London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — H1 2017 Earnings Presentation
22 slides from London Stock Exchange's earnings presentation, Aug 3, 2017
Slide 1: Interim results – six months ended 30 June 2017
London Stock Exchange Group plc Interim results – six months ended 30 June 2017 3 August 2017 Page 1
Slide 2: Key financial highlights
Key financial highlights Strong financial performance across all business areas – and good control of underlying costs Revenue Total income Expenses up 18% up 20% well controlled while £853m £946m investing for growth – up 5% on organic and constant (2016 H1: £722m) (2016 H1: £786m) currency basis E
Slide 3: Overview of results
Overview of results Six months ended Organic and 30 June constant currency 1 2017 2016 1 Variance variance £m £m % % Total income 946 786 20% 12% Cost of sales (102) (77) 32% 22% Gross profit 844 709 19% 11% Operating expenses before depreciation and amortisation (399) (337) 18% 4% Depreciation and
Slide 4: Income Growth
Income Growth Good organic growth from investment in new products LSEG 2017 H1 Income (£m) 1000 96 946 900 11 53 839 786 800 700 600 500 2016 H1 FX 2016 H1 Inorganic Organic 2017 H1 adjusted for FX Note: figures include continuing operations only London Stock Exchange Group Page 4
Slide 5: Operating Expenses
Operating Expenses Good control of underlying expenses – up 5% LSEG 2017 H1 Expenses (£m) 500 • FX includes one-off 22 445 items of £11m related to 423 closing out of balance 9 41 414 sheet positions (mainly Russell Investment 400 Management disposal) 373 • Organic increase includes £6m one-off item
Slide 6: Summarised cash flow
Summarised cash flow Strong cash generation £ million • £88m capex – mainly technology upgrades and new projects • Discretionary free cash flow remains strong at 59.4p per share1 (2016 H1 107.7p including Russell Investment Management tax payment and sale proceeds) Note: All above figures include co
Slide 7: Financial position
Financial position Facilities 30 June 2017 Operating net debt £1,005m (31 December 2016: £882m) Net debt: Pro forma EBITDA 1.2x (excluding £843m restricted cash) Net debt: 2017 H1 Pro forma EBITDA c.1.8x (includes share buy-back and The Yield Book / Citi’s Fixed Income Indices acquisition, excludes
Slide 8: MiFID II opportunities
MiFID II opportunities - MiFID II implementation from January 2018 - MiFID II mandates Open Access across financial markets infrastructure - Will promote greater competition, transparency and innovation through unbundling of services and fees - Transparency and consumer choice will create deeper poo
Slide 9: Investment in growth and innovation
Investment in growth and innovation Information Services − LSEG to acquire Yield Book and Citi Fixed Income Indices - strengthens FTSE Russell’s position as world’s #1 index provider with pro forma c.$15trn AuM benchmarked to its indexes − Integration of Mergent progressing well – leading provider o
Slide 10: Successful strategy driving growth
Successful strategy driving growth Investor Update affirmed mid-term outlook - Strong global business, well diversified across products and geographies - Open Access approach will enable Group to take full advantage of MiFID II Double-digit growth to continue 2017-2019 FTSE Russell Sustainable and a
Slide 11: Appendices
Appendices Page 11
Slide 12: Notes
Notes Adjusted operating profit - excludes amortisation of purchased intangible assets and non- recurring items, to enable comparison of the underlying earnings of the business with prior periods. Adjusted earnings per share Based on number of shares 347.0m (2016 H1: 348.1m), excludes ESOP Exchange
Slide 13: Diversified by business activity
Diversified by business activity LSEG 2017 H1 Total Income by segment Segmental growth 2017 H1 vs 2016 H1 Organic and constant currency Variance variance 1 Continuing operations % % Revenue £946m Information Services 1 24% 13% Post Trade Services - LCH 24% 17% Post Trade Services - CC&G and Monte Ti
Slide 14: Diversified by currency
Diversified by currency Diversification by both income and expenses across GBP, EUR and USD 2017 H1 Income 2017 H1 Expenses 40% 46% GBP GBP 33% 30% EUR EUR £946m £547m 25% 16% USD USD 2% 8% Other Other Note: figures include continuing operations only, expenses include depreciation and cost of sales
Slide 15: SwapClear - Interest Rate Swaps
SwapClear - Interest Rate Swaps Client clearing – average daily value ($bn) SwapClear H1 2017: 1,400 100% • $468trn total notional 90% 1,200 cleared (2016 H1: $346trn) 80% up 35% 1,000 70% 60% • 610k Client trades cleared 800 50% (2016 H1: 460k) up 33% 600 40% • 106 SwapClear members 30% 400 (2016 H
Slide 16: SwapClear - Compression
SwapClear - Compression Compression ($trn) 80 60 40 20 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2015 2016 2017 Compression activity ($trn) SwapClear H1 2017: 106 468 • $312trn compressed (2016 H1: $178trn) 312 302 • 1.8
Slide 17: OTC clearing – CDS and FX
OTC clearing – CDS and FX CDSClear – Share of Overall Indices CDSClear 35% 32% 30% • Market share growth since European mandate 25% 23% 22% implementation began February 2017 20% 20% 17% 18% 15% 13% • €298bn cleared in H1 (2016 H1: €242bn) up 10% 6% 8% 23% 5% 0% Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 20
Slide 18: Turquoise Plato Block Discovery
Turquoise Plato Block Discovery Turquoise Plato Block Discovery™ Value Traded (€bn) 5.5 • Award winning innovation designed in 5 cooperation with Plato Partnership, a unique collaboration with buy-side and 4.5 sell-side firms 4 • Monthly value traded in July 2017 at €5.5bn 3.5 up 3% on previous reco
Slide 19: Key performance indicators
Key performance indicators Capital Markets - Primary Markets Capital Markets - Secondary Markets Six months ended Six months ended 30 June Variance 30 June Variance 2017 2016 % Equity 2017 2016 % New Issues Totals for period UK Main Market, PSM & SFM 42 25 68% UK value traded (£bn) 683 637 7% UK AIM
Slide 20: Key performance indicators
Key performance indicators Post Trade Services - CC&G and Monte Titoli Post Trade Services - LCH Six months ended Six months ended 30 June Variance 30 June Variance 2017 2016 % 2017 2016 % CC&G Clearing OTC derivatives Contracts (m) 60.1 68.5 (12%) SwapClear Initial margin held (average €bn) 12.8 11
Slide 21: Revenues - Quarterly
Revenues - Quarterly Continuing operations only CY 2016 CY 2017 £ millions Q1 Q2 Q3 Q4 CY 2016 Q1 Q2 H1 Primary Markets 22.2 22.0 21.1 25.5 90.8 21.3 26.4 47.7 Secondary Markets - Equities 42.2 40.9 40.0 41.8 164.9 42.0 41.9 83.9 Secondary Markets - Fixed income, derivatives & other 28.0 26.3 28.5 2
Slide 22: Contacts
Contacts Paul Froud Tom Woodley Head of Investor Relations Investor Relations Manager Tel: +44 (0)20 7797 1186 Tel: +44 (0)20 7797 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
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