Interim management statement for the period to 26 January 2011

Including revenues and KPIs for the three months ended 31 December 2010

Revenues and KPIs for three months ended 31 December 2010 (“Q3”):

  • Strong increase in total income, up six per cent on Q3 last year (up nine per cent at constant currency) at £165.9 million
  • Sequential growth in total income of nine per cent on Q2
  • Capital Markets saw a strong performance from primary markets with a 75 per cent increase in number of new issues on the Group’s markets, including continued good growth in international IPOs; primary markets revenue rose five per cent 
  • Also in Capital Markets, secondary markets saw an increase of nine per cent from fixed income trading revenue due to strong growth in MTS money markets, offset by a decline of five per cent in the value of UK cash equities traded, a three per cent decline in volumes in Italy and a decrease in volumes of 10 per cent at IDEM.  Overall this led to a decline in secondary market revenues of nine per cent
  • Share of order book trading in UK cash equities in Q3 averaged 63.8 per cent, continuing the stabilisation in share since the start of the financial year (63.1 per cent over the past nine months); in Italy the share of order book trading in the period was 82.5 per cent and 84.0 per cent for the year to date
  • Post Trade Services total income was up 33 per cent, driven by an increase in treasury management income from clearing operations
  • Information Services revenues increased two per cent; the total number of professional users of real time information remained at the same level as the half year and broadly unchanged year on year, while other information products delivered good revenue growth
  • Technology Services revenues rose 11 per cent, reflecting full quarter revenue at MillenniumIT compared with partial Q3 contribution last year

    Operational Developments:

  • Millennium Exchange trading system successfully launched on Turquoise in Q3 and from the outset has been performing at class leading speeds; roll out to the UK cash market is scheduled for 14 February 2011
  • Successful migration of the IDEM derivatives business on to the SOLA trading system in past quarter
  • CC&G extended operations, providing CCP services to the MOT Italian retail bond market, and CC&G went live with the collateralised section of the Interbank Deposit Market, replacing a Bank of Italy service
  • In Information Services, the first client has commenced directly reporting its global real-time terminal inventory following an initiative to simplify client reporting of data use and remove duplication of costs for individual users
  • In Technology Services, the London data centre has been opened to non-trading market participants, including vendors and service providers, for faster receipt and distribution of trading data
  • The Group has signed a strategic partnership agreement to develop the Mongolian Stock Exchange, providing MillenniumIT technology and capital markets advisory services to modernise and develop the Mongolian exchange

Commenting on performance in the past quarter, Xavier Rolet, Chief Executive, said:

“This has been another good quarter for us with growth of six per cent in Group total income, up nine per cent in constant currency, and particularly strong performances from the treasury management part of Post Trade Services and MTS, our pan-European fixed income market.  At the macro level, the IPO market trends continue to be very encouraging and the pipeline remains strong. 

“Development work for derivatives trading on Turquoise is going well and we are on schedule for launch in calendar Q2.  Preparation is also advanced for the roll out of the Millennium Exchange trading platform for the UK equities market next month.  We continue to work on further ways to leverage the Group’s portfolio of assets and to develop opportunities to drive growth.”

Nine months to 31 December 2010

Total income increased three per cent year on year to £484.3 million (up five per cent at constant currency; up two per cent on organic, constant currency basis excluding Turquoise and MillenniumIT).  Including treasury management income within Post Trade Services, there has been growth year to date in all divisions other than Capital Markets.

Current trading and Outlook

Calendar 2011 has started well relative to Q3 with cash equities average value traded in the UK up 15 per cent at £4.8bn per day (down two per cent on January last year) and share of trading remains steady at 63.0 per cent.  In Italy volumes are up 37 per cent against average daily levels in the last quarter (up 29 per cent on January last year).  MTS fixed income trading is ahead of Q3 average levels and up on January last year, while IDEM derivative volumes are down slightly on Q3 but up on January last year .  Post Trade operations are benefitting from improved trading levels.  In primary markets the pipeline for new issues remains very encouraging with a number of international and domestic companies planning capital raising in the period ahead.

Focus remains on improving business efficiency, ensuring the successful roll out of new technology for the UK cash equities market on 14 February 2011 and extending our product offerings.  Development work for launch of derivatives trading through Turquoise is a current priority and other work continues across the Group to provide a platform for longer-term growth.

Q3 Revenue Summary

Revenues for three months and nine months ended 31 December 2010, with comparatives against performance for the same period last year.  Growth rates for both Q3 and year to date performance are also expressed on a constant currency basis.  All figures are unaudited.

 

Three months ended

 

Variance at

 

Nine months ended

 

Variance at

 

31 December

 

constant

 

31 December

 

constant

 

2010

2009

Variance

currency

 

2010

2009

Variance

currency

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

 

 

 

 

 

 

 

 

 

Capital Markets

69.4

72.0

(4%)

(2%)

 

206.2

223.3

(8%)

(6%)

Post Trade Services

23.9

25.7

(7%)

(2%)

 

72.2

75.3

(4%)

(0%)

Information Services

43.9

43.0

2%

4%

 

131.4

128.7

2%

3%

Technology Services

11.4

10.3

11%

11%

 

35.8

24.1

49%

50%

Other

0.5

0.3

 

 

 

1.3

1.3

 

 

Total revenue

149.1

151.3

(1%)

1%

 

446.9

452.7

(1%)

1%

Net treasury income   through CCP business

14.8

3.4

330%

348%

 

31.6

13.1

141%

151%

Other income

2.0

1.5

30%

33%

 

5.8

4.6

26%

26%

Total income

165.9

156.3

6%

9%

 

484.3

470.4

3%

5%

More detailed revenues by segment are provided in tables below:

Capital Markets

 

Three months ended

 

Variance at

 

Nine months ended

 

Variance at

 

31 December

 

constant

 

31 December

 

constant

 

2010

2009

Variance

currency

 

2010

2009

Variance

currency

Revenue

£m

£m

%

%

 

£m

£m

%

%

Primary Markets

 

 

 

 

 

 

 

 

 

Annual fees

9.6

8.7

10%

12%

 

28.3

26.2

8%

10%

Admission fees

9.5

9.5

0%

0%

 

24.8

26.3

(6%)

(5%)

 

19.1

18.2

5%

6%

 

53.1

52.5

1%

2%

Secondary Markets

 

 

 

 

 

 

 

 

 

Cash equities UK

19.5

23.0

(15%)

(15%)

 

63.4

76.7

(17%)

(17%)

Cash equities Italy

6.8

7.1

(4%)

1%

 

21.5

24.3

(12%)

(8%)

Derivatives

3.8

4.7

(19%)

(16%)

 

12.3

15.2

(19%)

(17%)

Fixed income

8.3

7.6

9%

15%

 

22.9

21.3

8%

12%

 

38.4

42.4

(9%)

(7%)

 

120.1

137.5

(13%)

(11%)

Other

11.9

11.4

4%

8%

 

33.0

33.3

(1%)

2%

Total revenue

69.4

72.0

(4%)

(2%)

 

206.2

223.3

(8%)

(6%)

Post Trade Services

 

Three months ended

 

Variance at

 

Nine months ended

 

Variance at

 

31 December

 

constant

 

31 December

 

constant

 

2010

2009

Variance

currency

 

2010

2009

Variance

currency

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

 

 

 

 

 

 

 

 

 

Clearing

8.4

8.9

(6%)

0%

 

25.2

24.9

1%

5%

Settlement

4.5

5.0

(10%)

(6%)

 

13.4

15.8

(15%)

(12%)

Custody & other

11.0

11.8

(7%)

(2%)

 

33.6

34.6

(3%)

1%

Total revenue

23.9

25.7

(7%)

(2%)

 

72.2

75.3

(4%)

(0%)

Net treasury income   through CCP business

14.8

3.4

330%

348%

 

31.6

13.1

141%

151%

Total income

38.7

29.1

33%

40%

 

103.8

88.4

17%

22%

Information Services

 

Three months ended

 

Variance at

 

Nine months ended

 

Variance at

 

31 December

 

constant

 

31 December

 

constant

 

2010

2009

Variance

currency

 

2010

2009

Variance

currency

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

 

 

 

 

 

 

 

 

 

Real time data

24.4

26.3

(7%)

(6%)

 

72.6

80.3

(10%)

(8%)

Other information   services

19.5

16.7

17%

18%

 

58.8

48.4

21%

23%

Total revenue

43.9

43.0

2%

4%

 

131.4

128.7

2%

3%

Technology Services

 

Three months ended

 

Variance at

 

Nine months ended

 

Variance at

 

31 December

 

constant

 

31 December

 

constant

 

2010

2009

Variance

currency

 

2010

2009

Variance

currency

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

 

 

 

 

 

 

 

 

 

MillenniumIT

4.1

2.6

58%

52%

 

13.1

2.6

-

-

Technology

7.3

7.7

(5%)

(4%)

 

22.7

21.5

6%

7%

Total revenue

11.4

10.3

11%

11%

 

35.8

24.1

49%

50%

Financial Position

The Group’s financial position is broadly unchanged since 30 September 2010.  As announced in November, the Group re-financed £225 million of its bank lines with a new £250 million, five year revolving credit facility, with committed credit lines for general group purposes totalling £1 billion, of which £750 million extends to 2015 or beyond.

The euro decreased 5 per cent against sterling Q3 over Q3 last year – a €0.05 decrease in the average euro:sterling rate for the full year reduces operating profit total by c£6.6 million.

Further information is available from:

London Stock Exchange Group plc

Victoria Brough – Media

+44 (0) 20 7797 1222

Paul Froud – Investor Relations

+44 (0) 20 7797 3322

 

Citigate Dewe Rogerson

Patrick Donovan/Grant Ringshaw

+44 (0) 20 7638 9571

Basis of Preparation

Results for Borsa Italiana for the periods ended 31 December 2010 have been translated into Sterling using the average monthly exchange rate for the period of €1.164: £1.  Constant currency growth rates have been calculated by translating prior period results at the average exchange rate for the current period.

Average €:£ rate 3   months ended 31 December 2010

Closing €:£ rate at 31   December 2010

Average €:£ rate 9   months ended 31 December 2010

Average €:£ rate 3   months ended 31 December 2009

Closing €:£ rate at 31   December 2009

Average €:£ rate 9   months ended 31 December 2009

 

 

 

 

 

 

€1.164

€1.167

€1.180

€1.106

€1.123

€1.131

 

Appendix

Capital Markets -   Primary Markets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

31 December

Variance

 

31 December

Variance

 

2010

 

2009

%

 

2010

 

2009

%

New Issues

 

 

 

 

 

 

 

 

 

UK Main Market, PSM   & SFM

25

 

14

79%

 

59

 

36

64%

UK AIM

35

 

18

94%

 

86

 

31

177%

Borsa Italiana

3

 

4

(25%)

 

6

 

6

0%

Total

63

 

36

75%

 

151

 

73

107%

 

 

 

 

 

 

 

 

 

 

Company Numbers (as at   period end)

 

 

 

 

 

 

 

 

 

UK Main Market, PSM   & SFM

1,475

 

1,499

(2%)

 

 

 

 

 

UK AIM

1,195

 

1,293

(8%)

 

 

 

 

 

Borsa Italiana

296

 

296

0%

 

 

 

 

 

Total

2,966

 

3,088

(4%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Capitalisation   (as at period end)

 

 

 

 

 

 

 

 

 

UK Main Market (£bn)

1,952

 

1,732

13%

 

 

 

 

 

UK AIM (£bn)

79

 

57

39%

 

 

 

 

 

Borsa Italiana (€bn)

425

 

457

(7%)

 

 

 

 

 

Borsa Italiana (£bn)

366

 

406

(10%)

 

 

 

 

 

Total (£bn)

2,397

 

2,195

9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Raised (£bn)

 

 

 

 

 

 

 

 

 

UK New

3.6

 

1.0

260%

 

8.7

 

2.2

295%

UK Further

6.8

 

20.8

(67%)

 

18.3

 

51.7

(65%)

Borsa Italiana new and   further

2.0

 

2.1

(5%)

 

3.1

 

13.6

(77%)

Total (£bn)

12.4

 

23.9

(48%)

 

30.1

 

67.5

(55%)

 

 

Capital Markets -   Secondary Markets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

31 December

Variance

 

31 December

Variance

 

2010

 

2009

%

 

2010

 

2009

%

Equity Volume Bargains   (m)

 

 

 

 

 

 

 

 

 

UK

33.8

 

34.5

(2%)

 

109.9

 

112.9

(3%)

Borsa Italiana

14.6

 

15.0

(3%)

 

46.7

 

48.5

(4%)

Total

48.4

 

49.5

(2%)

 

156.6

 

161.4

(3%)

 

 

 

 

 

 

 

 

 

 

Equity Value Traded

 

 

 

 

 

 

 

 

 

UK (£bn)

268

 

283

(5%)

 

881

 

863

2%

Borsa Italiana (€bn)

165

 

175

(6%)

 

579

 

552

5%

Borsa Italiana (£bn)

142

 

159

(11%)

 

492

 

490

0%

Total (£bn)

410

 

442

(7%)

 

1,373

 

1,353

1%

 

 

 

 

 

 

 

 

 

 

Equity Average Daily   Bargains ('000)

 

 

 

 

 

 

 

 

 

UK

528

 

539

(2%)

 

578

 

594

(3%)

Borsa Italiana

229

 

239

(4%)

 

242

 

254

(5%)

Total

757

 

778

(3%)

 

820

 

848

(3%)

 

 

 

 

 

 

 

 

 

 

Equity Average Daily   Value Traded

 

 

 

 

 

 

 

 

 

UK (£bn)

4.2

 

4.4

(5%)

 

4.6

 

4.5

2%

Borsa Italiana (€bn)

2.6

 

2.8

(7%)

 

3.0

 

2.9

3%

Borsa Italiana (£bn)

2.2

 

2.5

(12%)

 

2.5

 

2.6

(4%)

Total (£bn)

6.4

 

6.9

(7%)

 

7.1

 

7.1

0%

 

 

 

 

 

 

 

 

 

 

SETS Yield (basis points)

0.72

 

0.81

(11%)

 

0.71

 

0.88

(19%)

 

 

Three months ended

 

 

Nine months ended

 

 

31 December

Variance

 

31 December

Variance

 

2010

 

2009

%

 

2010

 

2009

%

Derivatives (contracts   m)

 

 

 

 

 

 

 

 

 

EDX

9.0

 

15.3

(41%)

 

26.2

 

46.6

(44%)

of which Russian / IOB

8.3

 

11.4

(27%)

 

24.0

 

28.6

(16%)

IDEM

9.5

 

10.6

(10%)

 

36.1

 

32.9

10%

Total

18.5

 

25.9

(29%)

 

62.3

 

79.5

(22%)

 

 

 

 

 

 

 

 

 

 

Fixed Income

 

 

 

 

 

 

 

 

 

MTS cash and   Bondvision (€bn)

649

 

668

(3%)

 

1,896

 

1,699

12%

MTS money markets (€bn   term adjusted)

15,827

 

10,441

52%

 

47,123

 

28,729

64%

 

 

 

 

 

 

 

 

 

 

MOT (€bn)

57

 

51

12%

 

171

 

167

2%

MOT number of trades   (m)

1.11

 

0.78

42%

 

2.95

 

2.52

17%

 

Post Trade Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

31 December

Variance

 

31 December

Variance

 

2010

 

2009

%

 

2010

 

2009

%

CC&G Clearing (m)

 

 

 

 

 

 

 

 

 

Equity clearing   (trades)

15.2

 

15.9

(4%)

 

49.3

 

50.6

(3%)

Derivative clearing    (contracts)

9.5

 

10.6

(10%)

 

36.0

 

32.9

9%

Total Contracts

24.7

 

26.5

(7%)

 

85.3

 

83.5

2%

Open interest   (contracts as at period end)

3.0

 

2.9

3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monte Titoli

 

 

 

 

 

 

 

 

 

Pre Settlement   instructions (trades m)

7.5

 

8.2

(9%)

 

22.6

 

26.4

(14%)

Settlement   instructions (trades m)

9.4

 

11.4

(18%)

 

29.3

 

37.8

(22%)

Custody assets under   management (average €tn)

3.00

 

2.95

2%

 

2.99

 

2.85

5%

 

Information Services

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

31 December

Variance

 

2010

 

2009

%

UK Terminals

 

 

 

 

Professional - UK

38,000

 

38,000

0%

Professional - International

55,000

 

55,000

0%

Total

93,000

 

93,000

0%

 

 

 

 

 

Borsa Italiana   Professional Terminals

140,000

 

143,000

(2%)

 

Total Income – Quarterly

 

 

FY 2010

 

FY 2011

£ millions

 

Q1

Q2

Q3

Q4

FY 2010

 

Q1

Q2

Q3

 

 

 

 

 

 

 

 

 

 

 

Annual Fees

 

8.9

8.6

8.7

9.0

35.2

 

9.3

9.4

9.6

Admission Fees

 

9.0

7.7

9.5

7.8

34.0

 

8.8

6.5

9.5

Cash equities UK

 

28.4

25.3

23.0

25.1

101.8

 

24.4

19.6

19.5

Cash equities Italy

 

9.1

8.1

7.1

7.4

31.7

 

8.7

6.0

6.8

Derivatives

 

5.5

5.0

4.7

4.3

19.5

 

4.9

3.5

3.8

Fixed Income

 

6.7

7.1

7.6

7.9

29.3

 

7.4

7.2

8.3

Other

 

11.0

10.9

11.4

10.5

43.8

 

10.7

10.5

11.9

Capital Markets

 

78.6

72.7

72.0

72.0

295.3

 

74.2

62.7

69.4

 

 

 

 

 

 

 

 

 

 

 

Clearing

 

8.9

7.1

8.9

8.5

33.4

 

9.7

7.2

8.4

Settlement

 

6.0

4.8

5.0

5.3

21.1

 

5.0

3.9

4.5

Custody & other

 

12.3

10.5

11.8

10.9

45.5

 

12.2

10.3

11.0

Post Trade Services

 

27.2

22.4

25.7

24.7

100.1

 

26.9

21.4

23.9

 

 

 

 

 

 

 

 

 

 

 

Real time data

 

27.4

26.6

26.3

23.4

103.7

 

24.0

24.3

24.4

Other information

 

16.7

15.0

16.7

17.3

65.5

 

20.0

19.1

19.5

Information Services

 

44.1

41.6

43.0

40.7

169.2

 

44.0

43.4

43.9

 

 

 

 

 

 

 

 

 

 

 

MillenniumIT

 

-

-

2.6

4.1

6.7

 

4.9

4.1

4.1

Technology

 

6.6

7.2

7.7

11.2

32.7

 

7.6

7.9

7.3

Technology Services

 

6.6

7.2

10.3

15.3

39.4

 

12.5

12.0

11.4

 

 

 

 

 

 

 

 

 

 

 

Other

 

0.5

0.3

0.3

0.4

1.5

 

0.4

0.4

0.5

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

157.0

144.2

151.3

153.1

605.5

 

158.2

139.9

149.1

 

 

 

 

 

 

 

 

 

 

 

Net treasury income   through CCP business

 

4.9

4.8

3.4

3.1

16.2

 

5.9

10.8

14.8

Other income

 

1.3

1.8

1.5

1.9

6.5

 

1.9

1.9

2.0

 

 

 

 

 

 

 

 

 

 

 

Total income

 

163.2

150.8

156.3

158.1

628.3

 

166.0

152.6

165.9