service, TRS, completed in October for £15 million, with its customers to be migrated to an enhanced UnaVista service
  • Acquisition of remaining 13.6 per cent minority interest in CC&G in November for €62 million; transaction expected to be immediately earnings enhancing. The full economic benefit accrues from the start of this financial year – if the transaction had been completed on 1 April 2011 it would have added 2.3p to first half adjusted EPS
  • The Group remains actively engaged in exclusive discussions with LCH.Clearnet regarding a potential transaction

Notes to editors:

About London Stock Exchange Group:

London Stock Exchange Group (LSE.L) sits at the heart of the world’s financial community. The Group operates a broad range of international equity, bond and derivatives markets, including London Stock Exchange; Borsa Italiana; MTS, Europe's leading fixed income market; and Turquoise, offering pan-European and US lit and dark equity trading. Through its markets, the Group offers international business unrivalled access to Europe’s capital markets.The Group is a leading developer of high performance trading platforms and capital markets software and also offers its customers around the world an extensive range of real-time and reference data products and market-leading post-trade services. 

Headquartered in London, United Kingdom with significant operations in Italy and Sri Lanka, the Group employs around 1500 people. Further information on London Stock Exchange Group can be found at

Chairman’s Statement

Operational Performance

The Group has delivered a strong first half financial performance, with growth recorded in each of our four main business segments. This performance highlights the success of our diversification strategy which has provided breadth, growth and resilience in a market characterised by uncertainty. The progress we have made also reflects our focus on cost control, working closely with clients, developing the range of products and services across the Group, and pursuing opportunities through partnerships and transactions to extend the international reach and increasingly diverse scope of the Group. Over half of the Group’s income came from the Post Trade Services and Information Services divisions (H1 FY 2011: 46 per cent).

Overall revenues for the Group’s Capital Markets segment, which includes both primary and secondary market activities, increased 13 per cent to £159.8 million reflecting growth across all main asset trading markets and good performance in the issuer business.

In our primary markets business, the total amount of capital raised increased 32 per cent to £23.3 billion, reflecting a number of significant new issues, particularly in Q1. These included Glencore, the largest ever international IPO in London which raised £6.2 billion, and Salvatore Ferragamo in Italy. There were a total of 102 new issues across the Group’s markets, an increase of 15 per cent on H1 last year, with 24 international companies joining our markets in the period including DP World, Ophir Energy, Oracle Coalfields (the first Pakistan-focused company to join AIM) and Sberbank (the largest Russian credit organisation, which was admitted to trading on our International Order Book). We now have 95 corporate bonds, 4 supranational bonds and 53 gilts on ORB, our retail bond market, including the innovative raising of £140 million by Places for People in June, and National Grid which raised £282.5 million in October. Over £1.3 billion has been successfully raised on ORB, through the retail investor community, since it launched in 2010. Total primary markets revenues increased 19 per cent in the half year to £40.5 million.

In the secondary markets, average daily value traded in the UK cash equities market increased 2 per cent to £5.0 billion, helped by strong trading in August. In Italy, the average daily number of trades rose seven per cent to 267,000, also benefitting from heightened trading over the summer. Share of cash equities order book trading in the UK averaged 62.3 per cent, broadly in line with the same time last year, although this has reduced slightly in the past two months; in Italy, share of electronic value traded was unchanged at an average 83.8 per cent. Turquoise, the MTF run in partnership with 12 banks, performed well with share of European order book trading increasing from 3.5 per cent to 5.4 per cent and now more than twice the level when the business was acquired in 2010. Turquoise was the second largest lit and dark pool pan-European MTF during the period. In total, revenues from equities trading increased 7 per cent.

Revenues from derivatives trading increased 7 per cent. There was a 6 per cent increase in number of contracts traded on IDEM, and a 26 per cent increase in trading on Turquoise Derivatives, principally representing growth in Russian derivatives contracts. In June the Group launched trading in FTSE 100 Index Futures and last month added trading of FTSE 100 Index Options. Trading levels on these new products, as expected, are low at present but further product additions are expected in coming months, including single stock options and emerging market indices products. Potential changes proposed in the draft review of the EU’s Market in Financial Instruments Directive, with regard to non-discriminatory access to clearing and licences to trade indices, may provide further opportunities for Turquoise.

The fixed income business delivered another good performance with a 29 per cent increase in revenue. Both the MTS cash and repo markets recorded good turnover growth, reflecting 6 per cent and 5 per cent growth in trading volumes respectively.

In Post Trade Services, total income, including net treasury income, grew 64 per cent to £106.7 million, up 57 per cent at constant currency. Revenue increased 8 per cent to £52.4 million. Excluding the £4.1 million included in H1 last year from Servizio Titoli, which was sold with effect from the start of the current financial year, total income increased by 75 per cent and revenue increased by 19 per cent.

Treasury income through the central counterparty business continued the strong performance in the immediately preceding H2 period last year, rising from £34.6 million to £54.3 million as a result of stronger trading levels, with a resulting higher quantum of cash margin held, and rising deposit yields. The Group has achieved a significant and sustainable step up in performance, although the high returns achieved in recent months have been elevated by both volatility in Italian markets and continuing low liquidity in the Italian interbank market with consequent high demand for cash from CC&G.

Risk management in the CCP business has remained a key focus amid volatile markets, with frequent reviews of the highly prudent risk controls in place. Treasury investment policies have been tightened. Term deposits for cash margin placed with banks have been shortened and faster call-back facilities put in place.

On 4 November 2011 the Group completed the acquisition of a 13.64 per cent stake in CC&G, from Unicredit S.p.A., for a total cash consideration of €62 million, in cash. Following the acquisition, the Group now owns 100 per cent of CC&G and the transaction is expected to be earnings accretive in the current financial year. The Group will gain full economic benefit from its increased ownership with effect from 1 April 2011 – if the transaction had been completed on that date it would have added 2.3p to first half adjusted EPS.

The Monte Titoli CSD business performed well during the period. Settlement revenues increased 10 per cent (up 5 per cent in constant currency) with an 11 per cent rise in pre-settlement instructions. In the custody operations the value of assets under management was stable at €3.0 trillion, with a 9 per cent increase in revenues (at constant currency, excluding Servizio Titoli) arising from charges for other services.

The Information Services division delivered a 6 per cent increase in revenue to £89.0 million, with gains in both real time data fees, following changes to billing arrangements last year, and from other information products. Professional terminals receiving London Stock Exchange real time data at 30 September 2011 were unchanged over the same date last year, at 93,000, while the number of professional terminals taking Borsa Italiana data declined 4 per cent. Among the non-real time data products, the FTSE indices business, SEDOL and UnaVista all delivered good results, with a total 8 per cent increase in revenue from other information products.

Revenues for Technology Services increased 2 per cent at constant currency to £24.8 million. MillenniumIT performed well, with first technology deliveries to Mongolia made during Q2, contributing to an increase in MillenniumIT revenues of 10 per cent at constant currency to £9.6 million (H1 FY 2011: £9.0m). MillenniumIT remains focused on developing technology for the Group as well as developing technology for third party capital markets clients – during the period its system went live at the Chittagong exchange and Tullett Prebon, it won new business with the Delhi Stock Exchange and Oslo Bors confirmed it would transfer to the Millennium Exchange platform.

Strategy for growth

The Group continues to execute on its strategy to grow the business, through our actions to "get in shape", to "leverage our assets" and to "develop opportunities". Operational efficiency, or "getting in shape", which includes technology improvements, aligning fully with clients and controlling costs, remains an on-going priority. The electronic order book for retail bonds (ORB) transferred to MillenniumIT technology in the period and preparation work is underway for migration of the Italian cash equities market to Millennium Exchange in 2012. Control of costs continues; compared to H1 last year and excluding one-off costs and currency changes, operating costs remained flat in real terms even though performance related pay was higher following the strong profit and adjusted EPS growth in the period.

Strategic development of the broad range of businesses within the Group, or "leveraging our assets", remains a key focus and we also continue to work on other plans as part of our "developing opportunities" strategy. Among the initiatives announced or launched during the period were:

  • trading of equity derivatives through the Turquoise MTF platform, starting with FTSE 100 Index Futures in June and followed by FTSE 100 Index Options in September - further product launches to expand pan-European and other derivatives will continue, with the planned launch of single stock options in April 2012
  • the electronic market for UK government bonds went live on MTS in July – joining the primary and secondary government bond markets of 16 other European countries already trading on MTS
  • expansion of ETFs tradable on our markets, including the addition of SPDR and Amundi emerging market ETFs, bringing the total number of ETFs and ETCs on our markets to over 1,450
  • new tri-party collateral management (X-Com) commenced testing by Monte Titoli to allow clients to manage assets more efficiently
  • opening of a settlement link by Monte Titoli with Euroclear UK and Ireland, to assist harmonisation of cross border trading
  • selection of the Group to provide clearing technology services for a new cross-market central counterparty mechanism for Central and Eastern European capital markets, using CC&G expertise and MillenniumIT software
  • acquisition of the FSA’s transaction reporting service (TRS), with clients of the service able to use the enhanced reporting and other functionality provided by the Group’s UnaVista service

On 28 September 2011 the Group announced it had entered exclusive discussions with LCH.Clearnet regarding a potential transaction. Due diligence work and engagement with a large number of stakeholders is continuing, with a view to moving towards an agreement, though the process is complex and there can be no certainty that any transaction will result. 

Financial Summary

Unless otherwise stated, all figures below refer to the six months ended 30 September 2011. Comparative figures are for the six months ended 30 September 2010 (H1 FY 2011). Variance is also provided at constant currency. The basis of preparation is set out at the end of this report.


Six months ended


Variance at


30 September




















Capital Markets







Post Trade Services







Information Services







Technology Services







Other revenue







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Net treasury income   through CCP business







Other income







Total income











Operating expenses







Share of profit of JVs   and associates







Acquisition   amortisation and non-recurring items







Operating profit







Adjusted operating   profit*











Basic earnings per   share (p)








Adjusted basic   earnings per share (p)*











Dividend (p)







* before amortisation of purchased intangibles and non-recurring items.

The Group delivered a strong financial performance in a period that experienced significant market volatility. Total income rose 20 per cent to £386.5 million (H1 FY2011: £321.1 million), up 18 per cent in constant currency.

Operating expenses, before amortisation of purchased intangibles and non-recurring items, increased 4 per cent to £174.5 million (H1 FY 2011: £167.9 million). Adjusting for currency changes, estimated inflation, the impact of disposals and the non-recurring VAT rebate and TradElect depreciation in H1 last year, operating costs were flat in real terms, reflecting reductions to our underlying cost base offset by increased performance related pay recognised in H1 this year as a result of the strong profit and earnings growth.

Adjusted operating profit for the period, before amortisation of purchased intangibles and non-recurring items, increased 38 per cent to £214.3 million (H1 FY 2011: £154.8 million), up 35 per centat constant currency.

Net finance costs were £19.2 million, down from £22.7 million in H1 last year, the improvement principally due to lower average net borrowings and one-off costs last year to close out certain interest rate swaps. The underlying effective Group tax rate was 29.4 per cent, down slightly on the rate for the year ended 31 March 2011(30.3 per cent), reflecting the mix of business between the UK and Italy and a reduction in the headline UK corporate tax rate.

Basic earnings per share were 43.1 pence, an increase of 86 per cent (H1 FY 2011: 23.2 pence). Adjusted basic earnings per share increased 48 per cent to 47.6 pence (H1 FY 2011: 32.2 pence).

Net cash inflow from operating activities was £154.2 million (H1 FY 2010: £143.8 million). Capital expenditure in the period amounted to £14.8 million, and full year spend is expected to approach £50 million. Net cash generated after dividends was £113.5 million (H1 FY 2010: £78.4 million). Free cash flow per share (pre dividend) was 63.0p (H1 FY 2010: 46.8p)

At 30 September 2011 adjusted net debt was £290 million (after setting aside £165 million of cash for regulatory and operational support purposes) while drawn borrowings of £500 million remain unchanged from the end of the previous financial year, being long term sterling bonds. Committed credit lines available for general group purposes total £1 billion, with £750 million extending to 2015 or beyond.

The Group has net assets of £1,159.3 million at 30 September 2011 (31 March 2011: £1,137.0 million). As usual, the central counterparty clearing business assets and liabilities within CC&G largely offset each other and are shown gross on the balance sheet as the amounts receivable and payable are with different counterparties. The gross clearing balances increased during the period, mainly reflecting an increase in the average terms of the repurchase transactions that remained open, together with an increase in the volatility of their nominal values.

Interim Dividend

The Directors have declared an interim dividend of 9.3 pence per share, an increase of 6 per cent on the interim dividend paid last year.The interim dividend will be paid on 5 January 2012 to shareholders on the register on 9 December 2011.

Current Trading and Outlook

The October daily average equity value traded in London was up 1 per cent on last year while average daily equity volumes in Italy were up 20 per cent. In the primary markets, activity levels at the start of H2 are lower than last year and any extended period of market volatility makes timing of new issues uncertain, although the pipeline for IPOs appears encouraging with a number of international companies seeking opportunity to raise capital and we still expect a flow of new issues on our markets. In our Post Trade Services division, active and prudent treasury management of CCP margins will continue, taking close account of the evolving market environment. Net treasury income remained strong in October while the outlook for the balance of the year will depend on trends in market conditions.

Looking forward, market conditions are expected to be testing, though the Group is in good shape as we continue to diversify our business through a focus on our strategy to improve competitiveness, drive innovation, extend our scope and scale and deliver growth.

Chris Gibson-Smith
16 November 2011

Operating Performance – Key statistics

To assist investors in understanding the underlying performance of the Group, percentage changes are also presented on a constant currency basis.


Victoria Brough
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Investor   Relations
Paul Froud 
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About LSEG

LSEG (London Stock Exchange Group) is a leading global financial markets infrastructure and data provider, playing a vital social and economic role in the world’s financial system.

With our open approach, trusted expertise and global scale, we enable the sustainable growth and stability of our customers and their communities. We are dedicated partners with extensive experience, deep knowledge and a worldwide presence in data and analytics; indices; capital formation; and trade execution, clearing and risk management across multiple asset classes. 

LSEG is headquartered in the United Kingdom, with significant operations in 70 countries across EMEA, North America, Latin America and Asia Pacific. We employ 23,000 people globally, more than half located in Asia Pacific. LSEG’s ticker symbol is LSEG.