Interim Management Statement for the period to 22 January 2014

  • Strong financial performance  -  Q3 total income1 up 48 per cent at £308.9 million and 9 months year-to-date up 38 per cent, to £876.0 million
  • Growth in Q3 and year-to-date revenues driven by organic increases in all segments, as well as inclusion of LCH.Clearnet revenues; on an organic constant currency basis, Q3 revenues up 13 per cent
  • Capital Markets Q3 revenues up 21 per cent, with good growth in primary markets as the number of new issues nearly doubled; secondary markets benefitted from improvements in cash equity and fixed income trading volumes
  • Post Trade Services (Italy) Q3 revenues up 14 per cent, with growth in clearing volumes and within settlement and custody
  • LCH.Clearnet Q3 total income up 3 per cent on pro forma basis - further year-on-year growth in OTC clearing
  • Information Services Q3 revenues up 16 per cent, reflecting good performances from FTSE and a number of other services, and with contribution from the fixed income JV indices business launched last year
  • Technology Services revenues up 17 per cent, driven by growth from MillenniumIT
  • Good progress being made on integration with LCH.Clearnet - detailed work programmes underway to restructure and drive cost and operational efficiencies

1 includes a £6.9m gain from sale of shares in non-core asset

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

“The Group continued to make good progress, delivering further revenue growth in the past quarter.  All of our main business segments have recorded good performances, both through organic development and as a result of successful additions to the Group’s portfolio of businesses.

“Significant focus remains on the integration of LCH.Clearnet, with a number of detailed programmes underway to achieve the widespread benefits of the transaction.  We are also focused on developing further growth opportunities across the Group, building on our increasingly diverse world class assets and working in partnership with our customers to deliver service and product innovation.”

Financial Position

Following normal course interim dividend and bond coupon payments, the Group’s financial position is broadly unchanged from the position reported at 30 September 2013. As at 31 December, 2013, the Group had committed facility headroom of circa £400 million available for general corporate purposes.

The euro strengthened against sterling compared with the same period last year. To illustrate our exposure to movements in this exchange rate, a €0.05 change in the average euro:sterling rate would have resulted in a change to total income of c£7 million for Q3.

Board and Management

As announced earlier in January, Sherry Coutu and Joanna Shields joined the LSEG Board as Non-Executive Directors with immediate effect.  These new appointments bring broad international management experience and, in particular, deep knowledge of the information technology sector, reflecting the Group’s continued focus on delivering innovative technology solutions to its customers around the world, as well as its on-going commitment to supporting entrepreneurs and SMEs to find appropriate and sustainable financing solutions.

Suneel Bakhshi, as previously announced, starts as LCH.Clearnet Group CEO, on 3 February. He joins from Citigroup and brings substantial experience in risk management and process change in complex organisations.  Suneel will help drive the integration process, work to achieve operational efficiencies and ensure the business meets EMIR and other regulatory requirements for clearing houses.

Current trading and outlook

The Group has made good progress in Q3 and year-to-date.  As we start the fourth quarter there are positive signs in our primary markets, with expectations of continuing capital raising activity, while in secondary markets, both UK and Italian cash equity trading  and Italian derivative trading is running ahead of the same period last year.  In turn, any improvements in trading will feed through to our Post Trade operations.

With a broad, well diversified and increasingly international range of businesses, the Group is well positioned to develop further.  In the meantime, we remain focused on delivering the synergy benefits from the transaction with LCH.Clearnet, with detailed work programmes underway to control costs, restructure and deliver operational efficiencies.

Further information is available from:

London Stock Exchange Group plc

Gavin Sullivan – Media

Paul Froud – Investor Relations

+44 (0) 20 7797 1222

+44 (0) 20 7797 3322

 

 

 

Citigate Dewe Rogerson

Patrick Donovan/Grant Ringshaw

+44 (0) 20 7638 9571

 

 

A conference call for analysts and investors will be held at 8:30 (UK time) on Thursday 23rd January.  On the call will be David Warren (CFO) and Paul Froud (Head of Investor Relations).

To access the Telephone conference call dial 0800 279 7058 or +44 (0) 1452 580 111

Conference ID: 34486460

Q3 Revenue Summary

Revenues for three months and nine months ended 31 December 2013, with comparatives against performance for the same period last year, are provided below.  Growth rates for both Q3 and year to date performance are also expressed on an organic and constant currency basis.  All figures are unaudited.

 


1
Exchange rates for the relevant period are detailed at the end of this section 

 Adjustments to calculate organic growth:

1)      Removal of EuroTLX revenue (Capital Markets – Fixed Income)

2)      Removal of FTSE TMX revenue (Information Services)

3)      Removal of GATElab revenue (Technology Services)

4)      Removal of LCH.Clearnet revenue

2LCH.Clearnet represents three months ended 31 December 2013 and eight months ended 31 December 2013

3Other income includes a gain of £6.9m from disposal of shares in a non-core asset

More detailed revenues by segment are provided in tables below:

 

  

Basis of Preparation

 

Results for Borsa Italiana and LCH.Clearnet for the period ended 31 December 2013 have been translated into Sterling using the average monthly exchange rate for the period of €1.19: £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 2013

Closing €:£ rate at 31 December 2013

Average €:£ rate 9 months ended 31 December 2013

Average €:£ rate 3 months ended 31 December 2012

Closing €:£ rate at 31 December 2012

Average €:£ rate 9 months ended 31 December 2012

 

 

 

 

 

 

€   1.19

€   1.20

€   1.18

€   1.24

€   1.23

€   1.25

 

 

 

 

 Note: Minor rounding differences may mean quarterly and other segmental figures may differ slightly