London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — FY2012 Earnings Presentation
35 slides from London Stock Exchange's earnings presentation, May 18, 2012
Slide 1: Preliminary results FY 2012
London Stock Exchange Group plc Preliminary results FY 2012 18th May 2012
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: Highlights
Highlights • Excellent progress in delivering growth and diversification strategy • Scale scope and reach of Group transformed through organic growth and acquisitions • Organic – Turquoise, Derivatives, ORB, technology partnerships • Acquisitions – FTSE, LCH.Clearnet, TRS • Strong financial performa
Slide 5: Doug Webb, Chief Financial Officer
Doug Webb Chief Financial Officer 5
Slide 6: Key financial highlights
Key financial highlights • Strong performance - total income up 21% to £814.8m; up 16% on organic and constant currency basis • Active and successful management of underlying operating expenses • Adjusted operating profit up 30% at £441.9m, up 25% at organic constant currency • Adjusted EPS up 36% t
Slide 7: Overview of results
Overview of results Year ended Organic and 31 March constant currency 2012 2011 Change variance £m £m % % Revenue 679.8 615.9 10% 5% Total income 814.8 674.9 21% 16% Adjusted Operating expenses* (378.8) (336.9) 12% 7% Adjusted operating profit * 441.9 341.1 30% 25% Operating profit 358.5 283.0 27% 2
Slide 8: Diversified Group income
Diversified Group income FY 2012 Total income £814.8m up 21% (FY 2011 £674.9m) 8
Slide 9: Diversified Group income – pro forma (incl FTSE)
Diversified Group income – pro forma (incl FTSE) Pro forma FY 2012 total income £888.0m 9
Slide 10: Capital Markets - Primary
Capital Markets - Primary Fixed income issuance strong – equity pipeline encouraging Revenue FY 2012 up 8% Highlights Annual fees up 4% Admission revenue up 12% 159 new issues 40 new international companies Bond revenue £3.3m up 73% Bond issuance strong “BTP Italia” – strong demand 5
Slide 11: Capital Markets - Secondary
Capital Markets - Secondary Equity trading levels and share of trading stable Revenue FY 2012 up 2% Highlights Secondary Markets: UK value traded and Italian trade volumes - stable Share of trading UK & Italy – broadly unchanged Turquoise Equity value traded up 46% European share 5.4% (201
Slide 12: Post Trade Services
Post Trade Services Growth in cleared volumes and strong treasury management income Total income up 52% (up 58% organically) Highlights Total revenue up 10% on organic basis Increased Italian equities, derivatives and MOT fixed income volumes Clearing – Net treasury income up 147% Increased deri
Slide 13: Post Trade Services
Post Trade Services CCP Net treasury income – significant step up through active management in volatile markets Average total initial margin FY 2012 up 36% to €9.4bn Average initial cash margin FY 2012 of €7.4bn (up 100% on FY 2010) 13
Slide 14: Information Services
Information Services Good growth across range of products Revenue up 27%, Highlights organic constant currency up 5% Real time data revenue up 3% Introduction of fees for non-displayed data Revenue from Other Information products up 8% UnaVista FSA TRS acquisition gaining new customers
Slide 15: Information Services
Information Services FTSE’s first quarter contribution Pro forma revenue up 18% Highlights FTSE first full quarter contribution revenue Q4 £32.7m Royalties £13.1m (11 ½ months due to catch up in FY 2012) FY 2012 pro forma revenue £123.6m up 18% (FY 2011 £104.4m) First joint product to be lau
Slide 16: Technology Services
Technology Services MillenniumIT technology implementation across range of customers Revenue up 8% Highlights MillenniumIT Revenue up 26% at constant currency Remains focused on providing technology for Group Live: Chittagong Stock Exchange (trading and surveillance) Tullett Prebon (trad
Slide 17: Operating expenses
Operating expenses Major movements • Excluding acquisitions and variable staff compensation costs, reflecting share price and earnings growth, underlying operating expenses broadly flat Note: Excluding amortisation of purchased intangibles and non-recurring items 17
Slide 18: Summarised cash flow
Summarised cash flow Continued strong cash generation £ million Investment activities • £33.4m capex – primarily IT systems and data centre related • £495m spent on acquisitions of FTSE, CC&G stake and TRS • £33m received from disposals and Turquoise minority interest subscription • Discretionary fr
Slide 19: Borrowings
Borrowings Facilities • Operating net debt £703m • £165m cash reserved for regulatory and operational purposes (FY 2011: £125m) • £1.39bn total committed facilities - £634m available at 31 March 2012 Operating net debt to Pro forma EBITDA • Pro forma gearing including proposed acquisition of 60% maj
Slide 20: Xavier Rolet, Chief Executive
Xavier Rolet Chief Executive 20
Slide 21: Successful execution and delivery of strategy
Successful execution and delivery of strategy • Excellent progress in delivering growth and diversification strategy • Strong operational and financial performance • Getting in shape • Costs well controlled, broadly flat on underlying basis • Leveraging our assets • Range of initiatives and new prod
Slide 22: Successful execution and delivery of strategy
Successful execution and delivery of strategy Group transformed – scale and diversification Enlarged Group Pro Forma Total Income FY 2012 £1,227.6m1 FY 2009 £671.4m 1Enlarged Group pro forma total income: LSEG FY 2012, FTSE LTM 31Mar2012, LCH LTM 31Dec2011 22
Slide 23: Strategic delivery
Strategic delivery Getting in shape • Strong focus on control of costs • Underlying costs remain broadly flat • Ongoing programme of technology upgrades across Group – next steps: Borsa Italiana MTA go-live on Millennium Exchange and launch of Group Ticker Plant • Additional Group platforms to be up
Slide 24: Strategic delivery: Leveraging Assets
Strategic delivery Leveraging Assets • Capital Markets - launch of Turquoise Derivatives; MTS new bond services, ORB retail bond market development, MOT and BTP Italia • Post Trade Services – CC&G providing clearing to 3 external parties; X- Com at Monte Titoli go-live expected mid-2012; preparation
Slide 25: Strategic delivery: Developing opportunities: FTSE
Strategic delivery Developing opportunities: FTSE • High growth, high quality global index business • 5 year CAGR of 22% for revenue and EBITDA • Ownership will accelerate and expand scope and growth of FTSE and LSE Group • World-class IP • Development of listed derivatives, ETFs and structured prod
Slide 26: Strategic delivery: Developing opportunities: LCH.Clearnet
Strategic delivery Developing opportunities: LCH.Clearnet • Confirms long term leading role in international customer focused market infrastructure • Captures growth in clearing services with new products and geographies • Customer partnership, horizontal model, open access and fully competitive • S
Slide 27: Outlook: Focus and opportunities
Outlook: Focus and opportunities • Widespread structural change and dynamic market creates significant opportunities for growth • Two key differentiating factors / competitive advantage from operational efficiency and distribution of: • Balance sheet and risk management services • Intellectual prope
Slide 28: Group in good shape
Group in good shape • Very good year – Increasing diversification – Strong financial performance continues – Good operational management • More to come from: – FTSE – LCH.Clearnet – Organic drivers • Sector will continue to be defined by opportunities in: – Balance sheet and risk management services
Slide 29: Appendices
London Stock Exchange Group Appendices
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 2011: 268.6m), excludes ESOP. Exchange
Slide 31: Operating expenses
Operating expenses Cost : Income ratio 46% (FY 2011 49%) Excluding amortisation of purchased intangibles and non-recurring items Note: Minor rounding differences, figures may not cast down 31
Slide 32: Revenues - Quarterly
Revenues - Quarterly FY 2011 FY 2012 £ millions Q1 Q2 Q3 Q4 FY 2011 Q1 Q2 Q3 Q4 FY 2012 Annual Fees 9.3 9.4 9.6 9.4 37.8 9.9 10.2 10.0 9.4 39.5 Admission Fees 8.8 6.5 9.5 8.3 33.0 12.2 8.2 7.1 9.5 37.0 Cash equities UK & Turquoise 26.7 21.9 21.6 26.2 96.4 24.3 27.8 21.1 22.2 95.4 Cash equities Italy
Slide 33: Capital Markets – key performance indicators
Capital Markets – key performance indicators Capital Markets - Primary Markets Capital Markets - Secondary Markets Year ended Year ended 31 March Variance 31 March Variance 2012 2011 % Equity 2012 2011 % New Issues Totals for period UK Main Market, PSM & SFM 60 74 (19%) UK value traded (£bn) 1,164 1
Slide 34: Post Trade and Information Services – key performance indicators
Post Trade – key performance indicators Post Trade Services Year ended 31 March Variance 2012 2011 % CC&G Clearing (m) Equity clearing (trades) 70.3 69.4 1% Derivative clearing (contracts) 46.7 46.4 1% Total Contracts 117.0 115.8 1% Open interest (contracts as at period end) 5.0 4.6 9% Initial margi
Slide 35: 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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