London Stock Exchange Group plc pre-close period update
Unless otherwise stated, the following commentary refers to the five months ended 31 August 2009 and, where appropriate, to the corresponding period last year.
London Stock Exchange Group plc (“the Group”) today issued a routine update ahead of the close period relating to the six months ending 30 September 2009.
- Money raised on the Group’s markets during the period remained strong and broadly in-line with the amount raised last year at £43 billion, mainly comprising good levels of secondary issues in London with £30 billion raised
- SETS average daily value traded declined 43 per cent year on year at £4.6 billion; trading volume at Borsa Italiana was up four per cent on last year at 262,000 trades per day
- The yield on UK cash equities trading in the period was 0.94 basis points of value traded. A new tariff structure for the UK market was introduced at the start of September, re-balancing the charging between passive and aggressive trades, which together with new discounts is expected to reduce the yield by approximately 10 per cent (based on trading levels in the previous quarter)
- The Group’s Derivatives operations saw overall contracts traded increase six per cent over the same period last year. Volume on IDEM increased 17 per cent, following tariff changes designed to stimulate growth in trading volumes. EDX traded a similar number of contracts to prior year, with Russian contracts outnumbering Scandinavian trades for the first time
- On the Fixed Income markets, MTS Cash and Repo markets value traded were lower than last year by two and eight per cent respectively. Trading on Borsa Italiana’s Electronic Bond and Government Securities Market MOT increased 36 per cent and value traded rose by 56 per cent
Post Trade showed growth in all areas with increases of four per cent and 17 per cent in the level of equity and derivative clearing by CC&G for the five months; open interest also remained high at five million contracts
Settlement instructions increased by 26 per cent and the Monte Titoli custody business remains robust, with a slight increase in value of assets under custody
Information & Technology Services
In Information & Technology Services, demand for terminals taking real time data reduced to 94,000 professional users of LSE information (98,000 at end of June 2009), while professional terminals receiving Borsa Italiana data declined 3,000 to 142,000 in the same period
Demand for other Information & Technology product lines remained good overall, with continued strength in SEDOL, Proquote and FTSE
In July we reported that consultation was underway to reduce headcount in the UK and Italy. The process is mostly complete, with 133 staff leaving the Group, representing 12 per cent of the total number of employees at the start of the year. This will provide expected cost savings of close to £11 million pa starting from the second half of this year, with a one-off exceptional cost to achieve the savings of £14 million to be taken in H1. Review of all Group costs will continue.
Last week we announced an agreement to acquire MillenniumIT, a Sri Lanka-based technology services company. MillenniumIT will provide the Group with a new, high performance trading platform and will generate at least £10 million pa of cost savings from FY2011-12. Non-recurring incremental operating expenses of £25 million, representing accelerated depreciation of the current TradElect platform and expensing of current year upgrades, will be incurred in the current financial year of which £18.5 million will be taken in H1. The acquisition is expected to complete in mid October.
Commenting on performance for the period, Xavier Rolet, Chief Executive said:
“Although market conditions remain challenging, the Group continues to see good levels of activity in many parts of the business.
“We continue to take actions to ensure the Group is well placed to compete and develop. The acquisition of MillenniumIT is an exciting and important step, that will provide a more flexible, efficient and high performance trading platform.”
The Exchange expects to announce its Interim results for the six months ending 30 September 2009 on 25 November 2009.
Further information is available from:
London Stock Exchange Group
Patrick Humphris – Media
+44 (0) 20 7797 1222
Luca Grassis – Media
+39 02 72426 211
Paul Froud – Investor Relations
+44 (0) 20 7797 3322
Citigate Dewe Rogerson
Patrick Donovan/ Grant Ringshaw/ Lucie Holloway
+44 (0) 20 7638 9571