Mondo Visione Worldwide Financial Markets Intelligence

FTSE Mondo Visione Exchanges Index:

London Stock Exchange Group Plc Interim Management Statement For The Period To 22 January 2014, Including Revenues And KPIs For The Three Months Ended 31 December 2013 (Q3)

Date 23/01/2014

  • 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 as 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.

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.

       

Organic and

     

Organic and

 

Three months ended

 

constant

 

Nine months ended

 

constant

 

31 December

 

currency

 

31 December

 

currency

 

2013

2012

Variance

variance1

 

2013

2012

Variance

variance1

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

                 

Capital Markets

80.1

66.3

21%

19%

 

225.3

196.0

15%

12%

Post Trade Services

24.9

21.8

14%

10%

 

73.1

66.5

10%

4%

LCH.Clearnet 2

61.2

-

-

-

 

172.3

-

-

-

Information Services

88.4

76.0

16%

9%

 

256.7

223.6

15%

6%

Technology Services

16.0

13.7

17%

13%

 

45.4

39.3

16%

9%

Other

1.4

1.3

8%

8%

 

3.4

3.5

(3%)

(3%)

Total revenue

272.0

179.1

52%

13%

 

776.2

528.9

47%

9%

                   

Net treasury income through CCP business

               

CC&G

10.4

27.8

(63%)

(64%)

 

38.5

95.8

(60%)

(62%)

LCH.Clearnet

17.6

-

-

-

 

48.1

-

-

-

Other income 3

8.9

2.0

345%

345%

 

13.2

7.8

69%

69%

LCH.Clearnet unrealised gain / (loss)

(0.9)

-

-

-

 

(2.9)

-

-

-

Total income including unrealised

308.0

208.9

-

-

 

873.1

632.5

-

-

Total income excluding unrealised

308.9

208.9

48%

5%

 

876.0

632.5

38%

(1%)

 

 

 

 

1Exchange 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:

 

 

 

Capital Markets

 

       

Organic and

       

Organic and

 

Three months ended

 

constant

 

Nine months ended

 

constant

 

31 December

 

currency

 

31 December

 

currency

 

2013

2012

Variance

variance1

 

2013

2012

Variance

variance1

Revenue

£m

£m

%

%

 

£m

£m

%

%

Primary Markets

                 

Annual fees

10.2

9.6

6%

5%

 

30.6

28.8

6%

4%

Admission fees

12.8

10.5

22%

22%

 

29.8

25.0

19%

19%

 

23.0

20.1

14%

14%

 

60.4

53.8

12%

11%

Secondary Markets

                 

Cash equities UK & Turquoise

21.7

19.8

10%

10%

 

68.1

62.7

9%

9%

Cash equities Italy

9.0

7.0

29%

23%

 

26.2

23.3

12%

7%

Derivatives

4.5

4.6

(2%)

(6%)

 

14.2

14.1

1%

(4%)

Fixed income

20.4

13.0

57%

29%

 

50.5

37.0

36%

22%

 

55.6

44.4

25%

22%

 

159.0

137.1

16%

13%

Other

1.5

1.8

(17%)

(21%)

 

5.9

5.1

16%

11%

Total revenue

80.1

66.3

21%

19%

 

225.3

196.0

15%

12%

 

 

Post Trade Services

 

 

Three months ended

 

Constant

 

Nine months ended

 

Constant

 

31 December

 

currency

 

31 December

 

currency

 

2013

2012

Variance

variance

 

2013

2012

Variance

variance

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

                 

Clearing

10.1

8.0

26%

22%

 

29.2

25.7

14%

8%

Settlement

4.2

3.8

11%

5%

 

12.1

10.9

11%

5%

Custody & other

10.6

10.0

6%

2%

 

31.8

29.9

6%

1%

Total revenue

24.9

21.8

14%

10%

 

73.1

66.5

10%

4%

Net treasury income

10.4

27.8

(63%)

(64%)

 

38.5

95.8

(60%)

(62%)

Total income

35.3

49.6

(29%)

(32%)

 

111.6

162.3

(31%)

(35%)

LCH.Clearnet 

 

 

Three months ended

 

Constant

 

Eight months ended

 

Constant

 

31 December

 

currency

 

31 December

 

currency

 

2013

2012

Variance

variance

 

2013

2012

Variance

variance

Revenue

£m

£m

%

%

 

£m

£m

%

%

OTC

 

Pro forma

   

Pro forma

SwapClear

24.5

13.0

89%

83%

 

65.7

33.4

97%

89%

ForexClear / CDSClear

4.0

3.8

6%

3%

 

10.7

8.0

34%

29%

 

28.5

16.8

70%

65%

 

76.4

41.4

85%

77%

Non-OTC

                 

Fixed income

7.0

7.7

(9%)

(11%)

 

20.8

20.7

0%

(4%)

Commodities

9.3

3.1

196%

187%

 

22.8

8.0

183%

172%

Listed derivatives

11.5

18.6

(38%)

(40%)

 

35.1

49.4

(29%)

(32%)

Cash equities

8.7

6.7

30%

26%

 

23.1

19.5

19%

14%

 

36.5

36.1

1%

(2%)

 

101.8

97.7

4%

0%

Total Clearing fee revenue

65.0

52.9

23%

19%

 

178.2

139.0

28%

23%

Other revenue

(3.8)

6.9

(155%)

(153%)

 

(5.9)

22.5

(126%)

(125%)

Total revenue

61.2

59.8

2%

(1%)

 

172.3

161.5

7%

2%

Net treasury income

17.6

16.7

5%

2%

 

48.1

46.1

4%

0%

Unrealised gain / (loss)

(0.9)

(2.5)

-

 

 

(2.9)

             2.9

-

 

Total income including unrealised

77.9

74.0

-

   

217.5

210.6

-

 

Total income excluding unrealised

78.8

76.5

3%

0%

 

220.4

207.6

6%

2%

 

 

 

 

 

Information Services

       

Organic and

       

Organic and

 

Three months ended

 

constant

 

Nine months ended

 

constant

 

31 December

 

currency

 

31 December

 

currency

 

2013

2012

Variance

variance1

 

2013

2012

Variance

variance1

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

                 

FTSE

44.2

32.9

34%

26%

 

128.1

97.7

31%

22%

Real time data

23.0

24.7

(7%)

(8%)

 

67.5

70.0

(4%)

(5%)

Other information services

21.2

18.4

15%

14%

 

61.1

55.9

9%

8%

Total revenue

88.4

76.0

16%

9%

 

256.7

223.6

15%

6%

 

 

 

 

 

 

 

 

Technology Services

 

       

Organic and

       

Organic and

 

Three months ended

 

constant

 

Nine months ended

 

constant

 

31 December

 

currency

 

31 December

 

currency

 

2013

2012

Variance

variance1

 

2013

2012

Variance

variance1

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

                 

MillenniumIT

7.9

6.7

18%

22%

 

21.0

18.1

16%

15%

Technology

8.1

7.0

16%

6%

 

24.4

21.2

15%

3%

Total revenue

16.0

13.7

17%

13%

 

45.4

39.3

16%

9%

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix

 

 

Capital Markets - Primary Markets

               
                   
 

Three months ended

   

Nine months ended

 
 

31 December

Variance

 

31 December

Variance

 

2013

 

2012

%

 

2013

 

2012

%

New Issues

                 

UK Main Market, PSM & SFM

21

 

17

24%

 

42

 

31

35%

UK AIM

33

 

16

106%

 

85

 

59

44%

Borsa Italiana

9

 

0

-

 

15

 

4

275%

Total

63

 

33

91%

 

142

 

94

51%

                   

Company Numbers (as at period end)

                 

UK Main Market, PSM & SFM

1,359

 

1,384

(2%)

         

UK AIM

1,087

 

1,096

(1%)

         

Borsa Italiana

290

 

287

1%

         

Total

2,736

 

2,767

(1%)

         
                   

Market Capitalisation (as at period end)

                 

UK Main Market (£bn)

2,307

 

1,973

17%

         

UK AIM (£bn)

76

 

61

25%

         

Borsa Italiana (€bn)

447

 

365

22%

         

Borsa Italiana (£bn)

372

 

298

25%

         

Total (£bn)

2,755

 

2,332

18%

         
                   

Money Raised (£bn)

                 

UK New

7.3

 

3.9

87%

 

11.0

 

7.7

43%

UK Further

2.8

 

2.1

33%

 

13.1

 

4.6

185%

Borsa Italiana new and further

0.9

 

0.1

800%

 

1.9

 

1.5

27%

Total (£bn)

11.0

 

6.1

80%

 

26.0

 

13.8

88%

 

 

 

 

Capital Markets - Secondary Markets

               
                   
 

Three months ended

   

Nine months ended

 
 

31 December

Variance

 

31 December

Variance

Equity

2013

 

2012

%

 

2013

 

2012

%

Totals for period

                 

UK value traded (£bn)

237

 

229

3%

 

766

 

737

4%

Borsa Italiana (no of trades m)

14.7

 

11.5

28%

 

41.4

 

40.2

3%

Turquoise value traded (€bn)

168.3

 

85.2

98%

 

508.4

 

285.9

78%

                   

SETS Yield (basis points) 

0.68

 

0.69

(1%)

 

0.66

 

0.68

(3%)

                   

Average daily

                 

UK value traded (£bn)

3.7

 

3.6

3%

 

4.0

 

3.9

3%

Borsa Italiana (no of trades '000)

237

 

186

27%

 

218

 

214

2%

Turquoise value traded (€bn)

2.63

 

1.33

98%

 

2.62

 

1.49

76%

                   

Derivatives (contracts m)

                 

LSE Derivatives

4.8

 

6.4

(25%)

 

13.6

 

19.8

(31%)

IDEM

8.6

 

7.2

19%

 

24.3

 

27.7

(12%)

Total

13.4

 

13.6

(1%)

 

37.9

 

47.5

(20%)

                   

Fixed Income

                 

MTS cash and Bondvision (€bn)

908

 

570

59%

 

2,416

 

1,673

44%

MTS money markets (€bn term adjusted)

17,114

 

17,351

(1%)

 

52,552

 

50,328

4%

MOT number of trades (m)

1.46

 

1.87

(22%)

 

4.32

 

4.55

(5%)

 

 

Post Trade Services

                 
                   
 

Three months ended

   

Nine months ended

 
 

31 December

Variance

 

31 December

Variance

 

2013

 

2012

%

 

2013

 

2012

%

CC&G Clearing (m)

                 

Equity clearing (no of trades)

15.3

 

12.2

25%

 

43.5

 

42.3

3%

Derivative clearing (no of contracts)

8.6

 

7.2

19%

 

24.2

 

27.7

(13%)

Total

23.9

 

19.4

23%

 

67.7

 

70.0

(3%)

Open interest (contracts as at period end)

3.9

 

3.3

18%

 

-

 

-

 

Initial margin held (average €bn)

12.4

 

9.5

31%

 

12.1

 

10.1

20%

                   

Monte Titoli

                 

Pre Settlement instructions (trades m)

7.5

 

7.2

4%

 

20.8

 

21.0

(1%)

Settlement instructions (trades m)

7.6

 

7.0

9%

 

21.2

 

19.6

8%

Total Settlement

15.1

 

14.2

6%

 

42.0

 

40.6

3%

Custody assets under management (average €tn)

3.34

 

3.26

3%

 

3.31

 

3.21

3%


 

LCH.Clearnet

                 
 

Three months ended

   

Nine months ended

 
 

31 December

Variance

 

31 December

Variance

 

2013

 

2012

%

 

2013

 

2012

%

                   

OTC derivatives

                 

SwapClear

                 

IRS notional outstanding ($trn)

426

 

340

25%

 

426

 

340

25%

IRS notional cleared ($trn)

120

 

106

13%

 

361

 

300

20%

SwapClear members

103

 

72

43%

 

103

 

72

43%

CDSClear

                 

Open interest (€bn)

23.0

 

12.0

92%

 

23.0

 

12.0

92%

Notional cleared (€bn)

25.4

 

26.5

(4%)

 

134.9

 

45.0

200%

CDSClear members

11

 

8

38%

 

11

 

8

38%

ForexClear

                 

Notional value cleared ($bn)

203

 

209

(3%)

 

642

 

445

44%

ForexClear members

20

 

14

43%

 

20

 

14

43%

Non-OTC

                 

Fixed income - Nominal value (€trn)

17.5

 

17.6

(1%)

 

54.4

 

53.2

2%

Commodities (lots m)

30.3

 

29.7

2%

 

93.3

 

85.2

10%

Listed derivatives (contracts m)

44.6

 

45.9

(3%)

 

128.2

 

146.5

(12%)

Cash equities trades (m)

88.5

 

73.4

21%

 

266.8

 

247.1

8%

                   

Average cash collateral (€bn)

37.6

 

41.2

(9%)

 

39.3

 

46.2

(15%)

 

 

 

 

 

Information Services

       
         
 

As at

 
 

31 December

Variance

 

2013

 

2012

%

UK Terminals

       

Professional - UK

32,000

 

34,000

(6%)

Professional - International

48,000

 

51,000

(6%)

Total

80,000

 

85,000

(6%)

         

Borsa Italiana Professional Terminals

131,000

 

139,000

(6%)

FTSE

       

ETFs assets under management benchmarked ($bn)

186

 

71

162%

 


 

Total Income – Quarterly

 

FY 2013

         

FY 2014

       

£ millions

Q1

Q2

Q3

Q4

FY 2013

 

Q1

Q2

Q3

 

9 mths

                       

Annual Fees

9.8

9.4

9.6

9.7

38.5

 

10.0

10.3

10.2

 

30.5

Admission Fees

7.9

6.6

10.5

7.3

32.3

 

9.5

7.6

12.8

 

29.9

Cash equities UK & Turquoise

22.4

20.5

19.8

23.3

86.0

 

24.2

22.2

21.7

 

68.1

Cash equities Italy

8.8

7.5

7.0

9.4

32.7

 

8.6

8.6

9.0

 

26.2

Derivatives

5.0

4.6

4.6

4.9

19.1

 

5.0

4.7

4.5

 

14.2

Fixed Income

12.1

11.9

13.0

14.8

51.8

 

15.5

14.5

20.4

 

50.4

Other

1.5

1.7

1.8

2.1

7.1

 

2.2

2.3

1.5

 

6.0

Capital Markets

67.5

62.2

66.3

71.5

267.5

 

75.0

70.2

80.1

 

225.3

                       

Clearing

9.0

8.7

8.0

10.4

36.1

 

10.1

9.0

10.1

 

29.2

Settlement

3.6

3.4

3.8

4.6

15.5

 

4.4

3.4

4.2

 

12.0

Custody & other

10.2

9.7

10.0

10.3

40.2

 

10.6

10.6

10.6

 

31.8

Post Trade Services

22.8

21.8

21.8

25.3

91.8

 

25.1

23.0

24.9

 

73.0

             

2 months

       

OTC - SwapClear

-

-

-

-

-

 

14.9

26.3

24.5

 

65.7

OTC - ForexClear / CDSClear

-

-

-

-

-

 

2.7

4.0

4.0

 

10.7

Fixed income

-

-

-

-

-

 

5.4

8.4

7.0

 

20.8

Commodities

-

-

-

-

-

 

4.4

9.1

9.3

 

22.8

Listed derivatives

-

-

-

-

-

 

12.4

11.2

11.5

 

35.1

Cash equities

-

-

-

-

-

 

6.2

8.2

8.7

 

23.1

Other

-

-

-

-

-

 

3.0

(5.0)

(3.8)

 

(5.8)

LCH.Clearnet

-

-

-

-

-

 

49.0

62.2

61.2

 

172.4

                       

FTSE

33.0

31.8

32.9

36.4

134.1

 

41.7

42.2

44.2

 

128.1

Real time data

23.7

21.6

24.7

26.9

96.9

 

22.4

22.1

23.0

 

67.5

Other information

18.6

18.9

18.4

19.4

75.3

 

19.8

20.1

21.2

 

61.1

Information Services

75.3

72.3

76.0

82.7

306.3

 

83.9

84.4

88.4

 

256.7

                       

MillenniumIT

4.9

6.5

6.7

8.8

26.9

 

7.4

5.7

7.9

 

21.0

Technology

7.2

7.0

7.0

8.0

29.2

 

8.1

8.2

8.1

 

24.4

Technology Services

12.1

13.5

13.7

16.8

56.1

 

15.5

13.9

16.0

 

45.4

                       

Other

1.3

1.0

1.3

1.2

4.7

 

1.2

0.8

1.4

 

3.4

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

179.0

170.8

179.1

197.5

726.4

 

249.7

254.5

272.0

 

776.2

Net treasury income through CCP:

                     

CC&G

28.5

39.6

27.8

20.9

116.7

 

16.7

11.4

10.4

 

38.5

LCH.Clearnet

-

-

-

-

-

 

11.7

18.8

17.6

 

48.1

Other income

2.0

3.8

2.0

2.0

9.8

 

2.1

2.2

8.9

 

13.2

LCH.Clearnet unrealised gain / (loss)

-

-

-

-

-

 

(1.2)

(0.8)

(0.9)

 

(2.9)

Total income including unrealised

209.5

214.2

208.9

220.4

852.9

 

279.0

286.1

308.0

 

873.1

Total income excluding unrealised

209.5

214.2

208.9

220.4

852.9

 

280.2

286.9

308.9

 

876.0

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