London Stock Exchange Group Interim Management Statement For The Period To 20 July 2011 - Including Revenues And KPIs For The Three Months Ended 30 June 2011

Highlights:

• Strong increase in total income, up 14 per cent on Q1 last year (up 12 per cent at constant currency) to £190.2 million
  
  
• Primary markets revenues up 22 per cent
  
  
• Share of cash equities trading stable: at 64.6 per cent in UK cash equities, 85.3 per cent in Italy; Turquoise progressing well - in recent weeks has been the no.2 MTF for pan-European lit and dark trading
  
  
• Post Trade Services total income up 58 per cent

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

“With an increase in total income of 14 per cent and growth in many business areas, these strong first quarter results confirm that we continue to make good progress.  Notable good performances included primary markets, fixed income trading, Information Services and net treasury income within the Post Trade operations which again produced a very strong performance. 

“We remain focused on developing the business, including initiatives in derivatives, fixed income and technology sales.  Other projects are in development and we will continue to assess a range of options to deliver further growth and shareholder value.”

Divisional performance

• In primary markets, 22 per cent growth in revenues reflecting a 26 per cent increase in number of new issues to 54 and a 65 per cent increase in total money raised, with notable new issues including Glencore (London’s largest ever international IPO), DP World, Bumi and, in Italy, Salvatore Ferragamo
  
  
• In secondary markets, fixed income trading revenue increased 32 per cent with growth in MTS cash and money (repo) markets, offset by a decline of 9 and 11 per cent respectively in revenue from both UK and Italian cash equities trading, reflecting weaker trading levels in markets as a whole; derivatives revenues reduced 12 per cent with a nine per cent decline in volumes on IDEM compared to a record Q1 last year 
  
  
• Post Trade Services total income increased 58 per cent, resulting from a more than four fold growth in net treasury income from clearing operations as demand for the short term cash deposits remained strong
  
  
• Information Services revenues rose six per cent; the total number of professional users of real time information remained unchanged in the UK and declined by 8,000 year on year in Italy, although income from real time data increased with changes to non-display charging; revenues from other information products increased 11 per cent reflecting growth across a range of products, including SEDOL, UnaVista and FTSE
  
  
• Technology Services revenues reduced 16 per cent, mainly resulting from uneven phasing of MillenniumIT deliveries between periods – we expect MillenniumIT will deliver growth in full year revenues  

Operational and other Developments:

• Trading of FTSE 100 Index Futures on Turquoise Derivatives successfully commenced in June
  
  
• Launch of a new Sponsored Access service that offers latency efficient connectivity for non-members of the London Stock Exchange and Turquoise operated order books, providing a wider range of investors and the development of more liquid and diversified order books
  
  
• MTS launched an electronic market for UK government bonds; and Places for People Capital Markets PLC raised £140 million through a retail bond issue on the UK ORB market
  
  
• Group selected to provide clearing technology services for a new, cross-market central counterparty mechanism for central and eastern European capital markets
  
  
• The Group reduced its net debt in the quarter with cash received from the sale of Servizio Titoli (€32.4m) and strong net cash generation reflecting seasonal inflows from charges for annual services invoiced at the start of the financial year.  There are no other material changes to the Group’s financial position since financial year end, and no change in committed credit lines.  Net costs taken in the current financial year associated with the proposed merger with TMX Group, which was terminated on 29 June, are expected to be immaterial following receipt of C$10 million expense fees from TMX Group.

Current trading and Outlook

The new financial year has started well, with good year on year growth and overall improvement sequentially quarter on quarter.  As usual, the summer period is expected to be quieter than Q1, particularly in primary markets though we believe the new issues pipeline further out in the year remains encouraging, subject to market conditions.  Net treasury income has remained very strong and is expected to be above last year, driven in part by the current favourable credit spread in the money market.

Q1 Revenue Summary

Revenues for three months ended 30 June 2011, with comparatives against performance for the same period last year.  Growth rates and year to date performance are also expressed on a constant currency basis.  All figures are unaudited.

Note:

1)       Post Trade Services last year includes revenue from Servizio Titoli (£2.6m in Q1 2010),  which was sold with effect from the start of the current financial year – on a like-for-like basis (excluding Servizio Titoli), total revenue increased 4%

2)       2010 comparatives have been adjusted throughout the IMS to reflect reporting of revenue from Turquoise in Capital Markets from April 2011 (was previously reported in Information Services)

More detailed revenues by segment are provided in tables below:

Capital Markets

Post Trade Services

Note:  Post Trade Services last year includes revenue from Servizio Titoli (£2.6m in Q1 2010), which was sold with effect from the start of the current financial year (previously included in “Custody & Other” line) – on a like-for-like basis revenue increased 7%


Information Services

 

Technology Services

 

Basis of Preparation

Results for Borsa Italiana for the periods ended 30 June 2011 have been translated into Sterling using the average monthly exchange rate for the period of €1.13: £1.  Constant currency growth rates have been calculated by translating prior period results at the average exchange rate for the current period.

Appendix

Total Income – Quarterly