London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — FY2002 Earnings Presentation
25 slides from London Stock Exchange's earnings presentation, May 23, 2002
Slide 1: London Stock Exchange Preliminary Results 23 May 2002
London Stock Exchange Preliminary Results 23 May 2002
Slide 2: Agenda
Agenda Introduction Don Cruickshank Chairman Financial Review Jonathan Howell Director of Finance CEO Overview Clara Furse Chief Executive Officer Q&A
Slide 3: Introduction
Introduction • Successful transition to a commercially focused, listed company • Financial highlights: - Turnover up 11% - Operating profit up 22% - Adjusted EPS growth of 20% - Full year dividend up 13% • Building a global business • Leading in Europe
Slide 4: Jonathan Howell, Director of Finance
Jonathan Howell Director of Finance
Slide 5: Overview of Results
Overview of Results Strong growth in turnover and profit Year ended 31 March 2002 2001 Change £m £m % Turnover Broker services 81.2 64.2 26 Issuer services 26.9 31.9 (16) Information services 94.9 87.0 9 Other income 12.6 10.3 22 Gross turnover* 215.6 193.4 11 Operating profit* 70.5 57.9 22 Exceptio
Slide 6: Broker Services
Broker Services Turnover increase driven by growth in bargains and migration to SETS Turnover up 26% Key metrics £81.2m • Daily average equity bargains up 25% to 200,000 £64.2m • Increased use of high-yield order book – order book bargains up 86% • Order book averaged 60% of value traded in eligible
Slide 7: Issuer Services
Issuer Services Decrease in turnover reflects weaker IPO market Turnover down 16% Key metrics • UK main market new issues fell 44% £31.9m from 212 to 119 £26.9m • 66% of all Western European IPOs took place on our markets • Number of companies: 2,879 (2001: 2,922) • AIM companies up 17% to 641 2001
Slide 8: Information Services
Information Services Turnover growth reflects higher average terminal numbers Turnover up 9% Key metrics £94.9m • Average terminal numbers 109,000, £87.0m up 5% • Year-end terminal population 105,000 (2001: 107,000) • Professional investor terminals in line with 2001 at 96,000 • FTSE JV – share of t
Slide 9: Operating and development costs
Operating and development costs Good management of cost base Costs/turnover* 69% 66% £136.1m £129.3m • H2 costs in line with H1 £19.9m £17.5m • Improved cost/income ratio • Total costs up 5% £118.6m £109.4m 2001 2002 Other operating costs Depreciation * continuing operations before exceptional items
Slide 10: Recent Track Record
Recent Track Record Strong financial progress over the last four years £216m Progress over last four years: £193m £164m • Turnover – increased 47% £147m £136m £129m £122m £118m • Operating profit – more than trebled £71m £58m £42m • Adjusted EPS almost trebled £21m to 18.3p 1999 2000 2001 2002 Turno
Slide 11: Summarised Cash Flow
Summarised Cash Flow Free cash flow (before exceptional items) up 46% Year ended 31 March 2002 2001 £m £m Net cash inflow from: - ongoing operating activities 82.4 74.5 Taxation (15.8) (20.6) Capital expenditure (15.8) (22.7) Dividends paid (9.7) (3.0) Exceptional items (3.8) (22.4) Free cash flow -
Slide 12: Summarised Balance Sheet
Summarised Balance Sheet Balance sheet further strengthened Year ended 31 March 2002 2001 £m £m Fixed assets 129.0 129.5 Current assets - debtors 46.8 48.0 - cash 189.9 147.9 Creditors: due within one year (62.7) (58.8) Provisions (21.7) (24.6) Net assets 281.3 242.0
Slide 13: Financial summary
Financial summary 2002 • Strength and resilience of our business • Improvements in turnover, operating margins and cash flows Outlook • Current trading conditions similar to H2 2002: - Trading volumes remain stable - Encouraging signs in the IPO market but difficult to predict upturn - Professional
Slide 14: Clara Furse, Chief Executive Officer
Clara Furse Chief Executive Officer
Slide 15: Strategic Overview
Strategic Overview • We are the leading exchange organisation in Europe • We are shaping the globalisation of capital markets • Our existing businesses are growing and we have extended their reach and scale
Slide 16: Financial Strength
Financial Strength • Outstanding results • Significantly higher cash flows • £82m operating cash flow before exceptional items • £190m net cash • Dividend increase of 13%
Slide 17: Positioned For Growth
Positioned For Growth • Fully listed and demonstrably commercial • A new senior management team • A centralised Marketing function • 90% of employees in share incentive schemes
Slide 18: Improving Our Service
Improving Our Service Issuer Services • 66% of Western European IPOs • Increasing choice of markets – techMARK mediscience • International focus – NTT DoCoMo, Xstrata, MoC with NASSCOM • Agent for the Nordic region
Slide 19: Broadening Our Product Range
Broadening Our Product Range Broker Services • 86% growth in SETS trades • Increasing revenue from cross-border trading services • A product growth strategy • Lower clearing and settlement costs
Slide 20: New and Better Products
New and Better Products Information Services • Review of new business opportunities • Corporate Data Warehouse • Commercial RNS – a new revenue stream
Slide 21: A Plan of Action for Long Term Success
A Plan of Action for Long Term Success • Promotion of open competition in global capital markets • World class trading infrastructure • Extranex global information network service • JSE SETS – unlocking further deals
Slide 22: The Next Step
The Next Step • Partnership with the Hong Kong Stock Exchange − Asia’s second largest and most international market − Listing and trading facilitation programme • Creating a global network
Slide 23: The London Advantage
The London Advantage • World’s most robust technology • Gateway to Europe - 37% of Eurotop 300 • Renowned and respected market rules and regulation • Serving the most international financial markets community in the world • Host to the world’s largest pool of investment funds • Strong foundation for
Slide 24: Appendix
London STOCK EXCHANGE
Slide 25: Quarterly turnover analysis
Quarterly turnover analysis Year ended 31 March Q1 Q2 Q3 Q4 FY £m £m £m £m £m Gross turnover Broker Services 20.2 19.7 21.2 20.1 81.2 Issuer Services 7.5 6.3 6.3 6.8 26.9 Information Services* 23.8 23.4 24.3 23.4 94.9 Other 2.9 3.0 3.8 2.9 12.6 54.4 52.4 55.6 53.2 215.6 * Includes RNS (previously in