IMS for the period to 18 October 2017, including revenues and KPIs for the three months ended 30 September

IMS for the period to 18 October 2017, including revenues and KPIs for the three months ended 30 September

  • Another period of delivery against our targets with continued good growth - Q3 total income up 17% to £486 million; and up 19% for 9 months year-to-date, to £1,432 million
  • Q3 revenues up 18% to £443 million; up 18% for 9 months year-to-date at £1,295 million
  • Strong demonstration of capital deployment to drive growth and returns, including: completion of the Citi Fixed Income Indices and The Yield Book acquisition; increasing our stake in LCH; and, completion of the £200 million share buyback programme

Q3 summary:

  • Information Services:  revenues up 22% (up 15% on organic and constant currency basis) – with good underlying growth and one month’s inclusion of The Yield Book and Citi Fixed Income Indices
  • Post Trade: LCH income up 26% (up 22% at constant currency), with 23% revenue growth in OTC from higher volume of SwapClear client trades; ForexClear continues to see strong volume growth.  CC&G and Monte Titoli income up 2% (down 4% at constant currency)
  • Capital Markets: revenues up 8% (up 5% on organic and constant currency basis), with record quarterly primary markets revenues in a period of strong equity issuance; Turquoise continues to trade well, with strong growth in the Turquoise Plato Block Discovery service (including a record month in September)
  • Technology Services:  revenues up 9% (up 7% at constant currency)

Commenting on performance in Q3, Xavier Rolet, Chief Executive, said:

“The Group continues to perform very well, with good revenue growth in our main businesses and a strong period of successful development and delivery.  The completion of the acquisition of Citi Fixed Income Indices and The Yield Book is already contributing to the further growth in FTSE Russell while LCH continues to perform strongly and has launched innovative new services.  I am also delighted that we are increasing our stake in the LCH Group. 

“The Group’s excellent financial performance is reflective of our continued innovation and execution of our growth strategy, enabling us to deliver against our three year financial targets.  Together with our proven Customer Partnership and Open Access approach, this positions us strongly to benefit from the introduction of MiFID II in less than three months time.”

Organic growth is calculated in respect of businesses owned for at least 3 months in either period and so excludes The Yield Book and Citi Fixed Income Indices, ISPS, Mergent and SwapMatch. The Group’s principal foreign exchange exposure arises from translating our European based Euro and US based USD reporting businesses into Sterling.

Investment in growth opportunities and new developments continued across the business:

  • LSEG will increase its stake in LCH Group to 64.4% (on completion of regulatory processes before the end of 2017), acquiring an additional 6.63% following a sale by certain minority shareholders
  • LCH SwapAgent service for non-cleared derivatives now live and has processed its first trades
  • LCH RepoClear launched Sponsored Clearing, offering buy-side firms direct access to LCH for repos clearing across 11 government bond markets
  • LCH signed binding terms with Euronext N.V. for the continued provision of clearing services for listed financial and commodity derivatives with LCH SA.  The agreement is expected to be finalised in Q4 2017
  • The Government Pension Investment Fund (GPIF) of Japan selected new FTSE Blossom Japan Index as a core ESG benchmark through its flagship fund
  • Good flow of new issues on our UK and Italian markets, with a near doubling in the number of new issues year on year – in early October Borsa Italiana welcomed Pirelli to its market, the largest continental European IPO so far in 2017; together with Allied Irish Bank in the summer, the two largest European IPOs have been on Group markets
  • Turquoise Lit Auctions, a pre-trade transparent and MiFID II compliant trading mechanism, received regulatory approval for Q4 2017 launch; and Turquoise Plato Block Discovery delivered record value traded in September (8 times the level of Q3 last year)
  • CurveGlobal marked its first year in operation – the platform is building a firm foundation, with 1.5 million lots traded since launch (of which 40%of the volume traded was in the last three months)
  • UK’s Financial Conduct Authority approved London Stock Exchange to be authorised as an Approved Publication Arrangement (APA) and an Approved Reporting Mechanism (ARM) – enabling firms to meet their trade and transaction reporting obligations under MiFID II and MiFIR
  • Borsa Italiana and IBM announced they are building a blockchain solution to digitise the issuance of securities for small and medium enterprises (SMEs) in Europe
  • LSEG Technology completed the go-live of Millennium Exchange through a technology partnership with Caja de Valores S.A., which acts as the technology provider for Bolsas y Mercados Argentinos
  • Gatelab has become an approved provider of risk gateway services for Bombay Stock Exchange

Financial Position

Refinancing to extend Group debt maturities was successfully completed in September.  The Group issued €500 million 0.875% 2024 bonds and €500 million 1.75% 2029 bonds, of which an aggregate €700 million was immediately swapped into USD to appropriately match Group currency of debt to currency of earnings. The resulting effective blended rate of interest on the bonds is fixed at c2.8% per annum until the first maturity date.

The Group's financial position remains strong, with good cash generation from operations offset by normal course interim dividend and bond coupon payments, and the conclusion of the £200 million share buyback programme.  We also continue to invest in projects to support growth initiatives.  During the period the Group completed the acquisition of the Citi Fixed Income Indices and The Yield Book, paying US$685 million.  At 30 September 2017, the Group's committed facility headroom was c£700 million, available for general corporate purposes.

The euro and US dollar both strengthened by 8% against sterling compared with the same period last year. To illustrate our exposure to movements in exchange rates, a €0.05 change in the average euro:sterling rate would have resulted in a change to continuing operations total income of c£6.9 million for Q3, while a US$0.05 move would have resulted in a c£4.8 million change.

Current trading

The Group continues to execute on its successful growth strategy to deliver attractive shareholder returns.  All main parts of the Group continue to perform well and investment remains ongoing on a number of initiatives.  We are well positioned for the introduction of MiFID II and a broader changing regulatory environment.

The Group released a separate statement this morning regarding succession planning.

Further information is available from:

London Stock Exchange Group plc
Lucie Holloway/Ramesh Chhabra – Media +44 (0) 20 7797 1222
Paul Froud – Investor Relations +44 (0) 20 7797 3322

A conference call for analysts and investors will be held at 8:30 (UK time) on Thursday 19 October.  On the call will be David Warren (CFO) and Paul Froud (Head of Investor Relations).

To access the telephone conference call dial 0800 694 0257 or +44 (0) 1452 555 566

Conference ID: 8705 3054