London Stock Exchange Group Plc Preliminary Results For The Year Ended 31 December 2017

Unless stated otherwise, all figures in the highlights below refer to continuing operations1 for 12 months to 31 December 2017 and comparisons with the prior 12 month period on the same basis.

  • Continued execution of strategy driving strong operational and financial performance – deployment of capital for acquisitions and organic investment to drive multiple growth opportunities
  • Strong financial results – headline growth across all core business divisions – Information Services, Post Trade and Capital Markets - underpins confidence in delivery of three-year financial targets
  • Well positioned to drive further growth as a diversified, global financial markets infrastructure business – operating on an Open Access basis in partnership with customers

2017 Highlights

  • Total revenue up 17% to £1,768 million (2016: £1,515 million)
  • Total income up 18% to £1,955 million (2016: £1,657 million) 
  • FTSE Russell delivered 33% revenue growth (up 15% on an underlying basis); LCH OTC revenues up 21% (up 17% on an underlying basis)
  • Adjusted operating expenses2 up 6% on an organic and constant currency basis reflecting continued investment in growth and efficiency projects
  • Adjusted operating profit3 up 18% at £812 million (2016: £686 million); operating profit up 47% at £626 million (2016: £427 million); adjusted EBITDA2 up 19% at £915 million (2016: £771 million)
  • Adjusted EPS3 up 19% at 148.7 pence (2016: 124.7 pence); basic EPSof 153.6 pence (2016: 63.8 pence)
  • Proposed final dividend increased to 37.2 pence per share - a 19% increase in the full year dividend to 51.6 pence per share – reflecting the strong outlook for the Group
  • Capital management continues in-line with policy: £200 million share buyback completed; new medium term debt with €1 billion Eurobond issuance to support further growth and leverage reduced to 1.7 times
  • New initiatives and achievements in the year include:
  • SwapAgent started new service providing efficiencies for non-cleared products
  • CurveGlobal making good progress one year on from launch and investing for next stage developments
  • Completed acquisitions of The Yield Book and Mergent, further building data and analytics capabilities in our Information Services businesses
  • Increased shareholding in LCH Group to 65.9% (up from 57.8%); expect to acquire a further 2% in March 2018
  • Strong flow of IPOs in London and Italy helped companies raise over £44 billion in new and further issues
  • Turquoise Block Discovery saw 600% rise in  total value traded to €54.5 billion as customers started to adjust their trading strategies ahead of MiFID II
  • Good progress on recruitment of new CEO with a strong field of high quality candidates

 

1 Continuing operations exclude businesses sold, being Russell Investment Management.

2 Before depreciation, amortisation and non-underlying items.

3 Before amortisation of purchased intangible assets and non-underlying items.

Organic growth is calculated in respect of businesses owned for at least 12 months in either period and so excludes Russell Investment Management, SwapMatch, ISPS, Mergent and The Yield Book. The Group’s principal foreign exchange exposure arises from translating and revaluing its foreign currency earnings, assets and liabilities into LSEG’s reporting currency of Sterling.

Commenting on performance for the year, David Warren, CFO and Interim Group Chief Executive, said:

 “We have delivered another year of strong performance with growth across all of our core businesses, including double-digit revenue increases at FTSE Russell and LCH OTC. The Group has also continued to invest in new initiatives and acquisitions to drive further expansion of our global client offering.  Reflecting the strong results, as well as confidence in outlook and focus on shareholder returns, the dividend per share increased in line with earnings at 19%, and the Group completed a £200 million buyback during the year. 

 “The Group is strategically, operationally and financially well positioned to capitalise on a range of opportunities ahead and to enhance shareholder returns. We also remain focused on delivering the financial targets we have set for the next two years. Our Open Access approach in partnership with customers will enable us to benefit from MiFID II and to adapt to an evolving regulatory and macroeconomic environment.”

Financial Summary

Unless otherwise stated, all figures below refer to continuing operations for the year ended 31 December 2017.  Comparative figures are for continuing operations for the year ended 31 December 2016.  Variance is also provided on an organic and constant currency basis.

Organic and

Year ended

constant

31 December

currency

2017

2016

Variance

variance1

Continuing operations

£m

£m

%

%

Revenue

 

 

 

Information Services 1

736 

595 

24% 

13% 

Post Trade Services - LCH

432 

356 

21% 

17% 

Post Trade Services - CC&G and Monte Titoli

109 

104 

5% 

(2%)

Capital Markets 1

391 

368 

6% 

3% 

Technology Services

91 

88 

3% 

Other revenue

9 

Total revenue

1,768 

1,515 

17% 

10% 

Net treasury income through CCP businesses

162 

125 

30% 

22% 

Other income

25 

17 

Total income

1,955 

1,657 

18% 

11% 

Cost of sales

(215)

(175)

23% 

16% 

Gross profit

1,740 

1,482 

17% 

10% 

Operating expenses before depreciation, amortisation and impairment

(816)

(706)

15% 

6% 

Depreciation, amortisation and impairment

(103)

(85)

22% 

7% 

Total operating expenses

(919)

(791)

16% 

6% 

Share of loss after tax of associate

(9)

(5)

Adjusted operating profit 2

812 

686 

18% 

15% 

Add back depreciation, amortisation and impairment

103 

85 

22% 

7% 

Adjusted earnings before interest, tax, depreciation and amortisation 2

915 

771 

19% 

14% 

Profit on disposal of businesses

7 

-

Amortisation of purchased intangible assets and non-underlying items

(193)

(259)

(25%)

(28%)

Operating profit

626 

427 

47% 

44% 

Earnings per share

Basic earnings per share (p)

153.6 

63.8 

141% 

Adjusted basic earnings per share (p) 2

148.7 

124.7 

19% 

Dividend per share (p)

51.6 

43.2 

19% 

 

1Organic growth is calculated in respect of businesses owned for at least 12 months in either period and so excludes Russell Investment Management, SwapMatch, ISPS, Mergent and The Yield Book.
The Group’s principal foreign exchange exposure arises from translating and revaluing its foreign currency earnings, assets and liabilities into LSEG’s reporting currency of Sterling.

 

2Before amortisation of purchased intangible assets and non-underlying items.

Unless otherwise stated, all figures refer to the 12 months ended 31 December 2017 and comparisons are against the same corresponding period in the previous year.

 

Contacts:

London Stock Exchange Group plc

 

Gavin Sullivan

Lucie Holloway 

Ramesh Chhabra

Paul Froud

Media

Investor Relations

+44 (0) 20 7797 1222

+44 (0) 20 7797 3322

 

 

Corporate Brokers

 

Kunal Gandhi - Barclays

Oliver Hearsey - RBC Capital Markets

 

 

 

+44 (0) 20 7623 2323

+44 (0) 20 7653 4000

 

 

Further information

The Group will host a conference call on its Preliminary Results for analysts and institutional shareholders today at 09:00am (GMT). On the call will be David Warren (CFO and Interim CEO) and Paul Froud (Head of Investor Relations).

Participant UK Dial-In Numbers: 0800 376 7922

Participant Std International Dial-In: +44 (0) 2071 928 000

Conference ID # 408 9059

Presentation slides can be viewed at http://www.lseg.com/investor-relations

For further information, please call the Group’s Investor Relations team on +44 (0) 20 7797 3322.

The information in the preliminary announcement of the results for the year ended 31 December 2017, which was approved by the Board of Directors on 1 March 2018, does not constitute statutory accounts as defined in Section 435 of the UK Companies Act 2006. The financial statements for the year ended 31 December 2016 were filed with the Registrar of Companies, and the audit report was unqualified and contained no statements in respect of Sections 498 (2) and 498 (3) of the UK Companies Act 2006. The financial statements for the year ended 31 December 2017 will be filed with the Registrar of Companies in due course.

In accordance with the Listing Rules of the UK Listing Authority, these preliminary results have been agreed with the Company’s auditors, Ernst &Young LLP, and the Directors have not been made aware of any likely modification to the auditor’s report to be included in the Group’s Annual Report and Accounts for the year ended 31 December 2017.

The preliminary results have been prepared on a basis consistent with the accounting policies set out in the Group’s Annual Report and Accounts for the year ended 31 December 2017.

To view the full RNS please visit our Investor Relations page -  http://www.lseg.com/investor-relations