London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — FY2011 Earnings Presentation
40 slides from London Stock Exchange's earnings presentation, May 13, 2011
Slide 1: Preliminary results FY 2011
London Stock Exchange Group plc Preliminary results FY 2011 13th May 2011
Slide 2: Agenda
Agenda Introduction Financial Review Doug Webb, Chief Financial Officer CEO Overview Xavier Rolet, Chief Executive Q&A
Slide 3: Xavier Rolet, Chief Executive
Xavier Rolet Chief Executive
Slide 4: Introduction
Introduction • Good financial results – growth in total income, reduction in underlying costs and strong AEPS growth, up 23% • Benefits of diversified business delivering with growth across broad number of business activities • Making progress on strategy to „get in shape, leverage our assets and de
Slide 5: Doug Webb, Chief Financial Officer
Doug Webb Chief Financial Officer 5
Slide 6: Key financial highlights
Key financial highlights • Total income up 7% to £674.9m (organic growth 6% at constant currency) • Operating expenses down 4% at £336.9m (down 2% at constant currency); organic operating expenses down 8% • Adjusted operating profit up 22% at £341.1m • Adjusted EPS up 23% to 73.7p; basic EPS up 67%
Slide 7: Overview of results
Overview of results Year ended Variance at 31 March constant 2011 2010 Change currency £m £m % % Revenue 615.9 605.6 2% 4% Total income 674.9 628.3 7% 9% Operating expenses (before amortisation and non- recurring items) (336.9) (349.6) (4%) (2%) Adjusted operating profit * 341.1 280.3 22% 24% Operat
Slide 8: Capital Markets - Primary
Capital Markets - Primary Leading venue for international companies Revenues Highlights Strong new issue growth: 185 new issues (FY2010: 110) 50 new international companies (24) Pipeline promising £13.1bn raised by new issues (FY 2010 £3.9bn), contributing to total money raised of £40bn (FY 2010 £77
Slide 9: Capital Markets – Secondary
Capital Markets – Secondary Equity markets share of trading stable, strong growth from fixed income Revenues Highlights UK share of equity order book trading stable; average 63.5% in year Average daily value traded up 2% on FY 2010 Average yield down 17% to 0.71bps Italian share of value traded stab
Slide 10: Post Trade Services
Post Trade Services Growth in underlying volumes and good treasury management Total income Highlights Clearing revenues higher on increased Italian derivatives and strong MTS fixed income volumes Settlement revenues lower following increased netting efficiency Custody Assets under management increas
Slide 11: Post Trade Services: CCP Net treasury income
Post Trade Services CCP Net treasury income 11
Slide 12: Information Services
Information Services Good demand for non-real time data products Revenues Highlights Real time data professional terminals stable UK 93,000 unchanged on 31 March 2010 Italy 139,000, down 3,000 Non-displayed data increasing (HFTs, MTFs, Algo‟s) Revenue from Other Information products up 13% FTSE – FT
Slide 13: Technology Services
Technology Services MillenniumIT, network partnerships and data centre services Revenues Highlights Revenue up 23% First full year contribution by MillenniumIT MillenniumIT Live: Turquoise & LSE SETS ACE Commodity Exchange (India) 9Alpha (SOR) Contracts won include: Tullett Prebon (trading) Egyptian
Slide 14: Operating expenses
Operating expenses Major movements • Organic cost base down 8% in constant currency • Headcount up 5% to 1,563 (1,488 31st March 2010), • Sri Lanka up 126, Other down 51 Note: Excluding amortisation of purchased intangibles and non-recurring items 14
Slide 15: Summarised cash flow
Summarised cash flow Strong cash generation £ million Investment activities • £43m capex – includes trading platform implementations for Turquoise, UK equities and IDEM derivatives • £5.5m invested in the acquisitions of ProMac and MTS France • Free cash flow per share 80.4p (65.6p) 15
Slide 16: Borrowings
Borrowings • Net borrowings £245m • £125m cash reserved for regulatory and operational purposes LSEG ratings • S&P A- (positive watch) • Moody‟s Baa2 (positive watch) 16
Slide 17: Current trading
Current trading • Good primary markets pipeline with 20 new issues in April – encouraging outlook, subject to market conditions • UK equity average daily value traded £4.4bn in April, down 10% on April 2010, largely impacted by unusual pattern of holidays; May* £5.5bn, up 24% on April • Italian cash
Slide 18: Xavier Rolet, Chief Executive
Xavier Rolet Chief Executive 18
Slide 19: Introduction
Introduction • Good financial results • Good operational performance across range of operations – Primary Markets, IDEM, Fixed Income, Post Trade, Information and MillenniumIT • Making progress - delivering on strategy to grow and develop the business • Customer focus is paramount 19
Slide 20: Landscape
Landscape • Macro economic influences and regulatory changes continue to shape our operations • Highly competitive environment, but actions taken are making us more responsive and efficient • Global consolidation trend set to continue • We are well positioned to leverage growth opportunities 20
Slide 21: Landscape
Landscape • Improving markets – Primary issuance increased • Pre-eminent venue – maintaining a competitive position versus other exchanges • Pipeline is good – more international 21
Slide 22: Landscape: Regulation
Landscape Regulation • Changing regulatory environment creates uncertainty and opportunity • MIFID II • Increased regulatory oversight of MTFs, BCNs and dark pools • Review of Proprietary and High Frequency trading • Improved quality of post trade data to counter effects of fragmentation – enable da
Slide 23: Delivering on our strategy
Delivering on our strategy Getting in shape • Continued focus on cost reduction – operating expenses down 4% overall, down 8% on organic basis • Putting clients at the heart of our business • MTS Fixed Income trading growing well; IDEM derivatives delivering good results • Share of UK cash equities
Slide 24: Getting in shape: Capital Markets share of trading
Getting in shape Capital Markets - Share of trading • UK and Italy stable at 63.5% and 84.0% (excluding Turquoise) LSE order-book value traded and share of trading LSE daily value traded LSE share of trading 65.3% 65.2% 65.1% 64.8% 64.5% 64.4% 64.1% 63.7% 63.4% 63.2% 63.2% 63.1% 62.4% 62.1% 7.0 61.4
Slide 25: Getting in shape: Turquoise share of trading
Getting in shape Capital Markets • Turquoise growing; now over 4% of European trading • 34% share of European MTF dark market, no 1 or 2 market position Turquoise - Share of European trading (Lit & Dark) 4.3% 4.1% 3.7% 3.7% 3.6% 3.6% 3.5% 3.4% 3.3% 2.9% 2.6% 2.5% 2.7% 2.7% 2.4% Jan Feb Mar Apr May J
Slide 26: Diversified Group income
Diversified Group income FY 2011 £674.9m FY 2010 £628.4m Other 1% Technology Services 6% Information Services Capital Markets 27% 47% Post Trade 19% 26
Slide 27: Getting in shape: Fixed Income
Getting in shape Capital Markets – Fixed Income • MTS covers 15 European markets, strong growth seen over last year in France, Netherlands and Spain • MTS Credit to launch before end 2011; trading in more than 2,400 corporate bonds 27
Slide 28: Getting in shape: Technology
Getting in shape Technology • Millennium Exchange successfully rolled out on Turquoise and LSE • World leading consistent latency performance • IDEM roll out on SOLA and upgrade for Turquoise Derivatives Trading system latency (milliseconds) 11.0 6.0 5.0 3.7 3.0 1.41 0.113 0.101 TradElect TradElect
Slide 29: Delivering on our strategy: Leveraging our assets
Delivering on our strategy Leveraging our assets • Co-location initiatives – expanding data centre space • Launching new markets – ORB, MTS Credit • Roll out of new post trade assets – New MIC Interbank collateralised deposit market • Expansion of Information Services portfolio e.g. UnaVista Confirm
Slide 30: Delivering on our strategy: Settlement and Clearing
Delivering on our strategy Settlement • T2S – Monte Titoli only confirmed major CSD participant in first wave of implementation • Aligned to interests of major clients that want simplification and harmonisation of European equity settlement process Clearing • Net treasury income benefiting from: • M
Slide 31: Delivering on our strategy: Developing opportunities
Delivering on our strategy Developing opportunities • Building scale and diversity in our business – Turquoise, MillenniumIT • UK retail strategy using Italian market experience • Financial Technology opportunities across asset classes, including services to back offices through technology, post tra
Slide 32: Merger update
Merger update Creation of International Exchange Leader Strongly Positioned for Growth Merger highlights • #1 globally by number of total listings and for listings of natural resources, mining, energy and • Work on key approvals underway and clean technology companies, as well as SMEs progressing as
Slide 33: Summary
Summary • Much achieved • Costs reduced 8% on organic constant currency basis • Adjusted EPS increased 23% • Total dividend increased 10% • Pursuing a range of organic growth opportunities – continue to leverage assets and develop opportunities • We‟re in a strong position, robust balance sheet and
Slide 34: Appendices
London Stock Exchange Group Appendices
Slide 35: Notes
Notes Adjusted operating profit / Adjusted earnings per share - excludes amortisation of purchased intangible assets and non-recurring items, to enable comparison of the underlying earnings of the business with prior periods. Based on number of shares 268.6m (FY 2010: 267.6m), excludes ESOP. Free Ca
Slide 36: Revenues - Quarterly
Revenues - Quarterly FY 2010 FY 2011 £ millions Q1 Q2 Q3 Q4 FY 2010 Q1 Q2 Q3 Q4 FY 2011 Annual Fees 8.9 8.6 8.7 9.0 35.2 9.3 9.4 9.6 9.4 37.8 Admission Fees 9.0 7.7 9.5 7.5 33.7 8.8 6.5 9.5 8.3 33.0 Cash equities UK 28.4 25.3 23.0 25.1 101.8 24.4 19.6 19.5 23.0 86.4 Cash equities Italy 9.1 8.1 7.1 7
Slide 37: Operating expenses
Operating expenses • Organic cost base down 8% in constant currency • Headcount up 5% to 1,563 (1,488 31st March 2010) Sri Lanka up 126, Other down 51 Cost : Income ratio 49% (excluding TradElect effects) (FY10 52%) Excluding amortisation of purchased intangibles and non-recurring items Note: Minor
Slide 38: Capital Markets – key performance indicators
Capital Markets – key performance indicators Capital Markets - Secondary Markets Capital Markets - Primary Markets Year ended 31 March Variance Year ended 2011 2010 % 31 March Variance Equity Volume Bargains (m) 2011 2010 % UK 150.5 149.2 1% New Issues Borsa Italiana 66.0 64.0 3% UK Main Market, PSM
Slide 39: Post Trade and Information Services – key performance indicators
Post Trade – key performance indicators Post Trade Services Year ended 31 March Variance 2011 2010 % CC&G Clearing (m) Equity clearing (trades) 69.4 67.0 4% Derivative clearing (contracts) 46.4 41.0 13% Total Contracts 115.8 107.7 8% Open interest (contracts as at period 4.6 4.1 12% end) Initial mar
Slide 40: 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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