London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — H1 2012 Earnings Presentation
33 slides from London Stock Exchange's earnings presentation, Nov 16, 2011
Slide 1: Interim results FY 2012
London Stock Exchange Group plc Interim results FY 2012 16th November 2011
Slide 2: Agenda
Agenda Introduction Financial Review Doug Webb, Chief Financial Officer CEO Overview Xavier Rolet, Chief Executive Q&A
Slide 3: Xavier Rolet, Chief Executive
Xavier Rolet Chief Executive
Slide 4: Introduction
Introduction • Strong financial results: • Total income up 20%, • Profit before tax up 79% • Growth in revenue across all segments, underlying costs flat • Diversified business well placed, resilient and performing well • Clear strategy – delivering on cost control, driving innovation in partnership
Slide 5: Doug Webb, Chief Financial Officer
Doug Webb Chief Financial Officer 5
Slide 6: Key financial highlights
Key financial highlights • Strong performance - total income up 20% to £386.5m • Increased diversification – half Group’s income from Post Trade Services and Information Services • Organic operating expenses were flat in real terms • Adjusted operating profit up 38% at £214.3m • Adjusted EPS up 48%
Slide 7: Overview of results
Overview of results Six months ended Variance at 30 September constant 2011 2010 Change currency £m £m % % Revenue 328.1 300.6 9% 7% Total income 386.5 321.1 20% 18% Adjusted Operating expenses* (174.5) (167.9) 4% 2% Adjusted operating profit * 214.3 154.8 38% 35% Operating profit 192.5 122.9 57% 54
Slide 8: Capital Markets - Primary
Capital Markets - Primary Strong uplift – in new issues and capital raised Revenues up 19% Highlights • Strong new issue growth: • 102 new issues (H1 FY2011: 89) • 24 new international companies (19) • Strong pipeline - pending favourable market conditions • £11.9bn raised by new issues (H1 FY 2011
Slide 9: Capital Markets – Secondary
Capital Markets – Secondary Growth across all asset classes Revenues up 11% Highlights • UK equity average daily value traded up 2% on H1 FY 2011, average yield stable at 0.70bps • Turquoise - No 2 Lit and Dark MTF in Europe, European share of trading 5.4% (H1 FY 2011 3.5%) • Italian equity average
Slide 10: Post Trade Services
Post Trade Services Growth in underlying volumes and good treasury management Total income up 64% Highlights • Clearing revenues higher on increased Italian equities, derivatives and MTS fixed income volumes • Settlement revenues higher on increased pre-settlement volumes • Custody Assets under mana
Slide 11: Post Trade Services: CCP net treasury income
Post Trade Services CCP Net treasury income – significant step up in performance • Spread - difference between Euribor over EONIA • Improved deposit yield - negotiated rate above Euribor • Quantum of margins – increase in cash margins held and deposited with banks H1 FY 2011 restated for FX movement
Slide 12: Information Services
Information Services Good growth across range of products Revenues up 6% Highlights • Real time data professional terminals numbers stable • UK 93,000 - unchanged on 31 March 2011 • Italy 134,000 - down 5,000 on 31 March 2011 • Non-displayed data revenues increasing (HFTs, MTFs, Algos) • Revenue fro
Slide 13: Technology Services
Technology Services MillenniumIT and other technology / data centre services Revenues up 1% Highlights • MillenniumIT • Revenues up 10% at constant currency • Remains focused on providing technology for LSEG • Live: • Mongolia SE – first deliveries made Q2 • Chittagong Stock Exchange (trading and su
Slide 14: Operating expenses
Operating expenses Major movements • Underlying costs remain flat in real terms Note: Excluding amortisation of purchased intangibles and non-recurring items 14
Slide 15: Summarised cash flow
Summarised cash flow Continued strong cash generation £ million Investment activities • £14.8m capex – includes Turquoise Derivatives platform, MillenniumIT clearing technology and commencement of work on Borsa Italiana cash market switch to Millennium Exchange • Annual capex expected to approach c£
Slide 16: Borrowings
Borrowings • Net debt £125m • £165m cash reserved for regulatory and operational purposes (FY 2011 : £125m) • £790m available funding at 30 September 2011 LSEG ratings • S&P A- (stable) • Moody’s Baa2 (negative outlook) Adjusted Net debt to Actual EBITDA excludes cash held for regulatory purposes 16
Slide 17: October trading
October trading • IPO pipeline full, however timing subject to market conditions • UK cash equities average daily value traded £4.4bn, up 1% on October 2010; Italian cash equities average daily trades of 279,000, up 20% on October 2010; • Derivatives contracts traded up 3% on October 2010 • Fixed in
Slide 18: Xavier Rolet, Chief Executive
Xavier Rolet Chief Executive 18
Slide 19: Successful strategy implementation
Successful strategy implementation • Strong first half performance across increasingly diversified Group • Executing against clear stated strategy to deliver operational efficiency and drive growth: • Getting in shape • Costs well controlled, flat in real terms • Leveraging our assets • Range of ini
Slide 20: Delivering performance across the Group
Delivering performance across the Group • Strategy is creating a diversified and resilient global exchange • Good growth across each of the four divisions • Range of initiatives and services in the period including: • Capital Markets - launch of Turquoise Derivatives; MTS new bond services, ORB reta
Slide 21: Strength through business balance
Strength through business balance • Large majority of our business either unaffected or positively impacted by short term volatility • Diversified and balanced portfolio presents opportunities in both volatile and stable markets Typical sensitivity to elevated short term volatility Illustrative of g
Slide 22: On-going commitment to efficient markets
On-going commitment to efficient markets • Promoting equity, efficient capital raising and product innovation • Assisting SMEs in rising capital and in turn creating jobs • Services for the retail market including ORB retail bond market • Promoting equity as an asset class • Corporate access to inno
Slide 23: Regulatory landscape
Regulatory landscape Changes create both opportunity and challenges • MIFID/MIFIR review Live 2013/14 • Non-discriminatory access to CCPs, fungibility and cross-asset margining • Non-exclusive licensing of IPR in indices • EMIR (European Markets Infrastructure Regulation) Live 2012 • OTC derivatives
Slide 24: Post Trade – risk management and opportunities
Post Trade – risk management and opportunities • Risk management • CC&G carefully managing clearing and treasury risks • Growth in trading – derivatives and fixed income • Regulators want trusted infrastructure to provide solutions • Opportunities • LCH.Clearnet 24
Slide 25: Summary
Summary • Strong financial performance • Balanced and diversified Group • Well placed to deliver further performance: • All four diversified core businesses performing well • Strong cost control and highly cash generative • Focused on growth opportunities and partnering with customers to drive innov
Slide 26: Appendices
4 London Stock Exchange Group Appendices
Slide 27: Notes
Notes Adjusted operating profit - excludes amortisation of purchased intangible assets and non- recurring items, to enable comparison of the underlying earnings of the business with prior periods. Adjusted earnings per share Based on number of shares 269.4m (H1 FY 2011: 268.3m), excludes ESOP. Excha
Slide 28: Diversified Group income
Diversified Group income H1 FY 2012 £386.5m 28
Slide 29: Operating expenses
Operating expenses Cost : Income ratio 45% (H1 FY 2011 51%) (excluding TradElect effects) Excluding amortisation of purchased intangibles and non-recurring items Note: Minor rounding differences, figures may not cast down 29
Slide 30: Revenues - Quarterly
Revenues - Quarterly FY 2011 FY 2012 £ millions Q1 Q2 Q3 Q4 FY 2011 Q1 Q2 Annual Fees 9.3 9.4 9.6 9.4 37.8 9.9 10.2 Admission Fees 8.8 6.5 9.5 8.3 33.0 12.2 8.2 Cash equities UK & Turquoise 26.7 21.9 21.6 26.2 96.4 24.3 27.8 Cash equities Italy 8.7 6.0 6.8 9.3 30.7 7.7 8.5 Derivatives 4.9 3.5 3.8 4.
Slide 31: Capital Markets – key performance indicators
Capital Markets – key performance indicators Capital Markets - Secondary Markets Capital Markets - Primary Markets Six months ended 30 September Variance Six months ended 2011 2010 % 30 September Variance Equity Volume Bargains (m) 2011 2010 % UK 87.5 76.1 15% New Issues Borsa Italiana 34.2 32.1 7%
Slide 32: Post Trade and Information Services – key performance indicators
Post Trade – key performance indicators Post Trade Services Six months ended 30 September Variance 2011 2010 % CC&G Clearing (m) Equity clearing (trades) 36.1 34.0 6% Derivative clearing (contracts) 28.3 26.6 6% Total Contracts 64.4 60.6 6% Open interest (contracts as at period 5.6 4.3 30% end) Init
Slide 33: No representation or warranty, expressed or implied, is made or given by or on
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
London Stock Exchange Group — H1 2012 Earnings Presentation on 6ix