London Stock Exchange Group Plc · LSE:LSEG
London Stock Exchange — H1 2014 Earnings Presentation
30 slides from London Stock Exchange's earnings presentation, Nov 13, 2014
Slide 1: London Stock Exchange Group plc Interim results
London Stock Exchange Group plc Interim results ended 30 September 2014 13 November 2014 Page 1 London Stock Exchange Group
Slide 2: Key financial highlights
Key financial highlights • Strong financial performance – revenue up 18%: • organic and acquisitions both delivering • organic revenue up 15% - growth across each business area • adjusted total income up 13% • continued good cost control, expenses on organic basis up 2%1 • adjusted operating profit
Slide 3: Overview of results
Overview of results Six months ended Organic and 30 September constant currency 2014 2013 Change variance £m £m % % Revenue 592.6 504.2 18% 15% 1 Adjusted total income 642.5 567.1 13% 10% Adjusted operating expenses1 (356.4) (337.2) 6% 2% Adjusted operating profit1 286.1 229.9 24% 21% Non-recurring
Slide 4: Income growth
Income growth Good organic growth and contribution from acquisitions London Stock Exchange Group Page 4
Slide 5: Capital Markets - Primary
Capital Markets - Primary Revenue up 21%; up 23% at constant currency Annual fee revenue up 10% Admission fee revenues up 35% • 126 new issues, up 59% (79) • UK Main Markets: 47 - up 124% • UK AIM: 62 - up 19% • Italy: 17 - up 183% • £27.5bn raised via equity issuance, up 83% (£15.0bn) • Good pipeli
Slide 6: Capital Markets - Secondary
Capital Markets - Secondary Revenue up 11%; up 8% at organic and constant currency • UK equities Average Daily Value (ADV) down 2% • Turquoise equities ADV up 39% • Italy equities average daily number of trades up 18% • Derivatives volumes down 8%, revenue up 3% at organic and constant currency • Fi
Slide 7: Post Trade Services – CC&G and MT
Post Trade Services – CC&G and MT Revenue unchanged; up 6% at constant currency (exc NTI) CC&G Clearing revenues up 2% • Clearing volumes up 15% Monte Titoli Settlement revenues up 19% • Settlement instructions up 22% (inc OTC) Custody revenues up 4% • Assets under Custody up 3% to €3.38 trillion NT
Slide 8: Post Trade Services - LCH.Clearnet
Post Trade Services - LCH.Clearnet Adjusted Income up 21% at organic and constant currency OTC revenue up 26% SwapClear: • $340 trillion notional cleared (up 41%) • 108 members (100) Non-OTC clearing revenue up 14% Volumes: • Fixed Income up 2% • Commodity up 34% • Equity up 17% • Listed derivatives
Slide 9: Information Services
Information Services Revenue up 8%; up 9% on organic and constant currency FTSE revenue up 10%; up 12% on organic and constant currency • FTSE China Indices exceeds $22 billion AUM • FTSE compliant with IOSCO Principles Real time data revenue down 4% - lower number of UK real-time professional users
Slide 10: Technology Services
Technology Services Revenue up 5%; up 10% on organic and constant currency MillenniumIT revenues down 2%; up 9% on and organic constant currency • Argentinian CSD first milestone delivery • Aequitas Innovations Inc selects suite of MillenniumIT products to power exchange in Canada • MillenniumIT to
Slide 11: Good control of operating expenses
Good control of operating expenses • LCH Cost synergies - increased May 2014 from €23m to €60m / £19m to £49m1 • To be achieved in full in 2015; €51m / £42m run-rate already achieved • £18m savings in FY 2015 H1 • Costs to achieve synergies reduced from €43m / £35m1 to €39 / £32m1 Note: Excluding am
Slide 12: Summarised cash flow
Summarised cash flow Good cash generation £ million • £40m capex1 – mainly technology upgrades, new projects and integration of LCH • Discretionary free cash flow after investment activities remains strong at 62.4p per share2 (FY 2014 H1 : 44.3p) 1 Investing activities includes capital expenditure,
Slide 13: Borrowings
Borrowings Facilities • Operating net debt £32.2m 1 (£1,023m 30 June 2014) • Net debt: EBITDA 1.6x (setting aside the effect of the rights issue) • Committed undrawn credit lines available for Group purposes at 30 September Leverage 2014 totalled £1.3 billion, extending out to 2016 or beyond • Ratin
Slide 14: Strategy update
Strategy update • Strategy to broaden and diversify the Group’s - strong financial results across all businesses • Increasing geographic expansion - particularly in US market • Complimentary products and services positioned around: • Capital formation (primary and secondary markets) • Intellectual p
Slide 15: Successful execution and delivery of strategy
Successful execution and delivery of strategy • Growth being delivered organically and through M&A • Russell acquisition to further expand geographic footprint with expanded US presence and strengthening of Intellectual Property assets Enlarged Group Adjusted Total Income FY 2009 H1 £342.5m FY 2015
Slide 16: Diversified revenue by geography
Diversified revenue by geography LSEG LSEG incl. Index(3) LSEG incl. Russell(3) 6% 6% 10% 28% 43% 34% 39% 30% 37% 14% 21% 32% Legend - Geography UK EMEA(4) FY 2014(3) North America(2) Asia and RoW LSEG: $1,848m (£1,088m) Russell: $954m (£562m) Combined: $2,802m (£1,650m) Extracted from LSEG acquisit
Slide 17: Continued investment in innovation
Continued investment in innovation Capital formation • ELITE – Over 200 companies signed up to programme in Italy and UK supporting high growth private companies • Launch of Turquoise Block Discovery™ • Successful migration of SETS and SETSqx Gross Trade Feed to Central Counterparties • Completed ac
Slide 18: SwapClear
SwapClear • SwapClear clears more than 90% of the cleared IRS market • $225 trillion reduction to notional outstanding as a result of compression services year to end September SwapClear Client clearing $166 trillion notional cleared – almost 4 times nearest competitor London Stock Exchange Group Pa
Slide 19: SwapClear – Compression
SwapClear – Compression Compression reduces notional and trade count with the Q3 2014 Highlights: following benefits : • $71 trn Net notional reduction in IRS outstanding • Reduced leverage ratio and capital requirements for members • $225 trn Overall net notional compressed across • Reduced portfol
Slide 20: Acquisition of Frank Russell Company
Acquisition of Frank Russell Company • Timetable: • Rights issue completed in September • CMA clearance received • On track to complete earlier than expected - before end of 2014 • Comprehensive review • Good progress with post completion plans • Outcome to follow completion late 2014 / early 2015 •
Slide 21: Outlook
Outlook • Good H1 financial performance • Increased revenue, operating profits and AEPS • Growth both organic and from acquisitions • Remain focused • Accelerated cost savings at LCH.Clearnet • Completing the acquisition of Russell and integration of indices business with FTSE • Continued investment
Slide 22: Appendices
Appendices London Stock Exchange Group Page 22
Slide 23: Notes
Notes Adjusted operating profit - excludes amortisation of purchased intangible assets, non-recurring items and unrealised gains/losses at LCH.Clearnet, to enable comparison of the underlying earnings of the business with prior periods. Adjusted earnings per share Based on number of shares 272.9m (F
Slide 24: Operating expenses
Operating expenses Cost : Income ratio 55% (FY 2014 H1 59%) Excluding amortisation of purchased intangibles and non-recurring items Note: Minor rounding differences, figures may not cast down London Stock Exchange Group Page 24
Slide 25: Key performance indicators
Key performance indicators Capital Markets - Primary Markets Capital Markets - Secondary Markets Six months ended Six months ended 30 September Variance 30 September Variance 2014 2013 % Equity 2014 2013 % New Issues Totals for period UK Main Market, PSM & SFM 47 21 124% 62 52 UK value traded (£bn)
Slide 26: Key performance indicators
Key performance indicators Post Trade Services - CC&G and Monte Titoli Post Trade Services - LCH.Clearnet Six months ended Six months ended 30 September Variance 30 September Variance 2014 2013 % 2014 2013 % CC&G Clearing (m) OTC derivatives Equity clearing (no of trades) 32.7 28.2 16% SwapClear Der
Slide 27: Revenues - Quarterly
Revenues - Quarterly FY 2014 FY 2014 FY 2015 £ millions Q1 Q2 Q3 Q4 Q1 Q2 Annual Fees 10.0 10.3 10.2 10.7 41.2 11.0 11.3 Admission Fees 9.5 7.6 12.8 10.0 39.9 14.3 8.8 Cash equities UK & Turquoise 24.2 22.2 21.7 26.4 94.5 24.5 23.8 Cash equities Italy 8.6 8.6 9.0 9.9 36.1 10.0 8.7 Derivatives 5.0 4.
Slide 28: Revenues – Quarterly (continued)
Revenues – Quarterly (continued) FY 2014 FY 2014 FY 2015 £ millions Q1 Q2 Q3 Q4 Q1 Q2 FTSE 41.7 42.2 44.2 45.9 174.0 44.4 48.3 Real time data 22.4 22.2 23.0 23.3 90.8 21.3 21.3 Other information 19.8 20.1 21.2 22.8 83.9 22.3 23.4 Information Services 83.9 84.5 88.4 92.0 348.7 88.0 93.0 MillenniumIT
Slide 29: Contacts
Contacts Paul Froud Tom Woodley Head of Investor Relations Investor Relations Manager Tel: +44 (0)207 797 1186 Tel: +44 (0)207 797 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
Slide 30: 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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