Unless otherwise stated, all figures below refer to continuing operations for the six months ended 30 June 2020 (H1 or H1 2020). Comparative figures are for continuing operations for the six months ended 30 June 2019 (H1 2019).
Good financial and operational performance in H1 drives 11% increase in AEPS
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Further good income growth in Information Services and Post Trade; resilient underlying result in Capital Markets
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Strong operational resilience across the Group’s trading, clearing and data platforms during unprecedented period; majority of employees continue to work remotely
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Group in strong financial position; confidence in future prospects supports increase in the interim dividend (up 16%) to 23.3 pence per share
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Good progress with foreign investment, antitrust and other regulatory approvals for the Refinitiv transaction, and integration planning is well developed; the Group expects to close the transaction by the end of the year or in early 2021
H1 Summary
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Total Revenue up 4% to £1,058 million (H1 2019: £1,018 million); total income up 8% to £1,235 million (H1 2019: £1,140 million)
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FTSE Russell revenue up 5% to £330 million (H1 2019: £315 million) with growth in subscription revenues and flat asset-based revenues reflecting lower ETF AUM levels
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Post Trade revenue up 9% to £372 million (H1 2019: £342 million), driven by strong growth in LCH; record activity in CDS, FX and cash equities clearing; total income up 19% to £548 million (H1 2019: £462 million), mainly reflecting higher cash margin held
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Capital Markets revenue down 4% on a reported basis to £217 million, and up 12% on a like-for-like basis excluding the one-off benefit of an IFRS 15 adjustment in prior year
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Adjusted operating expenses, before depreciation and amortisation1, were up 8% (up 5% on a constant currency basis) and up 1% compared with H2 2019
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Adjusted operating profit1 up 8% to £575 million (H1 2019: £533 million); operating profit was down 2% at £391 million (H1 2019: £399 million); profit before tax of £362 million (H1 2019: £363 million); profit after tax of £261 million (H1 2019: £265 million)
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Adjusted EBITDA1 margin broadly unchanged at 54.6% (2019 H1: 54.5%)
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Adjusted EPS1 up 11% to 112.0 pence (H1 2019: 100.6 pence); basic EPS down 9% at 64.6 pence (H1 2019: 70.7 pence)
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Strong balance sheet position with leverage at 1.4 times net debt: pro forma EBITDA
Commenting on performance for the period, David Schwimmer, CEO said:
“The Group has delivered a good financial performance and demonstrated strong operational resilience. During this unprecedented period, we have focused on ensuring the welfare of our employees and on continuity of services to our customers, maintaining access to our markets and clearing venues, with record volumes executed across our services.
“We are making good progress on the proposed transaction with Refinitiv, securing a number of regulatory approvals and engaging constructively with authorities on remaining approvals. We also continue to make good progress on integration planning to ensure we are ready to deliver the benefits of the transaction to our shareholders, customers and other stakeholders. We expect to close the transaction by the end of the year or in early 2021.”
Organic growth combined with new product development and investment continued throughout the period. Highlights include:
Information Services
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FTSE Russell announced a 10-year extension to a global index derivatives agreement with Cboe Global Markets to develop and list options based on FTSE Russell indices
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FTSE Russell launched a series of co-branded fixed income indices in partnership with Johannesburg Stock Exchange and new index derivatives launched by Singapore Stock Exchange using FTSE Russell indices
Post Trade
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LCH SwapClear became the first clearing house to clear Singapore Dollar swaps benchmarked to alternative reference rate Singapore Overnight Rate Average (SORA)
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LCH EquityClear went live with a new LSEG Technology post trade platform, processing record equity clearing volumes in March 2020
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UnaVista approved by ESMA to be a trade repository under Securities Financing Transactions Regulation (SFTR)
Capital Markets
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£19.8 billion equity capital raised across new and further issues up 29%, with 17% increase in value traded across venues
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China Pacific Insurance Group (CPIC) listed GDRs in London on Shanghai-London Stock Connect, the largest capital raise via an admission to London Stock Exchange in 2020 to date, raising US$2 billion
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London Stock Exchange celebrated the 25th anniversary of AIM, the London Stock Exchange’s growth market, with over 3,800 companies admitted since launch, raising £118 billion in equity capital
1 Before amortisation and impairment of purchased intangible assets and goodwill and non-underlying items
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.
London Stock Exchange Group uses non-GAAP performance measures as key financial indicators as the Board believes these better reflect the underlying performance of the business. As in previous years, adjusted operating expenses, adjusted operating profit, adjusted profit before tax, adjusted earnings before interest, tax, depreciation and amortisation, adjusted EBITDA margin and adjusted earnings per share all exclude amortisation and impairment of purchased intangible assets and goodwill and non-underlying items.
Further information is available from:
London Stock Exchange Group plc
Gavin Sullivan / Lucie Holloway – Media +44 (0) 20 7797 1222
Paul Froud – Investor Relations +44 (0) 20 7797 3322
Additional information on London Stock Exchange Group can be found at www.lseg.com
The Group will host a conference call for analysts and investors today at 08:30am (UK time). On the call to discuss the H1 results will be David Schwimmer (CEO), David Warren (CFO) and Paul Froud (Group Head of Investor Relations).
To access the telephone conference call please pre-register using the following link and instructions below: https://cossprereg.btci.com/prereg/key.process?key=P7C9K8NDA
- Please register in advance of the conference using the link above. Upon registering with your full name, company name and email address, you will be provided with the information required to join the conference, including dial-in numbers and passcodes
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In the 10 minutes prior to the call start time, please use the conference access information provided in the email received at the point of registering
For further information, please call the Group’s Investor Relations team on +44 (0) 20 7797 3322.
Chief Executive’s Statement
Overview of H1
The Group has produced a good half-year financial and operational performance against the backdrop of unprecedented conditions and with the majority of our employees around the world working on a remote basis. Throughout the period, we demonstrated strong operational resilience, maintaining orderly markets and managing market risk through our post trade services, with record volumes executed on our trading venues and at our clearing houses.
We have continued to develop and invest in the business during this period, successfully launching a new equity clearing platform at LCH in March during the peak of the equity market volatility, listing a second GDR through Shanghai-London Stock Connect and developing a number of new indices and winning new contracts in the Information Services division. Our commitment to open access and customer partnership is at the heart of our business model, offering systemically important services on an open, non-discriminatory basis and developing new products with our customers to support global markets.
Total income for the half-year increased 8%, reflecting good growth across many parts of the Group. This is particularly notable given the strong prior year comparative period inclusion of a one-off £32 million benefit from an IFRS 15 change in estimate, without which income would have risen 11%. Adjusted operating expenses before depreciation and amortisation were 8% higher, but increased 1% compared with H2 2019, demonstrating good underlying cost control. Adjusted operating profit increased 8% to £575 million, and adjusted EPS rose 11% to 112.0 pence per share. The Group’s adjusted EBITDA margin has remained broadly unchanged at 54.6% (2019 H1: 54.5%).
We remain in a strong financial position, with good cash generation supporting investment and product development while leverage remained stable at 1.4 times net debt to pro forma EBITDA. In line with our progressive dividend policy, and reflecting both the good H1 performance and confidence in future prospects, the interim dividend is increased by 16%, to 23.3 pence per share.
In August last year, we announced the proposed acquisition of Refinitiv, a leading global provider of data, analytics and financial markets solutions. We are making good progress on integration planning to ensure we are ready to deliver the benefits of the transaction immediately following completion. The Group continues to make good progress with foreign investment, merger control and other regulatory filings. Foreign investment approvals have been received in the US and Germany. Unconditional merger control clearances have been received in Botswana, Germany, Japan, Jersey, Kenya, Morocco, Pakistan, Russia, Saudi Arabia, Taiwan and Ukraine, and merger reviews are underway in several other jurisdictions, including in Singapore, Australia, US and Canada. The European Commission commenced a Phase II merger review in June and the Group continues to engage constructively with the case team. Today the Group confirms that it has commenced exploratory discussions which may result in a sale of LSEG’s interest in MTS or potentially the Borsa Italiana group as a whole. The Group expects to complete the transaction by the end of the year or in early 2021.
