London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — FY2014 Earnings Presentation
40 slides from London Stock Exchange's earnings presentation, May 15, 2014
Slide 1: Preliminary results FY 2014
London Stock Exchange Group plc Preliminary results FY 2014 15th May 2014 Page 1 London Stock Exchange Group
Slide 2: David Warren
David Warren London Stock Exchange Group Page 2
Slide 3: Agenda
Agenda Introduction Financial Review David Warren, Chief Financial Officer CEO Overview Xavier Rolet, Chief Executive LCH.Clearnet view Suneel Bakhshi, Chief Executive LCH.Clearnet Group CEO Overview continued Q&A London Stock Exchange Group Page 3
Slide 4: Key financial highlights
Key financial highlights • Good financial performance – revenue up 50%: • organic revenue up 10% - growth in all divisions • 11 month contribution from LCH.Clearnet – total adjusted income of £325.3m • adjusted total income up 42%: • expected NTI decline replaced with growth across all business area
Slide 5: Overview of results
Overview of results Year ended Organic and 31 March constant currency 2014 2013 Change variance £m £m % % Revenue 1,088.3 726.4 50% 10% 1 Adjusted total income 1,213.1 852.9 42% 0% Adjusted operating expenses1 (698.4) (422.7) 65% 6% Adjusted operating profit1 514.7 430.2 20% (6%) Exceptional items a
Slide 6: Income growth
Income growth CC&G NTI declined as expected - replaced by organic growth London Stock Exchange Group Page 6
Slide 7: Capital Markets - Primary
Capital Markets - Primary Revenue FY 2014 up 15%; up 13% at constant currency Annual Fees up 7% Admission revenues up 24% • 188 new issues up 55% (121) • UK Main Markets: 57 - up 43% • UK AIM: 111 - up 50% • Italy: 20 - up 186% • £34.2bn raised via equity issuance, up 90% (£18.0bn) • Improved Primar
Slide 8: Capital Markets - Secondary
Capital Markets - Secondary Revenue FY 2014 up 15%; up 10% at organic and constant currency • UK equities Average Daily Value (ADV) up 8% • Turquoise equities ADV up 67% • Italy equities average daily number of trades up 5% • Derivatives volumes down 11%, revenue up 3% • Fixed income revenue up 31%,
Slide 9: Post Trade Services – CC&G and MT
Post Trade Services – CC&G and MT Revenue FY 2014 up 7%, up 4% at constant currency (exc NTI) CC&G Clearing - revenues up 11% • Clearing volumes up 3% Monte Titoli Settlement - revenues up 6% • Settlement instructions up 5% (inc OTC) Custody - revenues up 4% • Assets under Custody up 3% to €3.32 tri
Slide 10: Post Trade Services - LCH.Clearnet
Post Trade Services - LCH.Clearnet Adjusted Income FY 2014 (11 months) up 14%, up 7% at organic constant currency OTC revenue up 73% SwapClear • $526 trillion notional cleared (up 18%) • 103 members (78) Non-OTC clearing revenue up 7% Volumes: • Fixed Income up 1% • Commodity up 13% • Equity up 17%
Slide 11: Information Services
Information Services Revenue FY 2014 up 14%; up 10% on organic and constant currency FTSE revenue up 30%, up 22% on organic constant currency • Completed switch of $209bn Vanguard assets to FTSE indices • FTSE TMX Global Debt Capital Markets launched • FTSE-BOCHK Offshore RMB Bond Index Series launc
Slide 12: Technology Services
Technology Services Revenue FY 2014 up 14%; up 12% on organic and constant currency MillenniumIT revenues up 17% • Millennium PostTradeTM selected by SGX to support its clearing, settlement and depositary service • Millennium SORTM live in TMX and supporting Hong Kong Exchanges and Clearing Ltd Othe
Slide 13: Operating expenses
Operating expenses Note: Excluding amortisation of purchased intangibles and non-recurring items Other organic includes £8.4 million for the release of provisions relating to Lehman debtors and the exit from a leasehold property. London Stock Exchange Group Page 13
Slide 14: Summarised cash flow
Summarised cash flow Good cash generation • Investment activities: £ million • £91m capex – mainly technology upgrades and addition of LCH • £575m investment in LCH.Clearnet, FTSE TMX Global Debt Capital Markets and EuroTLX • Discretionary free cash flow after investment activities remains good at 8
Slide 15: Borrowings
Borrowings Facilities • Operating net debt £1,109m (£1,180m 30 September 2013) • Net debt: EBITDA 1.9x • Within Group’s self-imposed target range of 1.0 - 2.0x • Committed debt and credit lines available for general purposes totalled £1.65bn, Leverage extending to 2016 or beyond • £422m undrawn • S&
Slide 16: LCH.Clearnet
LCH.Clearnet • Cost synergies - increased from €23m to €60m / £19m to £49m1 • To be achieved in full in 2015 • €17m / £14m already achieved • Majority from LCH.Clearnet; minority from LSEG ̵ including restructuring of operations, procurement efficiencies, combination of group functions and other hea
Slide 17: Xavier Rolet
Xavier Rolet London Stock Exchange Group Page 17
Slide 18: Strategy update
Strategy update • Taken further steps to expand and strengthen Group’s offering • Becoming truly global infrastructure player: • Global listings • FTSE • LCH.Clearnet • Unique open-access model, working in close partnership with our customers • Complimentary products and services positioned around:
Slide 19: Unique open access model
Unique open access model • Open access across all businesses – technology, indices, clearing and settlement • MiFID II agreement announced 15th January 2014 mandates open access • Open access does not require interoperability between CCPs • Open access supported by majority of buy side and sell side
Slide 20: LCH.Clearnet
LCH.Clearnet • Momentum across a number of areas: • Increased cost targets • New OTC agreements • Recruitment of a new CEO who is driving change • First year of a multi year project • Initial phase is firmly underway • Next phases will involve: • Leveraging opportunities in infrastructure • Increase
Slide 21: Suneel Bakhshi, CEO LCH.Clearnet
Suneel Bakhshi CEO LCH.Clearnet London Stock Exchange Group Page 21
Slide 22: LCH.Clearnet
LCH.Clearnet • LCH.Clearnet defined by – Systemically important role – Effective risk management and clearing solutions – Talented leadership team • Focus on execution and delivery – Integration programme – OTC service arrangements – EMIR reauthorisation on track • Growth prospects – Regulatory chan
Slide 23: Xavier Rolet
Xavier Rolet London Stock Exchange Group Page 23
Slide 24: Successful execution and delivery of strategy
Successful execution and delivery of strategy • Diversified Group – increasing scope and scale • Growth being delivered organically and through M&A • Global growth accelerating through FTSE, LCH.Clearnet and fixed income Enlarged Group Adjusted Total Income FY 2009 £671.4m FY 2014 £1,213.1m London S
Slide 25: Growth opportunities / priorities 1
Growth opportunities / priorities 1 • Settlement • International Central Securities Depository in Luxembourg (globeSettle), utilising Monte Titoli’s expertise, is on track to commence operation in Summer 2014 having received regulatory approval from the CSSF • T2S implementation for Monte Titoli in
Slide 26: Growth opportunities / priorities 2
Growth opportunities / priorities 2 • Fixed income: FTSE TMX Global Debt Capital Market launched and MTS Indices acquired MTS Markets International launched in the US; Bonds.com acquired EuroTLX – majority stake (70%) acquired in September 2013 • Capital markets • Increased number of companies comin
Slide 27: Outlook
Outlook • Good financial performance • Increased income, operating profits and AEPS • Organic and M&A – both delivering • Accelerated cost savings at LCH.Clearnet • Opportunities for growth • Unique position: • The only global open access market infrastructure player • Working in close partnership w
Slide 28: Appendices
Appendices London Stock Exchange Group Page 28
Slide 29: Notes
Notes Adjusted operating profit - excludes amortisation of purchased intangible assets, non-recurring items and unrealised gains/losses at LCH.Clearnet, to enable comparison of the underlying earnings of the business with prior periods. Adjusted earnings per share Based on number of shares 270.1m (F
Slide 30: Operating expenses
Operating expenses Cost : Income ratio 58% (FY 2013 50%) FY 2014 includes £240.6m for LCH.Clearnet Excluding amortisation of purchased intangibles and non-recurring items Note: Minor rounding differences, figures may not cast down London Stock Exchange Group Page 30
Slide 31: Opportunities - SwapClear
Opportunities - SwapClear • SwapClear Client clearing – $100 trillion notional cleared by early April – 4 times nearest competitor • $290 trillion cumulative reduction to notional outstanding as a result of compression services • LCH launches additional compression service March 2014 London Stock Ex
Slide 32: SwapClear – Compression
SwapClear – Compression Compression reduces notional and trade count with Q1 2014 Highlights: the following benefits: $22 trn Overall net notional reduction across Reduced leverage ratio and capital requirements for products members Reduced portfolio line items and operational risk /cost $49 trn
Slide 33: Indices – ETFs benchmarked
Indices – ETFs benchmarked Source : ETFGI, data year-end 2013 London Stock Exchange Group Page 33
Slide 34: Key performance indicators
Key performance indicators Capital Markets - Primary Markets Capital Markets - Secondary Markets Year ended 31 March Variance Year ended 2014 2013 % 31 March Variance Equity 2014 2013 % New Issues UK Main Market, PSM & SFM 57 40 43% Totals for period UK AIM 111 74 50% UK value traded (£bn) 1,087 994
Slide 35: Key performance indicators
Key performance indicators Post Trade Services CC&G and Monte Titoli LCH.Clearnet Year ended Year ended 31 March Variance 31 March Variance 2014 2013 % 2014 2013 % CC&G Clearing (m) Equity clearing (no of trades) 62.5 58.8 6% OTC derivatives Derivative clearing (no of contracts) 34.8 35.9 (3%) SwapC
Slide 36: Revenues - Quarterly
Revenues - Quarterly FY 2013 FY 2014 £ millions Q1 Q2 Q3 Q4 FY 2013 Q1 Q2 Q3 Q4 FY 2014 Annual Fees 9.8 9.4 9.6 9.7 38.5 10.0 10.3 10.2 10.7 41.2 Admission Fees 7.9 6.6 10.5 7.3 32.3 9.5 7.6 12.8 10.0 39.9 Cash equities UK & Turquoise 22.4 20.5 19.8 23.3 86.0 24.2 22.2 21.7 26.4 94.5 Cash equities I
Slide 37: Revenues – Quarterly (continued)
Revenues – Quarterly (continued) FY 2013 FY 2014 £ millions Q1 Q2 Q3 Q4 FY 2013 Q1 Q2 Q3 Q4 FY 2014 FTSE 33.0 31.8 32.9 36.4 134.1 41.7 42.2 44.2 45.9 174.0 Real time data 23.7 21.6 24.7 26.9 96.9 22.4 22.1 23.0 23.3 90.8 Other information 18.6 18.9 18.4 19.4 75.3 19.8 20.1 21.2 22.8 83.9 Informatio
Slide 38: LCH.Clearnet Historic Revenues
LCH.Clearnet Historic Revenues LCH.Clearnet - historic FY 2013 FY 2014 £ millions Q1 Q2 Q3 Q4 FY 2013 Q1 Q2 Q3 Q4 FY 2014 OTC 3 months OTC - SwapClear 11.8 12.5 13.0 18.2 55.5 22.1 26.3 24.5 25.8 98.7 ForexClear / CDSClear 2.3 2.6 3.8 3.9 12.6 4.1 4.0 4.0 7.4 19.5 14.1 15.2 16.8 22.1 68.1 26.2 30.3
Slide 39: Contacts
Contacts Paul Froud Tom Woodley Head of Investor Relations Investor Relations Manager Tel: +44 (0)207 797 1186 Tel: +44 (0)207 797 1293 email: pfroud@lseg.com email: twoodley@lseg.com London Stock Exchange Group plc 10 Paternoster Square London EC4M 7LS For information on the Group: www.lseg.com Lon
Slide 40: Stock Exchange Group plc (the “Company”) or any of its directors or any other
No representation or warranty, expressed or implied, is made or given by or on behalf of London Stock Exchange Group plc (the “Company”) or any of its directors or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation and no respo
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