London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — Morgan Stanley Financials Conference 2012
31 slides from London Stock Exchange's conference presentation, Mar 27, 2012
Slide 1: Growth, Opportunity & Diversification
London Stock Exchange Group plc Growth, Opportunity & Diversification Xavier Rolet – Chief Executive Officer Morgan Stanley Financials Conference 27th March 2012
Slide 2: Today's agenda
Today’s agenda: • Our Strategy • The implementation of our strategy • Recent relevant transactions: 2
Slide 3: Delivering on our strategy
Delivering on our strategy Priorities for the Group • Driving efficiency — Control operational costs Getting in shape — Implement improved technology — Adjust business model to align with customer needs (partnerships) • Building scale — Service to international customers — Scale drives efficiencies
Slide 4: Successful strategy implementation
Successful strategy implementation • Executing against clear stated strategy to deliver operational efficiency and drive growth: • Getting in shape • Costs well controlled, flat in real terms • High performance, low cost technology being rolled out to equities trading • Leveraging our assets • Range
Slide 5: Strength through business balance
Strength through business balance • Large majority of our business either unaffected or positively impacted by short term volatility • Diversified and balanced portfolio presents opportunities in both volatile and stable markets Typical sensitivity to elevated short term volatility Illustrative of g
Slide 6: Partnership transforms LSEG's Global Clearing and Trading Capabilities
Partnership transforms LSEG’s Global Clearing and Trading Capabilities A global leader in multi-asset, multi-venue clearing services Delivers diversification, builds on LSEG’s existing assets and Strategically expertise Compelling Strongly positions Enlarged Group for long-term, leading role i
Slide 7: Enhanced Financial Scale and Diversification for LSEG
Enhanced Financial Scale and Diversification for LSEG Post Trade to contribute c.45% of Enlarged Group Total Income Other income, 1% Post Trade (1) Services, 23% LCH.Clearnet, Capital 29% Markets, 25% Capital Markets, 35% Technology Services, 6% Information Information (2) LSEG Post Services, 25% Se
Slide 8: Compelling Strategic Rationale for LSEG
Compelling Strategic Rationale for LSEG A global leader in - Long-term leading role in pan-European market infrastructure, providing Getting in multi- multi asset, shape strong, competitive and customer-focused clearing operations venue clearing - Capture anticipated growth in clearing services glob
Slide 9: Further growth opportunities
Further growth opportunities • Global OTC derivatives grew by circa 20% p.a. in terms of notional outstanding value between 1998 and 2011 • IRS: leading interest rate swap clearing service; industry value of IRS Pre-eminent cleared through CCP expected to be $340.5 trillion by 2013(1) OTC Clearer •
Slide 10: Top 3 Global Index Services Provider
Top 3 Global Index Services Provider • High quality, high growth global indices brand with excellent development opportunities • A leading worldwide provider of information solutions, helping users benchmark the performance of their investments and make informed investment decisions – Calculates ove
Slide 11: Rapid Growth and Success since 1995
Rapid Growth and Success since 1995 • Rapid growth through organic development and partnerships • Track record of innovation, responding to growing complexity of markets and provision of market data, offering multiple services including: — Sale of real time, delayed and end of day index data — Licen
Slide 12: Successful Revenue Model
Successful Revenue Model Subscription Fees Asset Based Fees Benchmark Indices Index Licences c.60% Revenue c.40% Revenue Data and services IPR Licensing • Annual subscriptions • Linked to growth in assets, • 97% renewal rates especially alternative • High quality data • Fast growing • Builds on succ
Slide 13: Strong Track Record of Growth
Strong Track Record of Growth • Strong growth track record and attractive financial profile – Consistently high historical growth: 2006-2010 revenue CAGR of 22% and EBITDA CAGR of 22% – Adds a substantial revenue stream, based on good customer relationships, which performed well in volatile markets
Slide 14: Complementary Combination will Drive LSEG and FTSE Growth
Complementary Combination will Drive LSEG and FTSE Growth • Derivatives: Close collaboration to seek to develop innovative index products and derivative contracts to trade against them • Data Products: Enhancement of FTSE’s real-time calculations and data fees from improved service (faster distribut
Slide 15: Regulatory landscape
Regulatory landscape Changes create both opportunity and challenges • MIFID/MIFIR review Live 2013/14 • Non-discriminatory access to CCPs, fungibility and cross-asset margining • Non-exclusive licensing of IPR in indices • EMIR (European Markets Infrastructure Regulation) Live 2012 • OTC derivatives
Slide 16: Summary
Summary • Strong financial performance • Balanced and diversified Group • Well placed to deliver further performance: • Core businesses performing well in subdued markets • Strong cost control and highly cash generative • Focused on growth opportunities and partnering with customers to drive innovat
Slide 17: Appendix
Appendix 17
Slide 18: Diversified and integrated business
Diversified and integrated business Capital Markets Post Trade Primary Secondary Clients- trading firms, banks, Clients – listed companies and Clients – trading issuers and fund managers other issuers firms/banks/brokers Revenues from: Revenues from: Revenues from trading: - Clearing of trades - Ann
Slide 19: FY 2012 Q3 Interim Management Statement
FY 2012 Q3 Interim Management Statement - 27 January 2012 • Continued delivery on strategy to grow and diversify • Strong increase in total income, up 17% on Q3 last year, growth in 3 out of 4 divisions: • Post Trade Services income up 50%, driven by further sequential growth (over Q2) in treasury m
Slide 20: Continued diversification of Group income
Continued diversification of Group income FY 2012 Q3 £196.3m 20
Slide 21: Capital Markets – Equity
Capital Markets – Equity Group value and number of trades 21
Slide 22: Capital Markets – Fixed Income
Capital Markets – Fixed Income MTS Repo CAGR 21.8% FY 2009 to FY 2012 (to Feb) (average monthly value) Increasing use of CCP MTS Cash CAGR 11.5% FY 2009 to FY 2012 (to Feb) (average monthly value) 22
Slide 23: Capital Markets – Derivatives
Capital Markets – Derivatives IDEM – Italian derivatives - CAGR 8.5% FY 2009 to FY 2012 (to Feb) (average monthly contracts) Turquoise Derivatives – Equity and Indices futures and options on International Order Book securities, Norwegian stocks, recently launched FTSE 100 futures and options and up-
Slide 24: Post Trade – risk management and opportunities
Post Trade – risk management and opportunities • Risk management • CC&G carefully managing clearing and treasury risks • Growth in trading – derivatives and fixed income • Regulators want trusted infrastructure to provide solutions • Opportunities • LCH.Clearnet 24
Slide 25: Post Trade Services
Post Trade Services CCP Net treasury income – significant step up in performance £m Spread - difference between Euribor over EONIA Improved deposit yield - negotiated rate above Euribor Quantum of margins – increase in cash margins held and deposited with banks H1 FY 2011 restated for FX movem
Slide 26: Information Services
Information Services Significant potential areas of business development: • Index business: Leveraging 50:50 JV FTSE to create significant value • 120,000 indices covering 80 countries • FTSE China – largest Chinese ETF benchmark • Trade processing: Developing Proquote, SEDOL, UnaVista and X-TRM int
Slide 27: Interim results - Operating expenses FY 2012 H1
Interim results - Operating expenses FY 2012 H1 Major movements • Underlying costs remain flat in real terms Note: Excluding amortisation of purchased intangibles and non-recurring items 27
Slide 28: Borrowings
Borrowings • Net debt £582m (31 December 2011) • £165m cash reserved for regulatory and operational purposes (FY 2011 : £125m) • Post FTSE • Completed (16 December 2011) • £350m of new committed facilities (up to 3 years) • over £500m of cash and unutilised committed facilities • Pro forma, the grou
Slide 29: Revenues - Quarterly
Revenues - Quarterly FY 2011 FY 2012 FY12 £ millions Q1 Q2 Q3 Q4 FY 2011 Q1 Q2 Q3 9mths Annual Fees 9.3 9.4 9.6 9.4 37.8 9.9 10.2 10.0 30.1 Admission Fees 8.8 6.5 9.5 8.3 33.0 12.2 8.2 7.1 27.5 Cash equities UK & Turquoise 26.7 21.9 21.6 26.2 96.4 24.3 27.8 21.1 73.2 Cash equities Italy 8.7 6.0 6.8
Slide 30: Contacts and Information
Contacts and Information Information on the full range of products and services can be found at: www.londonstockexchange.com If you need information on any Group products, please contact: Paul Froud Tom Woodley Head of Investor Relations Investor Relations Manager Tel: +44 (0)207 797 1186 Tel: +44 (
Slide 31: 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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