London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — H1 2004 Earnings Presentation
30 slides from London Stock Exchange's earnings presentation, Nov 11, 2004
Slide 1: London Stock Exchange Interim Results 11 November 2004
London Stock Exchange Interim Results 11 November 2004
Slide 2: Agenda
Agenda Introduction Chris Gibson-Smith Chairman Financial Review Jonathan Howell Director of Finance CEO Overview Clara Furse Chief Executive Officer Q&A 2
Slide 3: Introduction
Introduction • Turnover up 5% • Interim dividend up from 1.4p to 2.0p, reflecting: − Progressive dividend policy − Re-balance to approximately one third total dividend • Development of business continues – services aligned with evolving customer needs 3
Slide 4: Jonathan Howell, Director of Finance
Jonathan Howell Director of Finance
Slide 5: Overview of results
Overview of results Six months ended Year ended 30 September 31 March 2004 20033 Change 2004 3 £m £m % £m Turnover Issuer services 16.3 18.4 (11) 38.5 Broker services 48.3 43.7 11 94.1 Information services 53.8 50.2 7 101.0 Derivatives services 3.6 1.7 2 - 6.1 Other income 3.8 5.6 (32) 10.7 Gross tu
Slide 6: Overview of results (continued)
Overview of results (continued) Six months ended Year ended 30 September 31 March 2004 2003 3 Change 2004 3 £m £m % £m 1 Operating profit 39.1 41.4 (6) 82.9 Exceptional items 5.0 - - - Profit before tax 48.2 44.4 8 88.8 Tax (13.7) (11.2) (26) (25.7) 2 Profit after tax 34.5 33.2 4 63.1 Earnings per s
Slide 7: Issuer Services
Issuer Services Impacted by tariff reductions Turnover down 11% Key metrics • Annual fees represented 53% of Issuer Services turnover (H1 2003/04: 59%) £18.4m £16.3m • Total new issues 214 (H1 2003/04: 94) - 30 Main Market (H1 2003/04: 18) £7.5m - 184 AIM (H1 2003/04: 76) £7.7m • Total companies 2,7
Slide 8: Broker Services
Broker Services Resilient trading volumes Key metrics Turnover up 11% • Average daily equity bargains up 12% to 246,000 £48.3m £43.7m - SETS bargains up 23% to 155,000 per day £16.6m £16.6m £27.1m - off book bargains down 16% to 46,000 per £16.4m day - international bargains up 18% to 45,000 per day
Slide 9: Information Services
Information Services Terminal numbers unchanged Turnover up 7% Key metrics • Terminal population 90,000 (H1 2003/04: 90,000) £53.8m £50.2m £7.5m • Professional investor terminals at £6.2m 80,000 (H1 2003/04: 81,000) £6.2m £7.5m £46.3m • 2,300 Proquote screens £44.0m (H1 2003/04: 1,500) • FTSE JV – s
Slide 10: Derivatives Services
Derivatives Services Progress in core business Key metrics £3.6m • 9.2 million contracts traded (3 months to 30 September 2003: 3.7 million) • Average daily contracts traded 73,000 £16.6m (3 months to 30 September 2003: £27.1m 56,000) £16.6m £1.7m H1 2003/04 H1 2004/05 Derivatives Services 10
Slide 11: Operating costs
Operating costs Step-up in cost base £80.1m • Higher depreciation, in line with £72.7m £14.4m increased capex – up £4m to £14m £10.7m • Relocation to Paternoster Square – property costs up £3m £65.7m £62.0m • Full six months of EDX – up £3m to £5m • Higher weighting of project spend in H2 2004/05 H1
Slide 12: Summarised Cash Flow
Summarised Cash Flow Strong cash generation Six months ended Year ended 30 September 31 March 2004 2003 2004 £m £m £m Net cash inflow from operating activities 59.0 54.8 105.4 Taxation (11.7) (8.6) (22.2) Capital expenditure (26.2) (18.3) (54.2) Ordinary dividends paid (10.0) (8.8) (12.9) Free cash
Slide 13: Summarised balance sheet
Summarised balance sheet Financial flexibility 30 September 31 March 1 2004 2004 £m £m Total fixed assets 146.8 194.5 Current assets - debtors 91.5 61.1 - cash 117.7 227.9 Creditors: due within one year (76.1) (78.9) Creditors: due after one year (0.5) (0.5) Provisions (43.9) (38.4) Net assets 235.5
Slide 14: Current trading and prospects
Current trading and prospects • Consistent with H1 trends: − New issue activity remains good, primarily on AIM − SETS continues to perform well; strong H2 comparative − Professional terminal numbers unchanged − Overall, performance for year should remain satisfactory 14
Slide 15: Clara Furse, Chief Executive Officer
Clara Furse Chief Executive Officer
Slide 16: Overview
Overview • Satisfactory performance in mixed conditions • Continued SETS growth, main market growth and record level of AIM new issues 16
Slide 17: Issuer Services: New issues up
Issuer Services New issues up from 94 to 214 250 AIM New Issues 200 MM New Issues 150 100 50 0 H1 2003/04 H2 2003/04 H1 2004/05 17
Slide 18: Issuer Services: Record growth on AIM
Issuer Services Record growth on AIM 30.0 1000 Market value (£bn) 950 25.0 No of companies 900 Total no of companies 850 20.0 Market value (£bn) 800 15.0 750 700 10.0 650 600 5.0 550 0.0 500 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 18
Slide 19: Issuer Services
Issuer Services • Main market represents c80% of money £10.2bn raised on our markets £0.9bn £9.4bn £2.0bn • 78% of Western European IPOs (2003/04: 87%) £9.3bn £7.4bn • Hong Kong office opened October 2004 H1 2003/04 H1 2004/05 Main market AIM 19
Slide 20: Broker Services: Continued growth on SETS
Broker Services Continued growth on SETS 20.0 15.0 SETS Bargains (m) 10.0 5.0 0.0 H1 01 H2 01 H1 02 H2 02 H1 03 H2 03 H1 04 20
Slide 21: Broker Services: Resilience of our market
Broker Services Resilience of our market 2004/05 year on year cash equity volume growth April May June July August Septem ber 40% 30% 27% 23% 20% 16% 14% 12% 10% 10% 3% 0% -4% -10% -8% -9% -11% -14% -15% -20% -20% -21% -23% -24% -30% -40% -35% LSE Euronext DBAG 21
Slide 22: Broker Services: Volume Incentive Scheme
Broker Services Volume Incentive Scheme 180 160 140 Bargains per day 000s 120 Additional 100 volume required to of f set 80 discount scheme 60 40 20 0 H1 2003/04 H1 2004/05 SETSmm volumes SETS volume grow th 22
Slide 23: Broker Services: SETS growth boosted by SETSmm
Broker Services SETS growth boosted by SETSmm 16.0 12.0 SETSmm Bargains 000s 8.0 4.0 0.0 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 c40% reduction in SETSmm spreads 23
Slide 24: Broker Services: Other initiatives
Broker Services Other initiatives SETSmm extension and tick size reduction EUROSETS launched May 2004 - low cost opportunity to leverage platform - some early success in larger stocks Off-book tariff charges - positioning for post MiFID environment 24
Slide 25: Derivatives: EDX London
Derivatives EDX London • Good performance in core Scandinavian equity derivatives business • 9.2 m contracts; 73,000 per day (2003/04: 56,000 per day) • Building new service for OTC equity derivatives 25
Slide 26: Information Services: Terminal numbers steady
Terminals 000s M 70 80 90 100 ar -0 Ap 3 r-0 M 3 ay -0 Ju 3 n- 0 Ju 3 l- Au 03 g- 0 Information Services Se 3 p- 0 O 3 ct- 0 Total Terminals No 3 v- De 03 Terminal numbers steady this year c- 0 Ja 3 n- 0 Fe 4 b- 0 M 4 ar -0 Ap 4 r-0 M 4 ay -0 Ju 4 n- 0 Ju 4 l- Au 04 g- 0 Professional Terminals Se 4
Slide 27: Information Services: Drivers of growth
Information Services Drivers of growth • Proquote – up to c2,300 screens (31 March 2004: 1,800) • RNS retained 90% market share of UK plc announcements • FTSE driven by global expansion of indices products • SEDOL doing well - 900 user licences – and service extended to 330,000 securities 27
Slide 28: Summary
Summary • H2 trends so far similar to H1 - therefore expect satisfactory performance for full year • Exchange is well positioned for the future 28
Slide 29: Questions
London STOCK EXCHANGE
Slide 30: Financial promotion notice
"This communication is directed only at persons who [(i) have professional experience in matters relating to investments] [or] [(ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc")] of The Financial Services and Markets Act 2000 (Fina
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