TIDMLSE
RNS Number : 0141U
London Stock Exchange Group PLC
19 October 2017
19 October 2017
LONDON STOCK EXCHANGE GROUP plc
INTERIM MANAGEMENT STATEMENT
FOR THE PERIOD TO 18 OCTOBER 2017, INCLUDING REVENUES AND KPIs
FOR THE THREE MONTHSED 30 SEPTEMBER 2017 (Q3)
-- Another period of delivery against our targets with continued
good growth - Q3 total income up 17% to GBP486 million; and up 19%
for 9 months year-to-date, to GBP1,432 million
-- Q3 revenues up 18% to GBP443 million; up 18% for 9 months year-to-date at GBP1,295 million
-- Strong demonstration of capital deployment to drive growth
and returns, including: completion of the Citi Fixed Income Indices
and The Yield Book acquisition; increasing our stake in LCH; and,
completion of the GBP200 million share buyback programme
Q3 summary:
-- Information Services: revenues up 22% (up 15% on organic and
constant currency basis) - with good underlying growth and one
month's inclusion of The Yield Book and Citi Fixed Income
Indices
-- Post Trade: LCH income up 26% (up 22% at constant currency),
with 23% revenue growth in OTC from higher volume of SwapClear
client trades; ForexClear continues to see strong volume growth.
CC&G and Monte Titoli income up 2% (down 4% at constant
currency)
-- Capital Markets: revenues up 8% (up 5% on organic and
constant currency basis), with record quarterly primary markets
revenues in a period of strong equity issuance; Turquoise continues
to trade well, with strong growth in the Turquoise Plato Block
Discovery service (including a record month in September)
-- Technology Services: revenues up 9% (up 7% at constant currency)
Commenting on performance in Q3, Xavier Rolet, Chief Executive,
said:
"The Group continues to perform very well, with good revenue
growth in our main businesses and a strong period of successful
development and delivery. The completion of the acquisition of Citi
Fixed Income Indices and The Yield Book is already contributing to
the further growth in FTSE Russell while LCH continues to perform
strongly and has launched innovative new services. I am also
delighted that we are increasing our stake in the LCH Group.
"The Group's excellent financial performance is reflective of
our continued innovation and execution of our growth strategy,
enabling us to deliver against our three year financial targets.
Together with our proven Customer Partnership and Open Access
approach, this positions us strongly to benefit from the
introduction of MiFID II in less than three months time."
Organic growth is calculated in respect of businesses owned for
at least 3 months in either period and so excludes The Yield Book
and Citi Fixed Income Indices, ISPS, Mergent and SwapMatch. The
Group's principal foreign exchange exposure arises from translating
our European based Euro and US based USD reporting businesses into
Sterling.
Investment in growth opportunities and new developments
continued across the business:
- LSEG will increase its stake in LCH Group to 64.4% (on
completion of regulatory processes before the end of 2017),
acquiring an additional 6.63% following a sale by certain minority
shareholders
- LCH SwapAgent service for non-cleared derivatives now live and has processed its first trades
- LCH RepoClear launched Sponsored Clearing, offering buy-side
firms direct access to LCH for repos clearing across 11 government
bond markets
- LCH signed binding terms with Euronext N.V. for the continued
provision of clearing services for listed financial and commodity
derivatives with LCH SA. The agreement is expected to be finalised
in Q4 2017
- The Government Pension Investment Fund (GPIF) of Japan
selected new FTSE Blossom Japan Index as a core ESG benchmark
through its flagship fund
- Good flow of new issues on our UK and Italian markets, with a
near doubling in the number of new issues year on year - in early
October Borsa Italiana welcomed Pirelli to its market, the largest
continental European IPO so far in 2017; together with Allied Irish
Bank in the summer, the two largest European IPOs have been on
Group markets
- Turquoise Lit Auctions, a pre-trade transparent and MiFID II
compliant trading mechanism, received regulatory approval for Q4
2017 launch; and Turquoise Plato Block Discovery delivered record
value traded in September (8 times the level of Q3 last year)
- CurveGlobal marked its first year in operation - the platform
is building a firm foundation, with 1.5 million lots traded since
launch (of which 40% of the volume traded was in the last three
months)
- UK's Financial Conduct Authority approved London Stock
Exchange to be authorised as an Approved Publication Arrangement
(APA) and an Approved Reporting Mechanism (ARM) - enabling firms to
meet their trade and transaction reporting obligations under MiFID
II and MiFIR
- Borsa Italiana and IBM announced they are building a
blockchain solution to digitise the issuance of securities for
small and medium enterprises (SMEs) in Europe
- LSEG Technology completed the go-live of Millennium Exchange
through a technology partnership with Caja de Valores S.A., which
acts as the technology provider for Bolsas y Mercados
Argentinos
- Gatelab has become an approved provider of risk gateway services for Bombay Stock Exchange
Financial Position
Refinancing to extend Group debt maturities was successfully
completed in September. The Group issued EUR500 million 0.875% 2024
bonds and EUR500 million 1.75% 2029 bonds, of which an aggregate
EUR700 million was immediately swapped into USD to appropriately
match Group currency of debt to currency of earnings. The resulting
effective blended rate of interest on the bonds is fixed at c2.8%
per annum until the first maturity date.
The Group's financial position remains strong, with good cash
generation from operations offset by normal course interim dividend
and bond coupon payments, and the conclusion of the GBP200 million
share buyback programme. We also continue to invest in projects to
support growth initiatives. During the period the Group completed
the acquisition of the Citi Fixed Income Indices and The Yield
Book, paying US$685 million. At 30 September 2017, the Group's
committed facility headroom was cGBP700 million, available for
general corporate purposes.
The euro and US dollar both strengthened by 8% against sterling
compared with the same period last year. To illustrate our exposure
to movements in exchange rates, a EUR0.05 change in the average
euro:sterling rate would have resulted in a change to continuing
operations total income of cGBP6.9 million for Q3, while a US$0.05
move would have resulted in a cGBP4.8 million change.
Current trading
The Group continues to execute on its successful growth strategy
to deliver attractive shareholder returns. All main parts of the
Group continue to perform well and investment remains ongoing on a
number of initiatives. We are well positioned for the introduction
of MiFID II and a broader changing regulatory environment.
The Group released a separate statement this morning regarding
succession planning.
Further information is available from:
Lucie Holloway/Ramesh Chhabra +44 (0) 20 7797 1222
London Stock Exchange - Media
Group plc Paul Froud - Investor Relations +44 (0) 20 7797 3322
A conference call for analysts and investors will be held at
8:30 (UK time) on Thursday 19 October. On the call will be David
Warren (CFO) and Paul Froud (Head of Investor Relations).
To access the telephone conference call dial 0800 694 0257 or
+44 (0) 1452 555 566
Conference ID: 8705 3054
Q3 Revenue Summary
Revenues for three months and nine months ended 30 September
2017 refer to continuing operations, 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 Organic
Three months and Nine months and
ended constant ended constant
30 September currency 30 September currency
------------------------------ -----------------------------
2017 2016 Variance variance(1) 2017 2016 Variance variance(1)
Continuing
operations: GBPm GBPm % % GBPm GBPm % %
Revenue
Information
Services 181.8 148.5 22% 15% 536.7 434.4 24% 14%
Post Trade
Services -
LCH 113.9 89.5 27% 24% 321.1 256.7 25% 19%
Post Trade
Services -
CC&G and
Monte
Titoli 26.2 25.2 4% (2%) 81.5 73.3 11% 2%
Capital
Markets 96.7 89.6 8% 5% 286.3 271.2 6% 1%
Technology
Services 22.7 20.8 9% 7% 63.8 58.8 9% 3%
Other 1.4 2.6 - - 5.9 3.7 - -
------------- -------------- -------------- --------- ------------ --------------- ------------ --------- ------------
Total
revenue 442.7 376.2 18% 13% 1,295.3 1,098.1 18% 11%
Net treasury
income
through
CCP
businesses 42.0 35.3 19% 13% 116.8 91.3 28% 18%
Other income 1.4 3.1 - - 19.4 11.0 - -
---------
Total income 486.1 414.6 17% 12% 1,431.5 1,200.4 19% 12%
------------- -------------- -------------- --------- ------------ --------------- ------------ --------- ------------
Cost of
sales (55.7) (44.8) 24% 20% (157.3) (121.8) 29% 22%
Gross profit 430.4 369.8 16% 11% 1,274.2 1,078.6 18% 11%
------------- -------------- -------------- --------- ------------ --------------- ------------ --------- ------------
(1) Organic growth is calculated in respect of businesses owned
for at least the full 3 or 9 months in either period and excludes
The Yield Book and Citi Fixed Income Indices, ISPS, Mergent and
SwapMatch. The Group's principal foreign exchange exposure arises
from translating our European based euro and US based USD reporting
businesses into sterling.
More detailed revenues by segment are provided in tables
below:
Information Services
Organic Organic
Three months and and
Nine months
ended constant ended constant
30 September currency 30 September currency
---------------- ----------------
2017 2016 Variance variance(1) 2017 2016 Variance variance(1)
GBPm GBPm % % GBPm GBPm % %
Revenue
FTSE Russell Indexes 135.3 102.1 33% 19% 395.8 295.7 34% 17%
Real time data 23.0 23.3 (1%) (3%) 70.4 67.7 4% 1%
Other information services 23.5 23.1 2% 18% 70.5 71.0 (1%) 11%
Total revenue 181.8 148.5 22% 15% 536.7 434.4 24% 14%
---------------------------- ------- ------- --------- ------------ ------- ------- --------- ------------
Cost of sales (15.4) (13.6) 13% 8% (45.5) (38.5) 18% 9%
---------------------------- ------- ------- --------- ------------ ------- ------- --------- ------------
Gross profit 166.4 134.9 23% 15% 491.2 395.9 24% 14%
---------------------------- ------- ------- --------- ------------ ------- ------- --------- ------------
(1) Removal of Mergent (acquired Q1 2017) and The Yield Book and
Citi Fixed Income Indices (acquired Q3 2017) from FTSE Russell and
ISPS from Other information services (disposed Q1 2017)
Post Trade Services - LCH
Three months Nine months
ended Constant ended Constant
30 September currency 30 September currency
---------------- ----------------
2017 2016 Variance variance 2017 2016 Variance variance
GBPm GBPm % % GBPm GBPm % %
Revenue
OTC - SwapClear, ForexClear
& CDSClear 58.6 47.6 23% 21% 171.2 136.7 25% 19%
Non-OTC - Fixed income,
Cash equities and Listed
derivatives 33.3 28.3 18% 12% 99.3 85.9 16% 7%
Other 22.0 13.6 62% 59% 50.6 34.1 48% 51%
------- ------- --------- --------- ------- ------- --------- ---------
Total revenue 113.9 89.5 27% 24% 321.1 256.7 25% 19%
----------------------------- ------- ------- --------- --------- ------- ------- --------- ---------
Net treasury income 31.1 24.1 29% 23% 86.6 59.1 47% 36%
Other income (0.5) 1.3 - - 6.5 5.7 - -
Total income 144.5 114.9 26% 22% 414.2 321.5 29% 22%
----------------------------- ------- ------- --------- --------- ------- ------- --------- ---------
Cost of sales (22.7) (15.8) 44% 36% (63.1) (39.0) 62% 49%
------- ------- ------- -------
Gross profit 121.8 99.1 23% 20% 351.1 282.5 24% 18%
----------------------------- ------- ------- --------- --------- ------- ------- --------- ---------
Post Trade Services - CC&G and Monte Titoli
Three months Nine months
ended Constant ended Constant
30 September currency 30 September currency
--------------- ---------------
2017 2016 Variance variance 2017 2016 Variance variance
GBPm GBPm % % GBPm GBPm % %
Revenue
Clearing 8.9 10.0 (11%) (16%) 29.5 30.7 (4%) (12%)
Settlement, Custody &
other 17.3 15.2 14% 7% 52.0 42.6 22% 12%
Total revenue 26.2 25.2 4% (2%) 81.5 73.3 11% 2%
----------------------- ------- ------ --------- --------- ------- ------ --------- ---------
Net treasury income 10.9 11.2 (3%) (8%) 30.2 32.2 (6%) (14%)
Total income 37.1 36.4 2% (4%) 111.7 105.5 6% (3%)
----------------------- ------- ------ --------- --------- ------- ------ --------- ---------
Cost of sales (4.3) (3.1) 39% 30% (12.7) (8.8) 44% 34%
------- ------ ------- ------
Gross profit 32.8 33.3 (2%) (7%) 99.0 96.7 2% (6%)
----------------------- ------- ------ --------- --------- ------- ------ --------- ---------
Capital Markets
Organic Organic
Three months and and
Nine months
ended constant ended constant
30 September currency 30 September currency
--------------- ----------------
2017 2016 Variance variance(1) 2017 2016 Variance variance(1)
GBPm GBPm % % GBPm GBPm % %
Revenue
Primary Markets 29.6 21.1 40% 38% 77.3 65.3 18% 16%
Secondary Markets - Equities 39.0 40.0 (3%) (4%) 122.9 123.1 (0%) (2%)
Secondary Markets - Fixed
income, derivatives and
other 28.1 28.5 (1%) (6%) 86.1 82.8 4% (4%)
Total revenue 96.7 89.6 8% 5% 286.3 271.2 6% 1%
------------------------------ ------- ------ --------- ------------ ------- ------- --------- ------------
Cost of sales (4.0) (5.5) (27%) (29%) (12.9) (17.2) (25%) (27%)
------- ------ ------- -------
Gross profit 92.7 84.1 10% 7% 273.4 254.0 8% 3%
------------------------------ ------- ------ --------- ------------ ------- ------- --------- ------------
(1) Removal of SwapMatch from Capital Markets (acquired Q3
2016)
Technology Services
Three months
Nine months
ended Constant ended Constant
30 September currency 30 September currency
--------------- ----------------
2017 2016 Variance variance 2017 2016 Variance variance
Revenue GBPm GBPm % % GBPm GBPm % %
MillenniumIT & other technology 22.7 20.8 9% 7% 63.8 58.8 9% 3%
--------------------------------- ------- ------ --------- --------- ------- ------- --------- ---------
Cost of sales (9.0) (6.5) 38% 41% (21.6) (17.1) 26% 20%
------- ------ ------- -------
Gross profit 13.7 14.3 (4%) (8%) 42.2 41.7 1% (5%)
--------------------------------- ------- ------ --------- --------- ------- ------- --------- ---------
Basis of Preparation
Results for the period ended 30 September 2017 have been
translated into Sterling using the average exchange rates for the
period. Constant currency growth rates have been calculated by
translating prior period results at the average exchange rate for
the current period.
Average rate
9 months ended Closing rate
at
30 September 30 September
2017 2017
---------------
GBP : EUR 1.15 1.13
----------- --------------- -------------
GBP : USD 1.28 1.34
----------- --------------- -------------
Average rate
9 months ended Closing rate
at
30 September 30 September
2016 2016
GBP : EUR 1.25 1.15
----------- --------------- -------------
GBP : USD 1.39 1.30
----------- --------------- -------------
Appendix - Key performance indicators
Information Services
As at
30 September Variance
------------------
2017 2016 %
ETF assets under management
benchmarked ($bn)
FTSE 345 246 40%
Russell Indexes 227 176 29%
----------------------------- ---------
Total 572 422 36%
----------------------------- -------- -------- ---------
Terminals
UK 69,000 73,000 (5%)
Borsa Italiana Professional
Terminals 116,000 129,000 (10%)
Post Trade Services -
LCH
Three months ended Nine months ended
30 September Variance 30 September Variance
--------------------- --------------------
2017 2016 % 2017 2016 %
OTC derivatives
SwapClear
IRS notional cleared
($tn) 197 160 23% 666 506 32%
SwapClear members 105 105 0% 105 105 0%
Client trades ('000) 313 232 35% 923 693 33%
CDSClear
Notional cleared (EURbn) 147 106 39% 445 348 28%
CDSClear members 13 12 8% 13 12 8%
ForexClear
Notional value cleared
($bn) 3,097 630 392% 7,954 1,206 560%
ForexClear members 28 24 17% 28 24 17%
------------------------------- ----------- -------- --------- --------- --------- ---------
Non-OTC
Fixed income - Nominal
value (EURtn) 22.3 17.1 30% 65.2 52.1 25%
Listed derivatives (contracts
m) 33.7 28.5 18% 110.1 98.5 12%
Cash equities trades
(m) 194 166 17% 613 511 20%
------------------------------- ----------- -------- --------- --------- --------- ---------
Average cash collateral
(EURbn) 82.1 68.9 19% 85.0 63.8 33%
Post Trade Services - CC&G and Monte Titoli
Three months ended Nine months ended
30 September Variance 30 September Variance
--------------------- --------------------
2017 2016 % 2017 2016 %
CC&G Clearing
Contracts (m) 22.6 28.0 (19%) 82.7 96.4 (14%)
Initial margin held (average
EURbn) 9.4 11.7 (20%) 11.6 11.8 (2%)
Monte Titoli
Settlement instructions
(trades m) 10.1 9.4 7% 33.0 32.0 3%
Custody assets under
management (average EURtn) 3.30 3.17 4% 3.26 3.17 3%
Capital Markets - Primary
Markets
Three months ended Nine months ended
30 September Variance 30 September Variance
--------------------- --------------------
2017 2016 % 2017 2016 %
New Issues
UK Main Market, PSM &
SFM 18 11 64% 60 36 67%
UK AIM 25 11 127% 53 52 2%
Borsa Italiana 10 5 100% 24 13 85%
Total 53 27 96% 137 101 36%
--------------------------- ---------- --------- --------- --------- --------- ---------
Money Raised (GBPbn)
UK New 2.5 0.3 733% 5.0 2.2 127%
UK Further 3.8 4.0 (5%) 12.2 10.0 22%
Borsa Italiana new and
further 0.8 0.8 (2%) 13.7 4.7 191%
Total (GBPbn) 7.1 5.1 39% 30.9 16.9 83%
--------------------------- ---------- --------- --------- --------- --------- ---------
Capital Markets - Secondary
Markets
Three months ended Nine months ended
30 September Variance 30 September Variance
--------------------- --------------------
Equity 2017 2016 % 2017 2016 %
Totals for period
UK value traded (GBPbn) 327 310 5% 1,010 947 7%
Borsa Italiana (no of
trades m) 15.1 16.6 (9%) 52.6 57.2 (8%)
Turquoise value traded
(EURbn) 225 325 (31%) 781 1,085 (28%)
SETS Yield (basis points) 0.63 0.63 0% 0.63 0.63 0%
Average daily
UK value traded (GBPbn) 5.1 4.8 6% 5.3 5.0 6%
Borsa Italiana (no of
trades '000) 237 255 (7%) 275 298 (8%)
Turquoise value traded
(EURbn) 3.5 4.9 (29%) 4.1 5.6 (27%)
Derivatives (contracts
m)
LSE Derivatives 1.5 0.9 67% 4.7 3.3 42%
IDEM 6.6 10.2 (35%) 27.1 35.4 (23%)
Total 8.2 11.1 (26%) 31.8 38.7 (18%)
--------------------------- ---------- --------- --------- --------- --------- ---------
Fixed Income
MTS cash and BondVision
(EURbn) 733 982 (25%) 2,635 3,024 (13%)
MTS money markets (EURbn
term adjusted) 17,385 19,305 (10%) 58,740 63,730 (8%)
Total Income - Quarterly
CY
CY 2016 2017
GBP millions Q1 Q2 Q3 Q4 CY 2016 Q1 Q2 Q3
-------------- -------------- -------------- -------------- ------- ------------- ----------------
Primary
Markets 22.2 22.0 21.1 25.5 90.8 21.3 26.4 29.6
Secondary
Markets -
Equities 42.2 40.9 40.0 41.8 164.9 42.0 41.9 39.0
Secondary
Markets -
Fixed
income,
derivatives
& other 28.0 26.3 28.5 29.8 112.6 30.4 27.6 28.1
------------- -------------- -------------- -------------- -------------- ------------- ------- ------------- ----------------
Capital
Markets 92.4 89.2 89.6 97.1 368.3 93.7 95.9 96.7
Clearing 10.6 10.1 10.0 11.8 42.5 10.7 9.9 8.9
Settlement,
Custody &
other 12.9 14.5 15.2 18.6 61.2 17.0 17.7 17.3
------------- -------------- -------------- -------------- -------------- ------------- ------- ------------- ----------------
Post Trade
Services -
CC&G and
Monte
Titoli 23.5 24.6 25.2 30.4 103.7 27.7 27.6 26.2
OTC -
SwapClear,
ForexClear
&
CDSClear 44.6 44.4 47.6 54.0 190.6 56.8 55.8 58.6
Non OTC -
Fixed
income,
Cash
equities &
Listed
derivatives 28.6 29.1 28.3 30.5 116.5 32.9 33.1 33.3
Other 11.1 9.3 13.6 15.4 49.4 16.0 12.6 22.0
------------- -------------- -------------- -------------- -------------- ------------- ------- ------------- ----------------
Post Trade
Services -
LCH 84.3 82.8 89.5 99.9 356.5 105.7 101.5 113.9
FTSE Russell
Indexes 96.4 97.1 102.1 113.7 409.3 126.7 133.8 135.3
Real time
data 22.7 21.8 23.3 23.1 90.9 23.0 24.4 23.0
Other
information 22.4 25.5 23.1 23.5 94.5 23.9 23.1 23.5
------------- ------- ------------- ----------------
Information
Services 141.5 144.4 148.5 160.3 594.7 173.6 181.3 181.8
Technology
Services 16.2 21.9 20.8 29.4 88.3 20.5 20.6 22.7
Other 1.0 0.1 2.6 0.4 4.1 1.4 3.2 1.4
Total
Revenue 358.9 363.0 376.2 417.5 1,515.6 422.6 430.1 442.7
Net treasury
income
through CCP:
CC&G 10.3 10.7 11.2 10.4 42.6 9.8 9.6 10.9
LCH 17.6 17.4 24.1 23.1 82.2 24.2 31.3 31.1
Other income 0.8 7.1 3.1 5.7 16.7 4.1 13.8 1.4
Total income 387.6 398.2 414.6 456.7 1,657.1 460.7 484.8 486.1
------------- -------------- -------------- -------------- -------------- ------------- ------- ------------- ----------------
Cost of
sales (35.3) (41.7) (44.8) (53.0) (174.8) (50.4) (51.2) (55.7)
Gross profit 352.3 356.5 369.8 403.7 1,482.3 410.3 433.6 430.4
------------- -------------- -------------- -------------- -------------- ------------- ------- ------------- ----------------
Note: Minor rounding differences may mean quarterly and other
segmental figures may differ slightly
This information is provided by RNS
The company news service from the London Stock Exchange
END
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