London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — H1 2013 Earnings Presentation
39 slides from London Stock Exchange's earnings presentation, Nov 13, 2013
Slide 1: London Stock Exchange Group plc Interim results
London Stock Exchange Group plc Interim results FY 2014 13th November 2013 London Stock Exchange Group
Slide 2: Agenda
Agenda Introduction Financial Review David Warren, Chief Financial Officer CEO Overview Xavier Rolet, Chief Executive Q&A London Stock Exchange Group Page 2
Slide 3: Xavier Rolet
Xavier Rolet London Stock Exchange Group Page 3
Slide 4: Highlights
Highlights • Good performance - all business segments performing well • Group focused on delivery of strategy for growth, diversification, increased global scale and reach • Transformational acquisitions delivering benefits: • FTSE - strong growth and on target to achieve transaction synergies • LCH
Slide 5: David Warren
David Warren London Stock Exchange Group Page 5
Slide 6: Key financial highlights
Key financial highlights • Group performed well on organic basis: • organic revenue up 8% - growth in all divisions • underlying organic costs broadly flat* • Benefitting from acquisitions, with total income up 34%: • 5 month contribution from LCH.Clearnet – total income of £141.7m • new FTSE fixed
Slide 7: Overview of results
Overview of results Six months ended Organic and 30 September constant currency 2013 2012 Change variance £m £m % % Revenue 504.2 349.8 44% 8% 1 Adjusted total income 567.1 423.7 34% (4%) Adjusted operating expenses1 (337.2) (206.5) 63% 6% Adjusted operating profit1 229.9 217.2 6% (13%) Exceptional
Slide 8: Diversified Group income
Diversified Group income FY 2014 H1 Adjusted total income £567.1m up 34% (FY 2013 H1 £423.7m) Note: LCH.Clearnet contribution for 5 months only London Stock Exchange Group Page 8
Slide 9: Information Services
Information Services Revenue FY 2014 H1 up 14%; up 9% on organic and constant currency FTSE revenue up 29% • Completed switch of $209bn Vanguard assets to FTSE indices • FTSE TMX Global Debt Capital Markets launched • FTSE-BOCHK Offshore RMB Bond Index Series launched On track to achieve £28m cost a
Slide 10: Post Trade Services – CC&G and MT
Post Trade Services – CC&G and MT Revenue FY 2014 H1 up 8%, up 1% at constant currency (exc NTI) CC&G • Clearing volumes down 13% Monte Titoli • Settlement instructions up 2% (inc OTC) • Assets under Custody up 3% to €3.29 trillion NTI down as expected (-61%) • 95 per cent of cash margin invested on
Slide 11: Post Trade Services - LCH.Clearnet
Post Trade Services - LCH.Clearnet Income FY 2014 H1 (5 months) up 8% on pro forma, up 1% at constant currency SwapClear revenue up 88% • $421 trillion notional outstanding (up 28%) • 100 members (67) Listed Products clearing revenue down 1% Volumes: • Fixed Income up 4% • Commodity up 5% • Equity u
Slide 12: Capital Markets - Primary
Capital Markets - Primary Revenue FY 2014 H1 up 11%; up 9% at constant currency Annual Fees up 6% Admission revenues up 18% • 79 new issues (61) • UK Main Markets: 21 - up 50% • AIM: 52 - up 21% • Italy: 6 - up 50% • £16.3bn raised via equity issuance (£7.6bn) • Improved Primary Markets and strong I
Slide 13: Capital Markets - Secondary
Capital Markets - Secondary Revenue FY 2014 H1 up 11%; up 8% at constant currency • UK equities Average Daily Value (ADV) up 2% • Turquoise equities ADV up 63% • Italy equities average daily number of trades down 8% • Derivatives volumes down 20%, revenue down 3% • Fixed income revenue up 24% • MTS
Slide 14: Technology Services
Technology Services Revenue FY 2014 H1 up 15%; up 6% on organic and constant currency MillenniumIT revenues up 11% • Growth at Enterprise Services Provision – systems integration in Sri Lanka • Live / Signed: • Caja de Valores S.A., Argentinian CSD • Millennium PostTradeTM chosen by SGX (in November
Slide 15: Operating expenses
Operating expenses • Continued good cost control – underlying operating expenses broadly flat1 Note: Excluding amortisation of purchased intangibles and non-recurring items 1 excluding cost of sales and variable compensation driven by share price increase London Stock Exchange Group Page 15
Slide 16: Summarised cash flow
Summarised cash flow Good cash generation • Investment activities: £ million • £35m capex – mainly data centre, IT hardware and software • £575m investment in LCH.Clearnet, FTSE TMX Global Debt Capital Markets and EuroTLX • Discretionary free cash flow after investment activities remains good at 44.
Slide 17: Borrowings
Borrowings Facilities • Operating net debt £1,180m (£550m 31 March 2013) • Net debt: EBITDA (pro forma) 2.2x • Committed debt and credit lines available for general purposes totalled £1.5bn, extending to 2016 or beyond • £700m unsecured committed Leverage revolving facility package signed in July 20
Slide 18: Summary
Summary • All segments of diversified group performing well • Control of costs remains a focus as Group expands and invests for growth • On track to achieve synergies at FTSE • Focus on achieving benefits of LCH.Clearnet transaction – detailed integration programme live London Stock Exchange Group P
Slide 19: Xavier Rolet
Xavier Rolet London Stock Exchange Group Page 19
Slide 20: Strategy update
Strategy update • Building best in class capabilities; Creating a global business and Developing opportunities • Group increasingly competes on a global basis: • Greater international reach through valuable, global capable assets – eg FTSE, LCH, Primary Markets • Step change in scale, diversity and
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 and customer services accelerating through FTSE and LCH.Clearnet Enlarged Group Total Income F
Slide 22: Growth opportunities
Growth opportunities • FTSE – Vanguard, FTSE TMX, FTSE-BOCHK Offshore RMB Bond Index Series • EuroTLX – majority stake (70%) acquired in • Luxembourg CSD – LSEG establishing new CSD; major customer already signed-up • MTS Swaps expected to go live Q4 2013 • UnaVista to launch a trade repository, to
Slide 23: LCH.Clearnet – progress to date
LCH.Clearnet – progress to date • New Group CEO – appointment of Suneel Bakhshi (to start Q1 2014) • Integration programme live and making good progress • Mapping out substantial efficiencies over next 3+ years • EMIR recertification to provide stable framework for business • Leveraging collateral p
Slide 24: FTSE opportunities
FTSE opportunities • Innovative partnerships • Vanguard selected FTSE as index benchmark provider for six international stock index funds - $209bn assets switched • FTSE TMX Global Debt Capital Markets (75% stake) - No. 3 fixed income ETF index provider globally • FTSE Shariah Developed Minimum Vari
Slide 25: CSD opportunities
CSD opportunities • New Central Securities Depository (CSD) in Luxembourg – extending existing infrastructure and expertise of Monte Titoli • Group to broaden its customer base for custody and settlement services • Open-access model - helps customers to meet regulatory obligations e.g article 47.3 o
Slide 26: Derivatives opportunities
Derivatives opportunities • London Stock Exchange Derivatives Market • Part of a Regulated Market, allowing customers to improve the efficiency of their clearing and margin arrangements in light of the requirements under the European Market Infrastructure Regulation (EMIR) • FTSE Super Liquid index
Slide 27: Regulation shaping the landscape
Regulation shaping the landscape • Regulatory landscape and new regulation continues to present opportunities • Current regulatory and other changes in process include: • MIFID/MIFIR • EMIR and Dodd-Frank • CSDR • T2-S • Benchmarks • Recovery and resolution for non-bank financial market infrastructu
Slide 28: Diversified revenue streams
Diversified revenue streams • LSEG has: CY 2012 Revenue segmentation, pro forma combination • well diversified revenues 100% 90% • no reliance on single or small 80% range of products 70% 60% • customer preferred open- 50% access model - no premium 40% pricing on single contracts 30% • strongly plac
Slide 29: Outlook
Outlook • Growth opportunities: • FTSE – geography and product • SwapClear - OTC opportunities • buoyant IPO market • recent improvement in Italian markets • fixed Income • Delivery on acquisitions: • LCH.Clearnet synergies • Focus on strategy: • diversification, international reach and best in clas
Slide 30: Appendices
Appendices London Stock Exchange Group Page 30
Slide 31: Notes
Notes Adjusted operating profit - excludes amortisation of purchased intangible assets, non- recurring items and unrealised gains/losses at LCH.Clearnet, to enable comparison of the underlying earnings of the business with prior periods. Adjusted earnings per share Based on number of shares 270.0m (
Slide 32: Operating expenses
Operating expenses Cost : Income ratio 59% (FY 2013 H1 49%) FY 2014 H1 includes £110.7m for LCH.Clearnet Excluding amortisation of purchased intangibles and non-recurring items Note: Minor rounding differences, figures may not cast down London Stock Exchange Group Page 32
Slide 33: Key performance indicators
Key performance indicators Capital Markets - Primary Markets Capital Markets - Secondary Markets Six months ended Six months ended 30 September Variance 30 September Variance 2013 2012 % Equity 2013 2012 % New Issues Totals for period UK Main Market, PSM & SFM 21 14 50% 52 UK value traded (£bn) 528
Slide 34: Key performance indicators
Key performance indicators Post Trade Services – CC&G and Monte Titoli Six months ended Post Trade - LCH.Clearnet 30 September Variance Six months ended 2013 2012 % 30 September Variance CC&G Clearing (m) 2013 2012 % Equity clearing (no of trades) 28.2 30.1 (6%) Derivative clearing (no of contracts)
Slide 35: Revenues - Quarterly
Revenues - Quarterly FY 2013 FY 2014 £ millions Q1 Q2 Q3 Q4 FY 2013 Q1 Q2 H1 Annual Fees 9.8 9.4 9.6 9.7 38.5 10.0 10.3 20.3 Admission Fees 7.9 6.6 10.5 7.3 32.3 9.5 7.6 17.1 Cash equities UK & Turquoise 22.4 20.5 19.8 23.3 86.0 24.2 22.2 46.4 Cash equities Italy 8.8 7.5 7.0 9.4 32.7 8.6 8.6 17.2 De
Slide 36: Revenues – Quarterly (continued)
Revenues – Quarterly (continued) FY 2013 FY 2014 £ millions Q1 Q2 Q3 Q4 FY 2013 Q1 Q2 H1 FTSE 33.0 31.8 32.9 36.4 134.1 41.7 42.2 83.9 Real time data 23.7 21.6 24.7 26.9 96.9 22.4 22.1 44.5 Other information 18.6 18.9 18.4 19.4 75.3 19.8 20.1 39.9 Information Services 75.3 72.3 76.0 82.7 306.3 83.9
Slide 37: LCH.Clearnet Historic Revenues
LCH.Clearnet Historic Revenues LCH.Clearnet - historic FY 2013 FY 2014 £ millions Q1 Q2 Q3 Q4 FY 2013 Q1 Q2 H1 OTC 3 months OTC - SwapClear 11.8 12.5 13.0 18.2 55.5 22.1 26.3 48.4 OTC - ForexClear / CDSClear 2.3 2.6 3.8 3.9 12.6 4.1 4.0 8.1 14.1 15.2 16.8 22.1 68.1 26.2 30.3 56.5 Non-OTC Fixed incom
Slide 38: Contacts
Contacts Paul Froud Tom Woodley Director of Investor Relations Investor Relations Manager Tel: +44 (0)207 797 1186 Tel: +44 (0)207 797 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
Slide 39: 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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