London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — FY2016 Earnings Presentation
28 slides from London Stock Exchange's earnings presentation, Mar 3, 2017
Slide 1: Preliminary results – Year ended 31 December 2016
London Stock Exchange Group plc Preliminary results – Year ended 31 December 2016 3 March 2017 London Stock Exchange Group
Slide 2: Key financial highlights
Key financial highlights Strong financial performance across all business areas – and good control of underlying costs Revenue Total income Adjusted Operating up 14% up 17% Profit up 17% £1,515.6m £1,657.1m £685.8m (2015: £1,324.7m) (2015: £1,418.6m) (2015: £584.7m) Expenses well controlled AEPS Ful
Slide 3: Overview of results
Overview of results Twelve months ended Organic and 31 December constant currency 2016 2015 Change variance £m £m % % Revenue 1,515.6 1,324.7 14% 7% Total income 1,657.1 1,418.6 17% 9% Cost of sales (174.8) (125.5) 39% 30% Gross profit 1,482.3 1,293.1 15% 7% Share of profit / (loss) after tax of ass
Slide 4: Income growth
Income growth Good organic growth across all business areas 99.1 3.0 107.0 29.4 1,657.1 1,525.6 1,418.6 2015 FX 2015 adjusted NTI Organic Acquisitions 2016 growth Note: figures include continuing operations only London Stock Exchange Group Page 4
Slide 5: Good control of underlying expenses and benefits of cost synergies
Good control of underlying expenses and benefits of cost synergies Expenses controlled – Cost of sales up as revenue increases Note: Excluding amortisation of purchased intangibles and non-recurring items . Figures include continuing operations only London Stock Exchange Group Page 5
Slide 6: Costs breakout
Costs breakout • Synergies - FTSE Russell delivered £30m 2016 / target 2017 £4m - LCH delivered €6m 2016, 2016 exit run-rate €24m / target run-rate end 2017 €40m • Investment for growth - £31m operating expense (£146m capital expenditure) - LSE/Borsa Italiana – FTSE Russell Global Fixed Income, MiFI
Slide 7: Diversified by business activity
Diversified by business activity Each of our business areas delivered year-on-year growth, highlighting the strength in the diversity of our business 2016 Income by segment Segmental growth 2016 vs 2015 Organic and constant currency Variance variance1 Continuing operations: % % Revenue Capital Marke
Slide 8: Diversified by currency
Diversified by currency Diversification by both income and expenses across GBP, EUR and USD 2016 Income £1,657.1m 2016 Expenses £966.4m Continuing operations only, expenses include Cost of sales London Stock Exchange Group Page 8
Slide 9: Summarised cash flow
Summarised cash flow Good cash generation £ million • £145.8m capex – mainly technology upgrades, new investment for growth projects across the Group and integration of FTSE Russell (2015 : £117.3m) • Discretionary free cash flow remains strong at 135.8p per share1 (2015 : 118.6p) • Fees for Russell
Slide 10: Borrowings
Borrowings Facilities • Operating net debt £882m (£1,273m 31 December 2015) • Net debt: Pro forma EBITDA 1.1x (excluding £848m restricted cash) • Committed undrawn credit lines available for Group purposes at 31 December 2016 total over £700 million, extending out to 2021 • 2016 Bond repaid in July
Slide 11: Dividend
Dividend • Full year dividend declared up 20% to 43.2p - 12.0p interim paid September 2016 / 31.2p final to be paid 31 May 2017 - Dividend cover of 2.9x now in targeted range Dividend paid / declared (pence) 43.2 Adjustment for 9 month 36.0 period 30.0 Final 7.5 31.2 Interim 25.2 12.8 9.7 10.8 12.0
Slide 12: Xavier Rolet
Xavier Rolet London Stock Exchange Group Page 12
Slide 13: Successful strategy delivering results
Successful strategy delivering results • Continued execution of strategy based on customer partnership and Open Access model • MiFID II – well positioned to benefit from our strong track record operating Open Access businesses as MiFID II’s open access provisions come into force • Continued investme
Slide 14: Regulatory landscape - MiFID II
Regulatory landscape - MiFID II MiFID II Implementation confirmed for January 2018 • MiFID II mandates Open Access across financial markets infrastructure • Will promote greater competition, transparency and innovation • LSEG firmly believe that transparency and consumer choice will create deeper po
Slide 15: Investment in growth and innovation
Investment in growth and innovation Information Services - FTSE Russell − FTSE Russell integration – almost complete, ahead of schedule − Approx. US$11 trillion AuM benchmarked to FTSE Russell indexes − Mergent acquired - a leading provider of business and financial data on companies − ‘New “Smart S
Slide 16: Turquoise – Plato partnership and innovation
Turquoise – Plato partnership and innovation Turquoise Lit + Turquoise Plato™ Turquoise Plato Block Discovery™ (LSEG acquired Turquoise, February 2010) 1,383 1,400 14% • Award winning innovation designed in partnership • Average trade size 30 times industry dark pool average 1,200 12% • €13.2bn matc
Slide 17: OTC clearing - Interest rate swaps
OTC clearing - Interest rate swaps SwapClear – global leader in interest rate swap clearing LCH - SwapClear SwapClear 2016: Client clearing - Average Daily Value $billion 800 100% • $666 trillion notional cleared 700 90% – up 25% 710 706 80% • $139 trillion Client notional 651 600 cleared - up 50% 6
Slide 18: OTC clearing - Compression
OTC clearing - Compression SwapClear – global leader in interest rate swap clearing • $384 trillion compressed (2015 : $328trn) • 2.9 million trade sides compressed (2015 : 3.0m) In May 2016, SwapClear announced that it had compressed over $1 quadrillion ($1,000,000,000,000,000) of cleared notional
Slide 19: OTC clearing – further growth
OTC clearing – further growth Uncleared margin rules – driving volumes Inflation swap volume (USD bn) CDSClear Market Share – Overall Indices 250 220 250 35% USD Billions Inflation Swaps 189 30% 27.2% 200 171 170 200 • $1.1 trillion cleared up 218% 25% 22.6% 150 (2015: $0.3 trillion) 150 19.8% 20% 1
Slide 20: LCH SwapAgent
LCH SwapAgent New service to simplify the processing, margining, and settlement of non-cleared derivatives Overview Opportunity Service Adoption • Extends the centralised clearing • SwapAgent targets the non-cleared • Commitment and partnership from infrastructure to the bilateral market rate and FX
Slide 21: Successful strategy drives growth
Successful strategy drives growth • Strategy is delivering – resilient model, well diversified by business activity, geography and currency • Growth across market-leading businesses – consistent investment in growth opportunities continues to drive revenue increases • MiFID II – LSEG well positioned
Slide 22: Appendices
Appendices London Stock Exchange Group Page 22
Slide 23: 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 348.9m (2015: 347.0m), excludes ESOP Exchange rat
Slide 24: Key performance indicators
Key performance indicators Capital Markets - Secondary Markets Capital Markets - Primary Markets Twelve months ended 31 December Variance Twelve months ended Equity 2016 2015 % 31 December Variance 2016 2015 % Totals for period New Issues UK value traded (£bn) 1,280 1,236 4% UK Main Market, PSM & SF
Slide 25: Key performance indicators
Key performance indicators Post Trade Services - CC&G and Monte Titoli Post Trade Services - LCH Twelve months ended Twelve months ended 31 December Variance 31 December Variance 2016 2015 % 2016 2015 % CC&G Clearing OTC derivatives Contracts (m) 129.6 120.1 8% SwapClear Initial margin held (average
Slide 26: Revenues - Quarterly
Revenues - Quarterly CY 2015 CY 2016 £ millions Q1 Q2 Q3 Q4 CY 2015 Q1 Q2 Q3 Q4 CY 2016 Primary Markets 21.4 24.0 19.1 24.3 88.8 22.2 22.0 21.1 25.5 90.8 Secondary Markets - Equities 38.2 36.5 35.1 33.9 143.7 42.2 40.9 40.0 41.8 164.9 Secondary Markets - Fixed income, derivatives & other 26.3 23.6 2
Slide 27: Contacts
Contacts Paul Froud Tom Woodley Head of Investor Relations Investor Relations Manager Tel: +44 (0)20 7797 1186 Tel: +44 (0)20 7797 1293 email: [email protected] email: [email protected] London Stock Exchange Group plc 10 Paternoster Square London EC4M 7LS For information on the Group: www.lseg.com Lon
Slide 28: 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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