May 15, 2013

Preliminary results for year ended 31 March 2013

• Further strong progress as the Group delivers on its strategy for growth, increased global scale and reach
• Good financial and operational performance from an increasingly diversified business against a backdrop of challenging markets
• Revenue up 7 per cent at £726.4 million (2012: £679.8 million); adjusted total income1 up 5 per cent at £852.9 million (2012: 814.8 million)
• Core operating costs1 held flat, before impact of acquisitions and FX; operating expenses1 up 12 per cent to £422.7 million, reflecting acquisitions (2012: £378.8 million)
• Adjusted operating profit1 3 per cent lower at £430.2 million (2012: £441.9 million); operating profit also 3 per cent down at £348.4 million (2012: £358.5 million)
• Adjusted profit before tax1 down 5 per cent at £380.7 million (2012: £400.6 million); profit before tax of £298.9 million (2012: £639.7 million, which included recognition of the increased value in FTSE)
 • Adjusted basic EPS1, including tax credits, up 5 per cent at 105.3 pence (2012: 100.6 pence); basic EPS of 80.4 pence (2012: 193.6 pence, including recognition of the increased value of our interest in FTSE)
• Proposed final dividend up 4 per cent to 19.8 pence per share; total dividend for the year increased 4 per cent to 29.5 pence per share. The final dividend will be paid on 19 August 2013 to shareholders on the register on 26 July 2013
• Completion of acquisition of majority stake in LCH.Clearnet on 1 May 2013; work is underway to achieve the benefits of this transformational deal

1 before acquisition amortisation and non-recurring items

Chris Gibson-Smith, Chairman, London Stock Exchange Group, said:
“This has been another year of significant progress as we have become a more international and more diversified business. The successful execution of our strategy has produced tangible operational and financial benefits and positions us well for further growth opportunities.

“We remain firmly focused on capitalising on the many opportunities that are available to us and to creating long term value.”

Commenting on the year, Xavier Rolet, Chief Executive, London Stock Exchange Group said:

“The Group has delivered a good full year performance with 7 per cent revenue growth and a 5 per cent increase in adjusted earnings per share.

“We have expanded our scale and reach, launched innovative new products and partnered with customers to develop new ventures. FTSE has performed well and is embedded as a core part of our business, and MillenniumIT has increased its third party sales as well as delivering key technology upgrades for the Group.  These achievements, and other initiatives we have undertaken to become more efficient and diversify our business, have laid strong foundations on which to continue to build and drive the Group forward.  We are optimistic about the year ahead and we will continue to focus on building best in class capabilities, extending our global footprint and to developing opportunities, now with LCH.Clearnet as part of the Group.”


Adjusted basic earnings per share1 of 105.3 pence includes a 5.4 pence benefit from a one-time £14.6 million tax credit relating to prior years. Basic EPS of 193.6 pence in the prior year includes recognition of the increased value of the Group’s interest in FTSE

1 before acquisition amortisation and non-recurring items

Organic growth is calculated in respect of businesses owned for at least 12 months and so excludes  GATElab and presents FTSE and TRS on a like-for-like basis with prior year.

Unless otherwise stated, all figures refer to the year ended 31 March 2013 and comparisons are against the same corresponding period in the previous year


The initiatives we have undertaken to become more efficient and to diversify our business have laid the strong foundations on which to build and drive the Group forward. Our industry remains in the middle of widespread structural change, but the strength and breadth of our business make us well positioned to benefit from these changes, as well as the opportunities presented by an improving economic environment. In the year ahead, we will remain firmly focused on achieving the expected benefits from recent transactions and investment in new products, as well as continuing to seek new growth opportunities.  We look ahead with optimism as we continue to develop opportunities to meet the needs of our customers and deliver value for shareholders.

Chief Executive’s Review


This has been another significant year of progress for the Group. We are fast becoming a truly international organisation, and this year we have continued to innovate and build our global reach, delivering against our diversification strategy and reporting a good financial performance.

Today, the Group has a strong, complementary portfolio of global brands, services and products. Through our offering, we look to partner with our customers, helping drive their, and our, success across different markets, asset classes and geographies. Capital raising, risk management, intellectual property and technology provide some of the most exciting opportunities for us. It is these areas in particular that continue to be a core focus for us.

Quality and Excellence

As a Group, delivering quality and excellence is embedded in all that we do. MillenniumIT, our world-class proprietary technology business, is now providing market infrastructure technology to over 30 companies around the world. Its low cost, high speed, proven technology delivers best-in class capital markets technology and, three years since joining the Group, MillenniumIT has more than fulfilled our expectations. The successful migrations of Borsa Italiana, Oslo Børs and Johannesburg Stock Exchange in 2012, have enabled us to fully decommission our legacy platform and are text book examples of how this low-cost, flexible, resilient technology is changing the industry. Locating our technology locally helps support both customers and regulators and we continue to build on our success, competing for and winning new business including contracts with HKeX, LME, and a new partnership with Lima Stock Exchange. We also continued to develop our technology skill set through innovation and partnerships and we recently completed the acquisition of a majority stake in GATElab, a highly complementary technology business.

The Group’s ability to attract companies, domestic and international, small and large, to list on its markets is reflected in a number of high-profile offerings in the past year including Direct Line, Sberbank and esure in London and Brunello Cucinelli and Moleskine in Milan. The Group has been a long-term advocate of the need for a fundamental rebalancing of our global economy, away from an excess of bank finance and debt, towards a more stable system where equity plays a greater role in funding growth. Earlier this year, London Stock Exchange announced plans to launch a new “High Growth Segment” on its Main Market to meet the needs of fast-growing companies. Acting as a launch pad this segment will help companies aspiring to seek a premium Main Market listing. The Group warmly welcomed the abolition of Stamp Duty in the UK on AIM shares in this year’s budget, and continues to work with Government and other stakeholders in promoting and supporting policies that will help innovative, high growth, blue chip companies of tomorrow to thrive.

Private investor demand for access to fixed income has been reflected in the performance of the Group’s retail bond platforms, MOT in Italy and ORB in the UK. MOT has over 350 listed corporate bonds and regularly sees €1 billion of trading a day. A new professional segment on ExtraMOT, dedicated to the trading of debt instruments issued by both listed and unlisted Italian companies, has provided companies with a flexible and accessible source of finance without an overly extensive listing process. Over £3 billion has been raised on ORB in the three years since it was launched and the new FTSE ORB Index, which is the first performance benchmark for retail bonds trading on ORB, signifies the increasing maturity of the market and growing secondary market liquidity.

Our fixed income platform, MTS, has responded to the regulatory drive to bring efficient, transparent access to European fixed income markets. MTS Credit, a pioneering new electronic platform for the trading of euro denominated non-government bonds, has signed its first prime bank to the service. MTS also launched a new daily repo index, Repo Funds Rate. In derivatives, our innovative new derivatives market for durum wheat, AGREX, commenced trading on our IDEM platform. The Group continues to develop its position as a leading marketplace for Russian index and equity derivatives.

The International Board, which we announced last year, has begun trading in collaboration with our first partner, Singapore Stock Exchange. The new trading initiative will extend trading hours for the most actively traded securities in both markets to around 15 hours each day, providing more opportunities for investment, trading, and risk management for participants in London and Singapore. Over time we believe it could enable the development of 24-hour global trading in cash equities.

Partnership and Innovation

The acquisitions we have made over the past four years have helped to transform the Group. Most notably, MillenniumIT, FTSE and more recently the purchase of a majority stake in LCH.Clearnet completed in May 2013. Each of these offer long-term diversification, heightened opportunities for collaboration and strong growth prospects.

We not do not believe in a ‘one size fits all model’. Rather, we believe that our offering needs to be tailored for different customers, markets and geographies. This is particularly true in technology where we locate our technology infrastructure close to our customers and regulators, delivering cost, oversight and commercial advantages to both. This approach differentiates the way we operate and has partnership and innovation at its core. We think this offers the optimum product and service for our customers, the optimum strategy for our business, and the optimum opportunity for us to deliver value for investors.

LCH.Clearnet brings to the Group greater breadth and depth of offering, new customers, new skills and expertise, but above all it champions a customer preferred model in multi-asset, multi-venue clearing and risk management services. The open-access horizontal model is unique in our industry and promotes customer choice and collateral efficiency, partnership and collaboration. The model is structured in such a way as to give regulators and the market enhanced levels of comfort from the greater systemic resiliency that open-access ultimately provides. Better, more efficient risk management is a key driver of change in our industry and we believe that LCH.Clearnet will be the first choice for a host of new and existing trading venues resulting from the implementation of Dodd-Frank in the US and EMIR in Europe for the simple reason that most competitors operate closed, vertical silos.  I would like to warmly welcome Jacques Aigrain, Ian Axe, the LCH.Clearnet management team and staff across the world, to the Group. We very much look forward to working together.

We continue to see the benefits of the full inclusion of FTSE in the Group. FTSE’s successful track record of winning new business by competing on product attractiveness, service and innovation was highlighted by Vanguard’s selection of FTSE as the index benchmark provider for six of their international equity index funds. It marked the largest ever international index benchmark provider switch and underlines FTSE’s continued growth as a global brand. FTSE further reinforced its global business development ambitions with a joint venture with TMX Datalinx, which will see it become the third largest fixed income ETF index provider globally, with over US$1 trillion in assets under management.

In a natural extension to its existing product offering, UnaVista has applied to become a Trade Repository. With the increased regulatory obligations coming into force, UnaVista will be able to provide customers with a simple, one-stop reporting solution for both EMIR and MiFID.


We have further strengthened the Group’s executive management team over the past year to reflect our increased diversification and international presence.

David Warren and Alexander Justham have both joined the Group, bringing a wealth of experience in financial markets to their respective roles as Group Chief Financial Officer and CEO of London Stock Exchange plc. Antoine Shagoury also took on the role of COO in addition to his role as CIO, and David Lester was appointed Group Director of Strategy. Mark Makepeace joined the Executive Committee as Group Director of Information Services.

The Group has also taken steps, reflecting the expanding and changing nature of the Group, to significantly strengthen its audit and risk management capabilities with the appointments of a new Chief Risk Officer, Diane Côte, and a new Head of Internal Audit. Diane Côte and Ian Axe, CEO of LCH.Clearnet, join the Executive Committee following the year end.

Outlook and Priorities

The Group has continued to make significant strides forward in the execution of its stated strategy. The initiatives we have undertaken over the past few years to become more efficient and to diversify our business have laid the strong foundations on which to build and drive the Group forward. Our industry remains in the middle of widespread structural change, but the strength and breadth of our business make us well positioned to benefit from these changes, as well as the opportunities presented by an improving economic environment. In the year ahead, we will remain firmly focused on achieving the expected benefits from recent transactions and investment in new products, as well as continuing to seek new growth opportunities.

Our active engagement with policy makers around the world promoting safe, transparent and successful competitive markets is demonstrating the vital role that strong capital market infrastructure plays. The Group’s place in society has never been more relevant, from job creation by improving access to equity financing for SMEs, to the provision of critical risk management infrastructure, through LCH.Clearnet. It is our belief that strong capital markets infrastructure is a bedrock of economic prosperity.

The coming year will see us consolidate on the progress we have made. As ever, there is always more to do, but we are optimistic about the year ahead and we will continue to focus on building best in class capabilities, extending our global footprint and to developing opportunities, now with LCH.Clearnet as part of the Group.

Financial Review

The following is a review of the Group’s financial performance for the year.

The Capital Markets division faced significant headwinds through the year, resulting in supressed markets and weaker investor confidence. Despite this, we remained well positioned to benefit from rebounding confidence towards the end of the year, with quarter four revenues up eight per cent on quarter three revenues.

A decline in annual fees was due to suppressed market capitalisations in both the UK and Italy, as well as from reduced number of companies across all the main markets, partly offset by pricing changes in the UK.

Total money raised on our markets in the year was £18.0 billion (2012: £33.8 billion) reflecting the continued dampened confidence for new IPOs, and more significantly a decline in the value of further issues. Admissions to our primary markets continued to be affected by economic uncertainty with the number of new issues on the UK Main Market down 34 per cent to 40 and on AIM down 17 per cent to 74. Despite the lower volume of new issues and the reduction in further issues, admission fees declined by only 13 per cent, as the average value of new issues in 2013 was higher – particularly in the UK markets which were up three per cent.

On our cash equities market in the UK, the average orderbook daily value traded was £4.0 billion (2012: £4.7 billion). We have held our average yield on the SETS order book at 0.68 basis points (2012: 0.69 basis points), with the share of value traded improved at 65.3 per cent through the year (2012 average: 62.0 per cent). In Italy, order book volume decreased 13 per cent to 223,000 per day (2012: 260,000). Revenue from Turquoise equities, our pan-European equities platform, also decreased due to lower value traded, caused by an overall contraction in the market. The annual average share of European equity trading improved for the second successive year to 5.6 per cent and, by the end of the year, had increased to eight per cent, the highest in three years.

Derivatives revenue decreased, as both IDEM volumes shrank and Turquoise was affected particularly by a decrease in Russian contract volumes. In Fixed Income, MOT volumes grew 11 per cent, while in MTS, good performance in our MTS Repo (volumes up 14 per cent) and BondVision (value traded up 17 per cent) markets were partially offset by a decline in volumes in cash markets. Other capital markets revenues of £44.4 million primarily comprise fees for membership of and connectivity to our markets.

Post Trade Services has seen small declines across all revenue and income lines, with a year on year decrease in income of nine per cent to £208.5 million. The European Market Infrastructure Regulation (EMIR) will come into effect during our financial year 2014 and we remain well placed to be compliant by this time.

Clearing volumes in cash equities and derivatives were down in line with lower trading in Capital Markets, which primarily led to the overall decrease in clearing revenues, offset by growth in fixed income.

Settlement contract volumes were negatively impacted by both larger clients implementing internal netting processes, as well as increased netting by central counterparties, which along with lower trading volumes, led to an overall decline in revenues of 18 per cent.

The average value of assets under custody grew by five per cent leading to an increase in year on year revenues from Custody and other on a constant currency basis. The main increase in assets under custody came in Government Bonds as structural reforms in Europe led to higher issues and increase in market values in the security type.

Net treasury income benefited from continued growth in fixed income volume through the CCP which led to average initial margin held increasing seven per cent to €10.1 billion (2012: €9.4 billion), in line with growth trends over recent years, with the percentage of initial margin held in cash averaging 80 per cent (2012: 78 per cent). The continued volatility in Italian markets and low liquidity in the Italian interbank market combined with the Group’s active treasury management largely maintained the returns made. The wider spreads in the second half of 2012 and the migration to secured investments in 2013 have seen a reduction in second half revenues of 32 per cent compared to prior year. EMIR will require CCPs to hold 95 per cent of margin in secured investments, which will lead to a decline in returns made during the coming financial year. We remain strongly focussed and dedicated to working with regulators, and are on track to be compliant within the required timeframe.

The full year impact of the FTSE acquisition has led to a significant increase in revenues in the Information Services division. FTSE’s own revenue has seen a year on year increase of nine per cent, primarily driven by an increase in subscription revenues from net new business, and the migration of Vanguard ETFs to FTSE. We remain on track to achieve the three year target set for FTSE revenue synergies, with the SEDOL business benefiting in particular in 2013.

Real time data revenues were down six per cent year on year, as the UK continued to see professional terminal declines, down seven per cent in the year, while Italy saw a move to lower value terminals.

Other information services performed strongly, particularly in SEDOL and UnaVista, which also benefited from the full year impact of the purchase of TRS, the trade reporting mechanism to UK regulatory authorities.

MillenniumIT continued to perform well in the year. As well as developing technology for the Group, MillenniumIT had key deliverables with Oslo Børs, London Metal Exchange, and Bursa Malaysia, amongst others. MillenniumIT revenues also benefited further from higher revenues from its Enterprise Service Provision division.

The Group’s Exchange Hosting service continued to perform well despite clients consolidating space, while the ASP business continued to deliver revenue growth through new clients and new product lines. 2013 key achievements included the UK equities market go live with MillenniumIT Ticker Plant – the Group’s new real time data services technology, and Oslo Equities markets successfully migrating to the Millennium Exchange platform. During the period the Group also acquired a majority stake in GATElab, an Italy / UK based company supplying advanced technology for trading and post trade services around the world, further complementing existing technology capabilities and commitment to clients.

Operating expenses

Operating expenses before amortisation of purchased intangibles and non-recurring items were flat year on year on an organic and constant currency basis, taking into account estimated inflation. The acquisition of GATElab in December and the acquisitions of FTSE and TRS in the prior year led to a 14 per cent increase in year on year costs. We remain committed to maintaining high levels of cost control, including realising synergies as part of the FTSE acquisition, where again we are in line to achieve our three year target.

Non-recurring costs of £11.3 million were mainly professional fees incurred in relation to the LCH.Clearnet transaction and FTSE integration costs, offset by non-recurring other income of £18.3 million received from TMX Group following the termination of the 2010 merger agreement.

Finance income and expense and taxation

Net finance costs increased by £6.9 million, mainly as a result of higher fixed interest accruals on the £300 million retail bond issued in November 2012. The Group’s effective tax rate on profit before amortisation of purchased intangibles and non-recurring items and excluding a one-time prior years’ adjustment of £14.6 million was 29.0 per cent, in line with the prior year (2012: 29.2 per cent), as higher proportional profits in Italy which attract higher tax rates, were offset by a reduction of UK tax rates.

Cashflow and balance sheet

The Group’s business continued to be strongly cash generative during the year, with cash generated from operations up five per cent to £487.5 million. Total investment in the year, net of dividends received, was £59.4 million as the Group invested £14.3 million in the purchase of 2.3 per cent of LCH.Clearnet and the acquisition of GATElab along with £46.4 million on capital expenditure.

At 31 March 2013, the Group had net assets of £1,599.0 million (2012: £1,449.7 million). Intangible assets decreased by £68.1 million, mainly reflecting the amortisation of purchased intangible assets, partly offset by goodwill and purchased intangibles recognised from the purchase of GATElab. The central counterparty clearing business assets and liabilities within CC&G largely offset each other but are shown gross on the balance sheet as the amounts receivable and payable are with different counterparties. Increased repurchase agreement balances led to higher gross year end positions.

At 31 March 2013, the Group had operating net debt of £549.9 million after setting aside £200 million to meet regulatory, clearing and commercial requirements. Following the changes to European regulations under EMIR, CC&G has satisfied its regulator, Bank of Italy, that it will meet the new requirements, with its financial position during the year underpinned by strong organic profits and cash generation.

The Group’s gross borrowings increased by £39.7 million, following the issue of a £300 million bond to UK retail investors which was completed on 2 November 2012. The pricing and size of this bond was a milestone in the development of that market and played a useful part in supporting the growth during 2012 of the Group’s Orderbook for Retail Bonds platform. The new borrowing extended the average maturity of the Group’s drawn debt to over 6 years and the proceeds allowed the full repayment of drawn bank facilities. At 31 March 2013, the Group had drawn debt and committed credit lines totalling £1.65 billion, with £1.4 billion extending to December 2014 or beyond. With £850 million of undrawn bank lines available, together with a strong cash position, the Group had comfortable headroom ahead of the planned completion of the acquisition of a further 55.5 per cent of LCH.Clearnet Group, the associated subsequent funding of LCH.Clearnet Group’s increased regulatory capital requirements and, separately, the investment in the FTSE TMX Debt Capital Markets joint venture.

The Group’s interest cover (the coverage of net finance expense by earnings before interest, taxation, depreciation and amortisation, both before non-recurring items) reduced to 9.5 times (2012: 11.8 times) due to a reduction in EBITDA and the cost of the longer term retail bond increasing the Group’s average cost of debt. However, the Group’s cash generation remained strong, which resulted in a reduction in operating net debt to adjusted EBITDA to 1.2 times (2012: 1.4 times on a pro forma basis as if the Group had owned 100 per cent of FTSE for the whole year), despite the increase in cash set aside to meet regulatory, clearing and commercial requirements. On an illustrative pro forma basis taking into account the LCH.Clearnet transaction, the enlarged Group operating net debt to adjusted EBITDA would be 2.0 times, which is in line with the position announced on 7 March 2013. The FTSE TMX Debt Capital Markets joint venture completed after the year end and would increase this ratio to 2.1 times on an illustrative pro forma basis.

The Group’s long term credit ratings remain at A- with Standard & Poor’s and Baa2 with Moody’s. Standard & Poor’s concluded its watch review of the LCH.Clearnet transaction by affirming on 3 May 2013 it’s A- rating and noting the positive impacts of recent investments made by the Group. However, Standard & Poor’s has assigned a negative outlook reflecting, amongst other factors, the risk that the Group underperforms against Standard and Poor’s leverage and debt servicing expectations in the year to 31 March 2014. Moody’s has affirmed its rating following completion of its own review with the movement of the outlook from negative to stable given the removal of a number of uncertainties for the agency around the transaction and the positive impact from further diversification of the business the LCH.Clearnet Group acquisition will bring.


Victoria Brough
Lucie Holloway
+44 (0) 20 7797 1222

Investor Relations
Paul Froud
+44 (0) 20 7797 3322

Citigate Dewe Rogerson
Patrick Donovan
Grant Ringshaw
+44 (0) 20 7638 9571

Further information

The Group will host a presentation of its Preliminary Results for analysts and shareholders today at 09:30am (BST) at 10 Paternoster Square, London EC4M 7LS. 

The presentation will be accessible via live webcast, which can be viewed at  For further information, please call the Group’s Investor Relations team on +44 (0) 20 7797 3322.

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.