London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — H1 FY2013 Earnings Presentation
36 slides from London Stock Exchange's earnings presentation, Nov 16, 2012
Slide 1: London Stock Exchange Group plc Interim results FY 2013
London Stock Exchange Group plc Interim results FY 2013 16th November 2012
Slide 2: Agenda
Agenda Introduction Financial Review David Warren, Chief Financial Officer CEO Overview Xavier Rolet, Chief Executive Q&A
Slide 3: Xavier Rolet, Chief Executive
Xavier Rolet Chief Executive
Slide 4: Highlights
Highlights • Strong financial performance in challenging markets - good contributions from Information Services, Post Trade and Technology • Continuing to deliver on strategy; focus on integration and operational efficiencies, organic opportunities and leveraging assets • Busy period characterised b
Slide 5: David Warren, Chief Financial Officer
David Warren Chief Financial Officer 5
Slide 6: Key financial highlights
Key financial highlights • Strong performance - total income up 10% to £423.7m; down 1% on organic and constant currency basis • Underlying operating expenses remain broadly flat – close control of costs • Adjusted operating profit up 1% at £217.2m • Adjusted basic EPS up 9% to 51.8p; basic EPS flat
Slide 7: Overview of results
Overview of results Six months ended Organic and 30 September constant currency 2012 2011 Change variance £m £m % % Revenue 349.8 328.1 7% (8%) Total income 423.7 386.5 10% (1%) Profit from JV / associates - 2.3 Adjusted operating expenses* (206.5) (174.5) 18% 3% Adjusted operating profit * 217.2 21
Slide 8: Information Services
Information Services FTSE, UnaVista and SEDOL driving growth Revenue up 66% organic constant currency up 1% FTSE revenue £64.9m Vanguard to switch $170bn assets to FTSE indices £148m Lyxor to switch two equity funds to FTSE Double digit revenue growth £65m expected FY 2013 £89m Revenue from no
Slide 9: Post Trade Services
Post Trade Services Strong treasury management income drives growth Total income up 6% Clearing – Net treasury income up 38% Average total initial margin up 21% £113m to €10.5bn £107m Clearing revenue down 10% on weaker trading £54m £68m Settlement revenue down 21% Reduction in trading £21m Cu
Slide 10: Net Treasury Income
Net Treasury Income • NTI driven by 21% year-on-year increase in initial cash margin held • CC&G adapting investment policy – moving to secured investments • Since end October: over €4bn of cash margin with CC&G fully collateralised through investments, mainly in Italian government securities 10
Slide 11: Capital Markets - Primary
Capital Markets - Primary Fixed income issuance strong in UK and Italy Revenue FY 2013 H1 down 17% Annual fees down 4% £41m Admission revenue down 29% • 59 new issues £34m • £7.9bn raised via equity issuance £20m £15m Bond issuance strong • “BTP Italia” – further success • October 2012 issue raised
Slide 12: Capital Markets - Secondary
Capital Markets - Secondary Subdued trading in challenging markets Revenue FY 2013 H1 down 22% Secondary Markets: Performance reflects effect of £119m macro economic uncertainties UK equities ADV traded down 18% £23m £96m Italian equities average daily number of trades down 15% £19m £21m FTS
Slide 13: Technology Services
Technology Services MillenniumIT technology implementation across range of customers Revenue FY 2013 H1 up 3% MillenniumIT Revenue up 36% at constant currency £25m £26m Now live at: • Borsa Italiana: £14m • Equity £15m • Fixed income • Structured products • Mongolian SE • Johannesburg SE £11m •
Slide 14: Operating expenses
Operating expenses Good cost control - underlying operating expenses remain broadly flat Note: Excluding amortisation of purchased intangibles and non-recurring items 14
Slide 15: Summarised cash flow
Summarised cash flow Strong cash generation • Investment activities £ million • £26.7m capex – primarily IT systems and data centre • Additional £18.3m received from TMX Group following termination of merger agreement • LCH.Clearnet shares purchased from MF Global (2.4% stake) • Discretionary free c
Slide 16: Borrowings
Borrowings Facilities (as at 2 November 2012) • Operating net debt £663m (at 30 September 2012) • Net debt: Pro forma* EBITDA 1.4x (excludes cash held for regulatory purposes (FY 2013 H1: £200m; FY 2012: £165m)) • £1.65bn total committed debt Leverage and facilities • £1.05bn extending to 2015 or be
Slide 17: Summary
Summary • Resilient performance in many business areas as markets remained challenging • Income growth driven by FTSE – clear benefit of strategy to diversify and grow through organic development and good acquisitions • Focus to continue on integration benefits, cost control and leveraging assets 17
Slide 18: Xavier Rolet, Chief Executive
Xavier Rolet Chief Executive 18
Slide 19: Strong operational performance
Strong operational performance • Further good progress in delivering on strategy for growth and diversification • Strong financial results despite market challenges • Getting in shape • Costs well controlled – broadly flat on underlying basis • Leveraging our assets • New products and initiatives la
Slide 20: Successful execution and delivery of strategy
Successful execution and delivery of strategy Group transformation continues – scale, diversification and better balance of revenues FY 2009 FY 2013 H1 20
Slide 21: Getting in shape: Good cost control and operational efficiencies
Getting in shape : Good cost control and operational efficiencies • Focus on operational efficiencies; underlying H1 costs broadly flat • FTSE - integration progressing, synergies being delivered • FTSE being integrated into Information Services business • Mark Makepeace leads expanded division • Mi
Slide 22: Getting in shape: Strengthened Senior Management Team
Getting in shape : Strengthened Senior Management Team Joined LSEG Previously Xavier Rolet* Chief Executive March 2009 Lehman/Goldman Sachs David Warren* Chief Financial Officer July 2012 NASDAQ OMX/CS First Boston Raffaele Jerusalmi* Director of Capital Markets and CEO October 2007 Credit Suisse of
Slide 23: Leveraging assets: new products and initiatives
Leveraging assets : new products and initiatives • Information Services • UnaVista expanding and gaining clients • SEDOL and Corporate Actions to migrate to UnaVista platform • Group Ticker Plant launched • Post Trade Services • Monte Titoli affirmed as T2S first wave participant; ranked as a top 10
Slide 24: Leveraging assets: MOT and ORB
Leveraging assets : MOT and ORB MOT • BTP Italia – innovative subscription method using MOT as an electronic distribution network: • First two issues raised a total €9.0bn (March 2012 & June 2012) • Third Issue raised €18bn in October 2012 - a European record for a product directly addressed to the
Slide 25: Developing opportunities: FTSE
Developing opportunities : FTSE • Innovative partnerships • Vanguard selected FTSE as index benchmark provider for six international stock index funds - $170bn assets – largest ever international index provider switch • FTSE Cürex FX Index series launched • Lyxor switches to FTSE for Global Real Est
Slide 26: Regulatory changes
Regulatory changes • MiFID / MiFIR • Access, transparency and market structure (OTFs) are current focus of discussions in Council • HFT – minimum resting period proposed by European Parliament, but may be negotiated away for other controls (e.g. tick sizes) • EMIR / Dodd-Frank • EMIR live 2013, foll
Slide 27: Developing opportunities: LCH.Clearnet
Developing opportunities: LCH.Clearnet • Progress • Regulatory approval received from lead regulator - ACP - in France • Anti-trust clearance received from CNC in Spain • UK OFT decision - expected December 2012 • Other regulatory reviews expected to complete shortly • Other developments • US “one-p
Slide 28: Outlook and priorities
Outlook and priorities • Diversification and geographical expansion delivering success for Group • Industry conditions present challenges in some areas but markets remain active • Group poised and well placed for market improvements • Significant opportunities from evolving industry and regulatory l
Slide 29: Appendices
Appendices 29
Slide 30: 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 269.6m (FY 2012 H1: 269.4m), excludes ESOP. Excha
Slide 31: Operating expenses
Operating expenses Cost : Income ratio 49% (FY 2012 H1 45%) £207m Cost of sales £175m £29m Depreciation £20m £20m £19m £32m IT/Network £34m £44m Property/marketing/other £34m Staff £82m £68m FY 2012 H1 FY 2013 H1 FY 2013 H1 costs include £35.3m for FTSE Excluding amortisation of purchased intangible
Slide 32: Diversified Group income
Diversified Group income FY 2012 H1 Total income £423.7m up 10% (FY 2012 H1 £386.5m) 32
Slide 33: Revenues - Quarterly
Revenues - Quarterly FY 2012 FY 2013 £ millions Q1 Q2 Q3 Q4 FY 2012 Q1 Q2 Annual Fees 9.9 10.2 10.0 9.4 39.5 9.8 9.4 Admission Fees 12.2 8.2 7.1 9.5 37.0 7.9 6.6 Cash equities UK & Turquoise 24.3 27.8 21.1 22.2 95.4 21.1 19.0 Cash equities Italy 7.7 8.5 7.2 8.0 31.4 6.6 5.6 Derivatives 4.3 4.7 3.9 3
Slide 34: Capital Markets – key performance indicators
Capital Markets – key performance indicators Capital Markets - Primary Markets Capital Markets - Secondary Markets Six months ended Six months ended 30 September Variance 30 September Variance 2012 2011 % Equity 2012 2011 % New Issues Totals for period UK Main Market, PSM & SFM 12 39 (69%) UK value
Slide 35: Post Trade and Information Services – key performance indicators
Post Trade – key performance indicators Post Trade Services Six months ended 30 September Variance 2012 2011 % CC&G Clearing (m) Equity clearing (no of trades) 30.1 36.1 (17%) Derivative clearing (no of contracts) 20.4 28.3 (28%) Total 50.5 64.4 (22%) Open interest (contracts as at period end) 4.8 5
Slide 36: Disclaimer
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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