London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — FY2013 Earnings Presentation
38 slides from London Stock Exchange's earnings presentation, May 15, 2013
Slide 1: Preliminary results FY 2013
London Stock Exchange Group plc Preliminary results FY 2013 15th May 2013
Slide 2: Agenda
Agenda Introduction Financial Review David Warren, 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 • Further good progress as the Group delivers on its strategy for attractive growth, increased global scale and reach • Good broad-based financial and operational performance from an increasingly diversified business - against a backdrop of challenging markets • FTSE delivered a good perf
Slide 5: David Warren, Chief Financial Officer
David Warren Chief Financial Officer 5
Slide 6: Key financial highlights
Key financial highlights • Strong performance – revenue up 7% to £726.4m; adjusted total income up 5% to £852.9m • Core operating expenses held flat • Adjusted basic EPS up 5% to 105.3p • Final dividend up 4% at 19.8 pence per share • Strong net cash flow from operations of £487.5m; net debt £550m •
Slide 7: Overview of results
Overview of results Year ended Organic and 31 March constant currency 2013 2012 Change variance £m £m % % Revenue 726.4 679.8 7% (3%) 1 Adjusted total income 852.9 814.8 5% (3%) Profit from JV / associates - 5.9 Adjusted operating expenses1 (422.7) (378.8) 12% 1% Adjusted operating profit1 430.2 441
Slide 8: Information Services
Information Services FTSE, UnaVista and SEDOL driving growth Revenue up 40% Organic constant currency up 4% FTSE revenue £134m Revenue from data/information products up 13% UnaVista SEDOL ProQuote Real time data revenue down 4% UK Terminals 7% lower at 84,000, revenues, Italy broadly unchang
Slide 9: Information Services - FTSE
Information Services - FTSE New business wins help drive growth Revenue up 9% (pro forma) Data Services (subscriptions) revenues up 13% Real time and end of day data sales strong Retention rate of 94% IP Licensing (asset based) revenue up 2% ETF assets $143bn (2012 :$55bn) Vanguard switching
Slide 10: Post Trade Services
Post Trade Services Strong treasury income on higher initial margin (as managing change to investment model) Total income down 4% (constant currency) Clearing revenue down 7% on weaker trading Net treasury income down 4% Average total initial margin up 7% to €10.1bn Settlement revenue down 13% R
Slide 11: Net Treasury Income
Net Treasury Income • 7% year-on-year increase in average initial margin held, to €10.1bn • CC&G adapting investment policy – moving to secured investments • March 2013: 61% of cash margin with CC&G* fully collateralised through investments in Italian, French, Dutch and Belgian government securities
Slide 12: Capital Markets - Primary
Capital Markets - Primary Issuance in UK and Italy improved in H2 Revenue FY 2013 down 6% (constant currency) Annual fees income down 1% Admission revenue down 12% 121 new issues, of which 36 international • £18bn raised via equity issuance Bond issuance strong • “BTP Italia” – further success: ‐
Slide 13: Capital Markets - Secondary
Capital Markets - Secondary Fixed income trading higher, equity trading lower in challenging markets Revenue FY 2013 down 13% (constant currency) Secondary Markets: Performance reflects uncertain macro economic conditions in first 9 months; signs of confidence returning Q4 to date UK equities AD
Slide 14: Technology Services
Technology Services MillenniumIT technology implementation for a growing range of customers Revenue FY 2013 up 11% (constant currency) MillenniumIT Revenue up 34% at constant currency Now live at: • Borsa Italiana: • Equity • Fixed income • Structured products • Mongolian SE • Johannesburg SE •
Slide 15: Operating expenses
Operating expenses Continued good cost control - underlying operating expenses held flat Note: Excluding amortisation of purchased intangibles and non-recurring items 15
Slide 16: Summarised cash flow
Summarised cash flow Strong cash generation • Investment activities: £ million • £46m capex – primarily IT hardware and software • Additional £18.3m received from TMX Group following termination of merger agreement • LCH.Clearnet shares purchased from MF Global (2.3% stake) • Discretionary free cash
Slide 17: Borrowings
Borrowings Facilities (as at 14 May 2013)1 • Operating net debt £550m (at 31 March 2013) • Net debt: EBITDA 1.2x (excludes cash held for regulatory purposes (FY 2013:£200m; FY 2012: £165m)) • Rising to 2.1x pro forma including LCH.Clearnet2 acquisition and FTSE TMX Global Debt Capital Markets JV tra
Slide 18: Summary
Summary • Another year of significant progress • Revenue growth driven by FTSE – benefit of strategy to diversify and grow • Priority is to deliver benefits from investments – particularly with LCH.Clearnet as part of Group 18
Slide 19: Xavier Rolet, Chief Executive
Xavier Rolet Chief Executive 19
Slide 20: Highlights
Highlights • Good financial and operational performance • Partnering with our customers across different markets, asset classes and geographies • Capital formation, risk management and intellectual property continue to be core focus • Successful diversification of revenues is delivering clear benefi
Slide 21: Successful execution and delivery of strategy
Successful execution and delivery of strategy • Group transformation continues – increasing scale and diversification • Integrated, broad suite of products and services for global customers • Global growth will accelerate through FTSE and LCH.Clearnet Enlarged Group Total Income FY 2009 £671.4m FY 2
Slide 22: Good cost control and operational efficiencies
Good cost control and operational efficiencies • Strong focus on operational efficiencies; underlying costs held flat • Programme of technology upgrades across Group – 12 systems live in 3 ½ years • Legacy TradElect platform now retired • Management team strengthened as Group expands and becomes mor
Slide 23: Leveraging assets: partnerships and innovations
Leveraging assets : partnerships and innovations • Information Services • UnaVista applied for trade repository status; Group Ticker Plant launched • Post Trade Services • Monte Titoli affirmed as T2S first wave participant; ranked as a top 10 depository by Thomas Murray • Monte Titoli launches „X-C
Slide 24: LCH.Clearnet – majority stake acquired
LCH.Clearnet – majority stake acquired • Open-access, horizontal model • Multi-asset, multi-venue clearing and risk management services, well placed in regulatory change-driven markets • Next steps • Focused on growth opportunities ahead – OTC and new geographies • Savings/synergies: • Cost savings
Slide 25: LCH.Clearnet – many positive developments
LCH.Clearnet – many positive developments • OTC • IRS - significant growth in sell side and buy side membership and trading • CDS & FX clearing launched - making good progress • Other opportunities: • LCH.Clearnet (US) LLC – US domiciled Swaps clearing service • Australian energy and commodities der
Slide 26: FTSE – opportunity rich, targeting further growth
FTSE – opportunity rich Targeting further growth • North America: • Vanguard • $170bn assets to switch (commenced January) - expected to complete within 6 months • Largest ever international index benchmark provider switch • Enhances FTSE profile in North America • FTSE TMX Global Debt Capital Marke
Slide 27: FTSE – opportunity rich, targeting further growth
FTSE – opportunity rich Targeting further growth • China: • $19.9bn ETF assets benchmarked to FTSE China indices, up 45% (2012: $13.7bn) • Shenzhen Securities Information Co. Ltd agreement to undertake new index-related research and to create specialised A Share indices • FTSE and Bank of China anno
Slide 28: Technology
Technology • MillenniumIT • Acquired in 2009 for $28m (£18m) • New building on campus in Sri Lanka, over 700 highly-skilled technology staff • Group has migrated 12 platforms in 3 ½ years • Over 30 capital markets customers, including: ‐ Johannesburg SE, Oslo Børs, LME, HKEx, Malaysia • Partnerships
Slide 29: Outlook and priorities
Outlook and priorities • Optimistic about the year ahead • Market characterised by continued regulatory and structural change • Group well placed to benefit from market improvements • Continue to build best in class capabilities and extend our global footprint • Remain firmly focused on achieving th
Slide 30: London Stock Exchange Group
ey London Stock Exchange Group
Slide 31: Appendices
Appendices 31
Slide 32: 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 269.8m (FY 2012 : 269.6m), excludes ESOP. Exchang
Slide 33: Operating expenses
Operating expenses Cost : Income ratio 50% (FY 2012 46%) FY 2013 costs include £70m for FTSE Excluding amortisation of purchased intangibles and non-recurring items Note: Minor rounding differences, figures may not cast down 33
Slide 34: Diversified Group income
Diversified Group income FY 2013 Adjusted total income £852.9m up 5% (FY 2012 £814.8m) 34
Slide 35: Revenues - Quarterly
Revenues - Quarterly FY 2012 FY 2013 £ millions Q1 Q2 Q3 Q4 FY 2012 Q1 Q2 Q3 Q4 FY 2013 Annual Fees 9.9 10.2 10.0 9.4 39.5 9.8 9.4 9.6 9.7 38.5 Admission Fees 12.2 8.2 7.1 9.5 37.0 7.9 6.6 10.5 7.3 32.3 Cash equities UK & Turquoise 24.3 27.8 21.1 22.2 95.4 21.1 19.0 18.3 21.6 79.9 Cash equities Ital
Slide 36: 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 2013 2012 % Equity 2013 2012 % New Issues Totals for period UK Main Market, PSM & SFM 40 61 (34%) UK value traded (£bn) 994 1,1
Slide 37: Post Trade and Information Services – key performance indicators
Post Trade – key performance indicators Post Trade Services Year ended 31 March Variance 2013 2012 % CC&G Clearing (m) Equity clearing (no of trades) 58.8 70.3 (16%) Derivative clearing (no of contracts) 35.9 46.7 (23%) Total 94.7 117.0 (19%) Open interest (contracts as at period end) 4.2 5.0 (16%)
Slide 38: 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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