Interim Management Statement

RNS Number : 6925K

London Stock Exchange Group PLC

20 July 2011

 



20 July 2011

LONDON STOCK EXCHANGE GROUP plc

INTERIM MANAGEMENT STATEMENT

FOR THE PERIOD TO 20 JULY 2011, INCLUDING REVENUES AND KPIs FOR THE THREE MONTHS ENDED 30 JUNE 2011

Highlights:

·    Strong increase in total income, up 14 per cent on Q1 last year (up 12 per cent at constant currency) to £190.2 million

·    Primary markets revenues up 22 per cent

·    Share of cash equities trading stable: at 64.6 per cent in UK cash equities, 85.3 per cent in Italy; Turquoise progressing well - in recent weeks has been the no.2 MTF for pan-European lit and dark trading

·    Post Trade Services total income up 58 per cent

Commenting on performance in the past quarter, Xavier Rolet, Chief Executive, said:

"With an increase in total income of 14 per cent and growth in many business areas, these strong first quarter results confirm that we continue to make good progress.  Notable good performances included primary markets, fixed income trading, Information Services and net treasury income within the Post Trade operations which again produced a very strong performance. 

"We remain focused on developing the business, including initiatives in derivatives, fixed income and technology sales.  Other projects are in development and we will continue to assess a range of options to deliver further growth and shareholder value."

Divisional performance

·    In primary markets, 22 per cent growth in revenues reflecting a 26 per cent increase in number of new issues to 54 and a 65 per cent increase in total money raised, with notable new issues including Glencore (London's largest ever international IPO), DP World, Bumi and, in Italy, Salvatore Ferragamo 

·    In secondary markets, fixed income trading revenue increased 32 per cent with growth in MTS cash and money (repo) markets, offset by a decline of 9 and 11 per cent respectively in revenue from both UK and Italian cash equities trading, reflecting weaker trading levels in markets as a whole; derivatives revenues reduced 12 per cent with a nine per cent decline in volumes on IDEM compared to a record Q1 last year 

·    Post Trade Services total income increased 58 per cent, resulting from a more than four fold growth in net treasury income from clearing operations as demand for the short term cash deposits remained strong

·    Information Services revenues rose six per cent; the total number of professional users of real time information remained unchanged in the UK and declined by 8,000 year on year in Italy, although income from real time data increased with changes to non-display charging; revenues from other information products increased 11 per cent reflecting growth across a range of products, including SEDOL, UnaVista and FTSE

·    Technology Services revenues reduced 16 per cent, mainly resulting from uneven phasing of MillenniumIT deliveries between periods - we expect MillenniumIT will deliver growth in full year revenues  

Operational and other Developments:

·    Trading of FTSE 100 Index Futures on Turquoise Derivatives successfully commenced in June

·    Launch of a new Sponsored Access service that offers latency efficient connectivity for non-members of the London Stock Exchange and Turquoise operated order books, providing a wider range of investors and the development of more liquid and diversified order books

·    MTS launched an electronic market for UK government bonds; and Places for People Capital Markets PLC raised £140 million through a retail bond issue on the UK ORB market

·    Group selected to provide clearing technology services for a new, cross-market central counterparty mechanism for central and eastern European capital markets

·    The Group reduced its net debt in the quarter with cash received from the sale of Servizio Titoli (€32.4m) and strong net cash generation reflecting seasonal inflows from charges for annual services invoiced at the start of the financial year.  There are no other material changes to the Group's financial position since financial year end, and no change in committed credit lines.  Net costs taken in the current financial year associated with the proposed merger with TMX Group, which was terminated on 29 June, are expected to be immaterial following receipt of C$10 million expense fees from TMX Group

Current trading and Outlook

The new financial year has started well, with good year on year growth and overall improvement sequentially quarter on quarter.  As usual, the summer period is expected to be quieter than Q1, particularly in primary markets though we believe the new issues pipeline further out in the year remains encouraging, subject to market conditions.  Net treasury income has remained very strong and is expected to be above last year, driven in part by the current favourable credit spread in the money market.

Further information is available from:

London Stock Exchange Group plc	Tom Gilbert - Media Paul Froud - Investor Relations	[phone] [phone]
Citigate Dewe Rogerson	Patrick Donovan/Grant Ringshaw	[phone]

Q1 Revenue Summary

Revenues for three months ended 30 June 2011, with comparatives against performance for the same period last year.  Growth rates and year to date performance are also expressed on a constant currency basis.  All figures are unaudited.

	Three months ended			Variance at
	30 June			constant
	2011	2010	Variance	currency
	£m	£m	%	%
Revenue
Capital Markets	79.7	76.5	4%	3%
Post Trade Services	26.0	26.9	(3%)	(6%)
Information Services	44.7	42.0	6%	4%
Technology Services	10.6	12.6	(16%)	(15%)
Other	1.4	1.5	(7%)	(7%)
Total revenue	162.4	159.5	2%	0%
Net treasury income through CCP business	25.8	5.9	337%	316%
Other income	2.0	1.9	5%	5%
Total income	190.2	167.3	14%	12%

Note:

1)   Post Trade Services last year includes revenue from Servizio Titoli (£2.6m in Q1 2010),  which was sold with effect from the start of the current financial year - on a like-for-like basis (excluding Servizio Titoli), total revenue increased 4%

2)   2010 comparatives have been adjusted throughout the IMS to reflect reporting of revenue from Turquoise in Capital Markets from April 2011 (was previously reported in Information Services)

More detailed revenues by segment are provided in tables below:

Capital Markets

	Three months ended			Variance at
	30 June			constant
	2011	2010	Variance	currency
Revenue	£m	£m	%	%
Primary Markets
Annual fees	9.9	9.3	6%	5%
Admission fees	12.2	8.8	39%	39%
	22.1	18.1	22%	21%
Secondary Markets
Cash equities UK & Turquoise equities	24.3	26.7	(9%)	(9%)
Cash equities Italy	7.7	8.7	(11%)	(14%)
Derivatives	4.3	4.9	(12%)	(16%)
Fixed income	9.8	7.4	32%	29%
	46.1	47.7	(3%)	(5%)
Other	11.5	10.7	7%	5%
Total revenue	79.7	76.5	4%	3%

Post Trade Services

	Three months ended			Variance at
	30 June			constant
	2011	2010	Variance	currency
	£m	£m	%	%
Revenue
Clearing	9.9	9.7	2%	(1%)
Settlement	4.8	5.0	(4%)	(6%)
Custody & other	11.3	12.2	(7%)	(10%)
Total revenue	26.0	26.9	(3%)	(6%)
Net treasury income through CCP business	25.8	5.9	337%	316%
Total income	51.8	32.8	58%	53%

Note:  Post Trade Services last year includes revenue from Servizio Titoli (£2.6m in Q1 2010), which was sold with effect from the start of the current financial year (previously included in "Custody & Other" line) - on a like-for-like basis revenue increased 7%

Information Services

	Three months ended			Variance at
	30 June			constant
	2011	2010	Variance	currency
	£m	£m	%	%
Revenue
Real time data	25.2	24.4	3%	2%
Other information services	19.5	17.6	11%	7%
Total revenue	44.7	42.0	6%	4%

Technology Services

	Three months ended			Variance at
	30 June			constant
	2011	2010	Variance	currency
	£m	£m	%	%
Revenue
MillenniumIT	3.2	5.0	(36%)	(32%)
Technology	7.4	7.6	(3%)	(4%)
Total revenue	10.6	12.6	(16%)	(15%)

Basis of Preparation

Results for Borsa Italiana for the periods ended 30 June 2011 have been translated into Sterling using the average monthly exchange rate for the period of €1.13: £1.  Constant currency growth rates have been calculated by translating prior period results at the average exchange rate for the current period.

Average €:£ rate 3 months ended 30 June 2011	Closing €:£ rate at 30 June 2011	Average €:£ rate 3 months ended 31 March 2011	Closing €:£ rate at 31 March 2011	Average €:£ rate 3 months ended 30 June 2010	Closing €:£ rate at 30 June 2010
€1.13	€1.11	€1.17	€1.13	€1.17	€1.22

Appendix

Capital Markets - Primary Markets
	Three months ended
	30 June			Variance
	2011		2010	%
New Issues
UK Main Market, PSM & SFM	26		23	13%
UK AIM	24		20	20%
Borsa Italiana	4		0	-
Total	54		43	26%
Company Numbers (as at period end)
UK Main Market, PSM & SFM	1,466		1,492	(2%)
UK AIM	1,151		1,235	(7%)
Borsa Italiana	297		295	1%
Total	2,914		3,022	(4%)
Market Capitalisation (as at period end)
UK Main Market (£bn)	2,006		1,609	25%
UK AIM (£bn)	76		59	29%
Borsa Italiana (€bn)	432		390	11%
Borsa Italiana (£bn)	390		319	22%
Total (£bn)	2,472		1,987	24%
Money Raised (£bn)
UK New	9.7		2.8	246%
UK Further	2.0		7.7	(74%)
Borsa Italiana new and further	6.0		0.2	2900%
Total (£bn)	17.7		10.7	65%

Capital Markets - Secondary Markets
	Three months ended
	30 June			Variance
	2011		2010	%
Equity Volume Bargains (m)
UK	39.0		40.9	(5%)
Borsa Italiana	15.6		18.3	(15%)
Total	54.6		59.2	(8%)
Equity Value Traded
UK (£bn)	290		343	(15%)
Borsa Italiana (€bn)	193		251	(23%)
Borsa Italiana (£bn)	170		214	(21%)
Total (£bn)	460		557	(17%)
Equity Average Daily Bargains ('000)
UK	650		669	(3%)
Borsa Italiana	248		290	(14%)
Total	898		959	(6%)
Equity Average Daily Value Traded
UK (£bn)	4.8		5.6	(14%)
Borsa Italiana (€bn)	3.1		4.0	(23%)
Borsa Italiana (£bn)	2.7		3.4	(21%)
Total (£bn)	7.5		9.0	(17%)
SETS Yield (basis points)	0.73		0.71	3%

	Three months ended
	30 June			Variance
	2011		2010	%
Derivatives (contracts m)
Turquoise	10.3		9.3	11%
of which Russian / IOB	9.3		8.5	9%
IDEM	16.8		18.5	(9%)
Total	27.1		27.8	(3%)
Fixed Income
MTS cash and Bondvision (€bn)	722		606	19%
MTS money markets (€bn term adjusted)	15,947		15,345	4%
MOT (€bn)	45.4		63.0	(28%)
MOT number of trades (m)	0.90		1.02	(12%)

Post Trade Services
	Three months ended
	30 June			Variance
	2011		2010	%
CC&G Clearing (m)
Equity clearing (trades)	16.5		19.3	(15%)
Derivative clearing  (contracts)	16.8		18.6	(10%)
Total Contracts	33.3		37.9	(12%)
Open interest (contracts as at period end)	4.4		6.8	(35%)
Initial margin held (average €bn)	8.5		6.6	29%
Monte Titoli
Pre Settlement instructions (trades m)	8.5		8.4	1%
Settlement instructions (trades m)	9.2		11.1	(17%)
Custody assets under management (average €tn)	3.08		2.98	3%

Information Services
	Three months ended
	30 June			Variance
	2011		2010	%
UK Terminals
Professional - UK	38,500		38,000	1%
Professional - International	54,500		55,000	(1%)
Total	93,000		93,000	0%
Borsa Italiana Professional Terminals	132,000		140,000	(6%)

          Total Income - Quarterly

			FY 2011					FY 2012
£ millions			Q1	Q2	Q3	Q4	FY 2011	Q1
Annual Fees			9.3	9.4	9.6	9.4	37.8	9.9
Admission Fees			8.8	6.5	9.5	8.3	33.0	12.2
Cash equities UK & Turquoise			26.7	22.0	21.6	26.2	96.5	24.3
Cash equities Italy			8.7	6.0	6.8	9.3	30.7	7.7
Derivatives			4.9	3.5	3.8	4.5	16.8	4.3
Fixed Income			7.4	7.2	8.3	9.5	32.4	9.8
Other			10.7	10.5	11.9	11.2	44.4	11.5
Capital Markets			76.5	65.1	71.5	78.4	291.5	79.7
Clearing			9.7	7.2	8.4	10.7	35.9	9.9
Settlement			5.0	3.9	4.5	4.8	18.2	4.8
Custody & other			12.2	10.3	11.0	11.6	45.2	11.3
Post Trade Services			26.9	21.4	23.9	27.1	99.3	26.0
Real time data			24.4	24.6	24.7	27.5	101.2	25.2
Other information			17.6	17.5	17.8	17.7	70.6	19.5
Information Services			42.0	42.1	42.5	45.2	171.8	44.7
MillenniumIT			5.0	4.0	4.1	5.0	18.2	3.2
Technology			7.6	7.9	7.3	7.7	30.4	7.4
Technology Services			12.6	11.9	11.4	12.7	48.6	10.6
Other			1.5	0.7	1.3	1.2	4.7	1.4
Total Revenue			159.6	141.1	150.6	164.6	615.9	162.4
Net treasury income through CCP business			5.9	10.8	14.8	19.8	51.3	25.8
Other income			1.9	1.9	2.0	1.9	7.7	2.0
Total income			167.3	153.8	167.4	186.3	674.9	190.2

Note: Minor rounding differences may mean quarterly and other segmental figures may differ slightly

 

END

 

 

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