London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — Merger or Acquisition (March 2013)
22 slides from London Stock Exchange's merger presentation, Mar 7, 2013
Slide 1: A Leading Global Partnership in Multi-Asset, Multi-Venue Clearing and Risk Management Services
London Stock Exchange Group plc and LCH.Clearnet Group Ltd A Leading Global Partnership in Multi-Asset, Multi-Venue Clearing and Risk Management Services 7 March, 2013
Slide 2: Disclaimer
DISCLAIMER No representation or warranty, expressed or implied, is made or given by or on behalf of London Stock Exchange Group plc (―LSEG‖) or LCH.Clearnet Group Limited (―LCH.Clearnet‖ or ―LCHC‖ and together with LSEG, the ―Companies‖) or any of their respective subsidiaries, directors, officers,
Slide 3: Global Leadership in Clearing and Risk Management
Global Leadership in Clearing and Risk Management A global leader in multi-asset, multi-venue clearing services Delivers diversification, builds on LSEG’s existing assets and Strategically Compelling expertise Strongly positions Enlarged Group for long-term leading role in global market infras
Slide 4: Transaction Summary
Transaction Summary • London Stock Exchange Group plc (―LSEG‖) to be the majority owner, acquiring up to 55.5%(1) of LCH.Clearnet Group Ltd (―LCH.Clearnet‖) existing shares for a maximum cash consideration of €328m at completion and €23m deferred consideration(2) • LCH.Clearnet shareholders will rec
Slide 5: What Has Changed?
What Has Changed? • Increased clarity on regulatory changes and opportunities for CCPs and OTC clearing • Significant change in the regulatory capital framework for CCPs since the announcement of the original transaction in March 2012 Regulatory – ESMA and EBA recommendations to European Commission
Slide 6: What Has Changed? (cont'd)
What Has Changed? (cont’d) Original Offer Revised Offer • €20 per share, comprising: • €15 per share, comprising: – €19 per share in cash payable by LSEG on Completion; – €14 per share in cash payable by LSEG on Completion; Consideration plus plus – special dividend of €1 per share payable by – €1 p
Slide 7: Strategically Compelling for LSEG
Strategically Compelling for LSEG A Global Leader in • Long-term leading role in market infrastructure, providing strong, competitive and Multi-Asset, customer-focused clearing operations Multi-Venue Clearing • Benefit from anticipated growth in clearing services globally – driven by market and regu
Slide 8: Strategically Compelling for LCH.Clearnet
Strategically Compelling for LCH.Clearnet • Well-capitalised, trusted operator of regulated and systemically important market Strong Capital Partner infrastructure businesses Exchange Partner to • Committed to LCH.Clearnet’s continued adherence to the principles of an open access, Support Horizontal
Slide 9: LCH.Clearnet Today - At a Glance
LCH.Clearnet Today - At a Glance Overview of Business Key Recent Developments • Continued improvement of risk management practices across the firm • Interest rate swaps: – Well-prepared for introduction of EMIR and Dodd-Frank – SwapClear is the world’s leading interest rate swap clearing – Creation
Slide 10: Ideally Positioned for Market Opportunities
Ideally Positioned for Market Opportunities OTC Businesses • Continued support for multi-asset, multi-market Cumulative Notional Notional Volume and multi-venue horizontal model Value Cleared Outstanding Cleared CDS (€Bn) Interest Rates (US$Tn) Cleared Swaps (m) 160 500 2.5 • Regulatory momentum (EM
Slide 11: Continued Diversification for LSEG
Continued Diversification for LSEG Post Trade to contribute c.49% of Enlarged Group Total Income Technology Other Income Capital Markets Services 2% 23% 6% LCH.Clearnet Capital Markets 29% 32% Information Services 33% LSEG Post Trade (1) Information Services Services 20% (1) 23% Post Trade Services
Slide 12: Significant Cost Efficiencies and Synergy Potential
Significant Cost Efficiencies and Synergy Potential • LCH.Clearnet’s current strategy includes: LCH.Clearnet Transformation – Further develop its sophisticated risk and collateral management capability Plan – Continue to expand geographic and product capabilities – Continue to improve efficiency and
Slide 13: Transaction Financing and LSEG Financial Position
Transaction Financing and LSEG Financial Position • Completion will require the initial payment by LSEG of €328m (£282m(1)) in cash for the acquisition of up to 55.5%(2) of LCH.Clearnet; and maximum €185m (£159m(1)) contribution to the capital raise Financing • LSEG intends to finance the acquisitio
Slide 14: Global Leadership in Clearing and Risk Management
Global Leadership in Clearing and Risk Management Clear strategic rationale – long-term leading role in listed and OTC global market infrastructure Further growth, diversification and scale to deliver value for shareholders Building on existing platforms servicing the UK, Europe, US and Asia
Slide 15: Appendix
Lond ee LCH.CLEARNET Stock Exchange Group Appendix -15-—
Slide 16: LCH.Clearnet – A Unique Business Model with Global Reach
LCH.Clearnet – A Unique Business Model with Global Reach Asset Class Coverage Interest Rate Foreign Credit Default Freight and Cash Equities Fixed Income Commodities Listed Derivatives Swaps Exchange Swaps Energy Global Geographic Coverage Clearing hub in the US through the acquisition of IDCG, rena
Slide 17: LCH.Clearnet Governance and Initial Board Composition
LCH.Clearnet Governance and Initial Board Composition • LCH.Clearnet SA executive power maintained in France • LCH.Clearnet Group will continue to be lead regulated by the ACP • LCH.Clearnet Ltd will continue to be regulated by the FSA / Bank of England and the CFTC • LCH.Clearnet LLC(1) will contin
Slide 18: Post Trade - Organisational Structure
Post Trade - Organisational Structure London Stock Exchange Group plc London Stock Exchange CC&G Monte Titoli (C) Ltd(1) (Milan/Rome) (Milan/Rome) • LCH.Clearnet Group Ltd incorporated in the UK • Owned by LSEG (50%+1 share to 57.8%) LCH.Clearnet Group Ltd • Lead regulated by the ACP LCH.Clearnet Lt
Slide 19: LCH.Clearnet Key Financials
LCH.Clearnet Key Financials Presented in Accordance with LCH.Clearnet’s Presented in Accordance with LSEG’s Accounting Policies Accounting Policies Growth vs. Growth vs. (€ m) 2011(1) 2012 (€ m) 2011(1) 2012 2011 2011 rk rk Clearing Fees 236.7 253.9 7.3% Clearing Fees 276.2 296.3 7.3% Total Investme
Slide 20: Reconciliations of LCH.Clearnet Financials to LSEG Accounting Policies (1/2)
Reconciliations of LCH.Clearnet Financials to LSEG Accounting Policies (1/2) LCH.Clearnet Adjusted EBITDA €m LSEG & Enlarged Group EBITDA Calculations(2) £m Total income 426.2 LSEG LTM 30 Sep 2012 – as reported (-) Operating expenses (before impairment and non-recurring) (298.7) Adjusted EBITDA y/e
Slide 21: Reconciliations of LCH.Clearnet Financials to LSEG Accounting Policies (2/2)
Reconciliations of LCH.Clearnet Financials to LSEG Accounting Policies (2/2) LCH.Clearnet Adjusted Net Income €m Profit before tax 91.3 (-) Unrealised net investment gain (34.7) (+) Impairment and non-recurring items 27.6 Adjusted profit before tax 84.2 (-) Tax charged to income statement (31.6) (+)
Slide 22: Financial promotion and forward-looking information notice
This communication is directed only at persons who have professional experience in matters relating to investments pursuant to section 19 of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or to whom it may otherwise lawfully be communicated (all such persons together be
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