TIDMLSE
RNS Number : 6531X
London Stock Exchange Group PLC
01 May 2019
1 May 2019
LONDON STOCK EXCHANGE GROUP plc
TRADING STATEMENT
INCLUDING REVENUES AND KPIs FOR THE THREE MONTHSED 31 MARCH 2019
(Q1)
-- Good overall Q1 income performance against challenging market backdrop
-- Q1 total income up 5% year-on-year to GBP546 million
-- Group continues to develop and invest for growth, with the
acquisition of minority stake in Euroclear and launch of new
services in Post Trade and Information Services
Q1 summary:
-- Information Services: revenues up 6% to GBP214 million - with
7% growth at FTSE Russell. Growth in index subscriptions remained
strong while FTSE Russell asset-based revenues reduced due to
reduction in AuM at the end of 2018 (which impacted on revenue in
the first part of Q1 2019); asset-based revenue in Q2 is expected
to be stronger
-- Post Trade - LCH: income up 17% to GBP182 million, with 16%
revenue growth in OTC following record volumes at SwapClear and no
discernible change to customers' use of the service as equivalence
secured in event of hard Brexit; LCH benefited from an updated
SwapClear agreement with partner banks, with effect from the start
of the year, estimated to deliver c.GBP30 million savings to cost
of sales in 2019
-- Post Trade - Italy: income down 4% to GBP36 million as equity
markets experienced a slow first quarter; after adjusting for the
treatment of T2S costs, gross profit increased 3%
-- Capital Markets: revenues down 9% to GBP97 million, mostly
reflecting lower equity trading volumes
-- Technology Services: revenues up 9% to GBP14 million
David Schwimmer, CEO said:
"We continue to execute our strategy across our core businesses
of Information Services, Post Trade and Capital Markets. In Post
Trade, we acquired a stake in Euroclear, which shares our open
access approach, and we updated our SwapClear agreement, which will
deliver significant savings as we further develop the service.
"We are investing in and growing our Information Services
business, including developing our multi-asset and data and
analytics offering. While equity markets were slower due to
macroeconomic uncertainty, we have seen an improved listing
environment in Q2.
"The Group is strategically well positioned to develop its
growth opportunities further in the evolving macroeconomic
landscape."
New product development and investment in opportunities
continued across the business:
- Group acquired a 4.9% stake in Euroclear with a seat on the
Board, which will help strengthen the existing commercial
relationships between the businesses
- LCH RepoClear members successfully consolidated European debt
clearing activity in LCH SA, benefitting from T2S efficiencies
- SwapClear Non-Deliverable IRS Clearing expanded to include 5
new LatAm and Asia-Pacific currencies
- Dutch pension fund Pensioenfonds Detailhandel selected a
custom FTSE Russell ESG benchmark as the basis of a new EUR6bn
developed market passive equity mandate managed by BlackRock
- FTSE Russell launched a new Multi-Asset Composite Index Series
- a wide range of indexes across major asset classes covering
global, regional and emerging markets
- In early April, Network International, a Middle Eastern
payments company, raised GBP1.1 billlion on London Stock Exchange
plc; and Nexi, a major Italian payments company listed on Borsa
Italiana, raising $2.6 billion, the largest IPO year to date
globally
- Acquisition of minority stake in Nivaura, partnering with them
to support capital markets innovation through use of emerging
technologies
Financial Position
The Group's financial position remains strong and is broadly
unchanged from that reported for 31 December 2018. As at 31 March
2019, having funded the purchase of a 4.9% stake in Euroclear, the
Group had committed facility headroom of over GBP750 million
available for general corporate purposes.
S&P maintains a positive outlook over its A- long term
rating of LSEG, while Moody's rates LSEG A3 with a stable
outlook.
The euro weakened by 2% and the US dollar strengthened by 6%
against sterling compared with the same period last year. To
illustrate our exposure to movements in exchange rates, a EUR0.05
change up or down in the average euro:sterling rate would have
resulted in a corresponding change to continuing operations total
income of c.GBP7 million for Q1, while a US$0.05 move would have
resulted in a c.GBP6 million change.
Further information is available from:
Gavin Sullivan/Lucie Holloway
London Stock Exchange - Media +44 (0) 20 7797 1222
Group plc Paul Froud - Investor Relations +44 (0) 20 7797 3322
A conference call for analysts and investors will be held at
8:00 (UK time) on Wednesday 1 May. On the call will be David Warren
(Group CFO) and Paul Froud (Group Head of Investor Relations).
To access the telephone conference call dial 0800 376 7922 or
+44 (0) 20 7192 8000
Conference ID: 506 6297
Q1 Revenue Summary
Revenues for three months ended 31 March 2019 refer to
continuing operations, with comparatives against performance for
the same period last year, are provided below. Growth rates for Q1
performance are also expressed on an organic and constant currency
basis. All figures are unaudited.
Three months ended Constant
31 March currency
---------------------
2019 2018 Variance variance
Continuing operations: GBPm GBPm % %
Revenue
Information Services 214 201 6% 3%
Post Trade Services - LCH 134 118 14% 14%
Post Trade Services - CC&G
and Monte Titoli 25 28 (10%) (9%)
Capital Markets 97 107 (9%) (9%)
Technology 14 13 9% 9%
Other 2 3 (31%) (31%)
----------------------------- ---------- --------- --------- ---------
Total revenue 486 470 3% 2%
Net treasury income through
CCP businesses 59 48 23% 22%
Other income 1 2 (53%) (53%)
----------
Total income 546 520 5% 4%
----------------------------- ---------- --------- --------- ---------
Cost of sales (56) (56) - (1%)
---------- ---------
Gross profit 490 464 6% 4%
----------------------------- ---------- --------- --------- ---------
The Group's principal foreign exchange exposure arises from
translating and revaluing its foreign currency earnings, assets and
liabilities into LSEG's reporting currency of Sterling.
More detailed revenues by segment are provided in tables
below:
Information Services
Revised reporting format:
Three months ended Constant
31 March currency
---------------------
2019 2018 Variance variance
GBPm GBPm % %
Revenue
Index - Subscription 99 89 11% 7%
Index - Asset based 52 52 - (6%)
FTSE Russell 151 141 7% 2%
---------------------------- ---------- --------- --------- ---------
Real time data 24 24 (1%) (1%)
Other information services 39 36 8% 7%
Total revenue 214 201 6% 3%
---------------------------- ---------- --------- --------- ---------
Cost of sales (17) (18) (2%) (7%)
---------- ---------
Gross profit 197 183 7% 3%
---------------------------- ---------- --------- --------- ---------
Note:
Mergent and some other minor items (previously reported in FTSE
Russell subscriptions), are now included in Other information
services
Previous reporting format:
Three months ended Constant
31 March currency
---------------------
2019 2018 Variance variance
GBPm GBPm % %
Revenue
FTSE Russell 161 150 7% 2%
Real time data 24 24 (1%) (1%)
Other information services 29 27 7% 7%
Total revenue 214 201 6% 3%
---------------------------- ---------- --------- --------- ---------
Cost of sales (17) (18) (2%) (7%)
---------- ---------
Gross profit 197 183 7% 3%
---------------------------- ---------- --------- --------- ---------
Post Trade Services - LCH
Three months ended Constant
31 March currency
---------------------
2019 2018 Variance variance
GBPm GBPm % %
Revenue
OTC - SwapClear, ForexClear
& CDSClear 76 66 16% 14%
Non OTC - Fixed income,
Cash equities & Listed derivatives 34 33 2% 3%
Other 24 19 26% 27%
---------- ---------
Total revenue 134 118 14% 14%
------------------------------------- ---------- --------- --------- ---------
Net treasury income 48 38 26% 24%
Other income - - - -
Total income 182 156 17% 16%
------------------------------------- ---------- --------- --------- ---------
Cost of sales (32) (25) 26% 28%
---------- ---------
Gross profit 150 131 15% 14%
------------------------------------- ---------- --------- --------- ---------
Post Trade Services - CC&G and Monte Titoli
Three months ended Constant
31 March currency
---------------------
2019 2018 Variance variance
GBPm GBPm % %
Revenue
Clearing 11 10 3% 4%
Settlement, Custody & other 14 18 (18%) (16%)
Total revenue 25 28 (10%) (9%)
----------------------------- ---------- --------- --------- ---------
Net treasury income 11 10 13% 15%
Total income 36 38 (4%) (3%)
----------------------------- ---------- --------- --------- ---------
Cost of sales (1) (2) (4) (61%) (61%)
---------- ---------
Gross profit 34 34 3% 5%
----------------------------- ---------- --------- --------- ---------
1 Pass through of T2S costs, Cost of sales have now been netted
off against Settlement, Custody & other, 2019 Q1 impact
GBP3m
Capital Markets
Three months ended Constant
31 March currency
---------------------
2019 2018 Variance variance
GBPm GBPm % %
Revenue
Primary Markets 28 29 (2%) (1%)
Secondary Markets - Equities 37 45 (18%) (18%)
Secondary Markets - Fixed
income, derivatives and
other 32 33 (4%) (3%)
Total revenue 97 107 (9%) (9%)
------------------------------ ---------- --------- --------- ---------
Cost of sales (1) (5) (67%) (67%)
---------- ---------
Gross profit 96 102 (6%) (6%)
------------------------------ ---------- --------- --------- ---------
Technology Services
Three months ended Constant
31 March currency
---------------------
2019 2018 Variance variance
Revenue GBPm GBPm % %
MillenniumIT & other technology 14 13 9% 9%
--------------------------------- ---------- --------- --------- ---------
Cost of sales (2) (3) (16%) (16%)
---------- --------- --------- ---------
Gross profit 12 10 16% 16%
--------------------------------- ---------- --------- --------- ---------
Basis of Preparation
Results for the period ended 31 March 2019 have been translated
into sterling using the average exchange rates for the period.
Constant currency growth rates have been calculated by translating
prior period results at the average exchange rate for the current
period.
Average rate Average rate
Closing rate Closing rate
3 months ended at 3 months ended at
31 March 2019 31 March 2019 31 March 2018 31 March 2018
GBP : EUR 1.15 1.16 1.13 1.14
GBP : USD 1.30 1.30 1.39 1.40
--------------- -------------- --------------- --------------
Appendix - Key performance indicators
Information Services
As at
31 March Variance
------------------
2019 2018 %
ETF assets under management
benchmarked ($bn)
FTSE 413 399 4%
Russell Indexes 256 240 7%
----------------------------- ---------
Total 669 639 5%
----------------------------- -------- -------- ---------
Terminals
UK 67,000 68,000 (1%)
Borsa Italiana Professional
Terminals 105,000 109,000 (4%)
Post Trade Services -
LCH
Three months ended
31 March Variance
---------------------
2019 2018 %
OTC derivatives
SwapClear
IRS notional cleared
($tn) 318 291 9%
SwapClear members 119 105 13%
Client trades ('000) 411 407 1%
CDSClear
Notional cleared (EURbn) 176 162 9%
CDSClear members 26 13 100%
ForexClear
Notional value cleared
($bn) 4,311 4,286 1%
ForexClear members 34 30 13%
------------------------------- ---------- --------- ---------
Non-OTC
Fixed income - Nominal
value (EURtn) 26.2 23.9 10%
Listed derivatives (contracts
m) 36.4 38.5 (5%)
Cash equities trades
(m) 180.8 221 (18%)
------------------------------- ---------- --------- ---------
Average cash collateral
(EURbn) 91.1 83.0 10%
Post Trade Services - CC&G and
Monte Titoli
Three months ended
31 March Variance
---------------------
2019 2018 %
CC&G Clearing
Contracts (m) 25.0 29.7 (16%)
Initial margin held (average
EURbn) 13.7 9.0 52%
Monte Titoli
Settlement instructions
(trades m) 10.7 11.7 (9%)
Custody assets under
management (average EURtn) 3.31 3.30 -
Capital Markets - Primary
Markets
Three months ended
31 March Variance
---------------------
2019 2018 %
New Issues
UK Main Market, PSM &
SFM 11 19 (42%)
UK AIM 5 12 (58%)
Borsa Italiana 7 6 17%
----------
Total 23 37 (38%)
--------------------------- ---------- --------- ---------
Money Raised (GBPbn)
UK New 0.5 1.0 (50%)
UK Further 3.0 5.5 (45%)
Borsa Italiana new and
further 0.0 1.5 (100%)
Total (GBPbn) 3.5 8.0 (56%)
--------------------------- ---------- --------- ---------
Capital Markets - Secondary Markets
Three months ended
31 March Variance
---------------------
Equity 2019 2018 %
Totals for period
UK value traded (GBPbn) 294 388 (24%)
Borsa Italiana (no of
trades m) 15.6 19.2 (19%)
Turquoise value traded
(EURbn) 163 254 (36%)
SETS Yield (basis points) 0.68 0.61 11%
Average daily
UK value traded (GBPbn) 4.7 6.2 (24%)
Borsa Italiana (no of
trades '000) 248 305 (19%)
Turquoise value traded
(EURbn) 2.6 4.0 (35%)
Derivatives (contracts
m)
LSE Derivatives 0.8 1.8 (56%)
IDEM 8.3 9.2 (10%)
Total 9.1 11.0 (17%)
------------------------------ ---------- --------- ---------
Fixed Income
MTS cash and BondVision
(EURbn) 836 1,030 (19%)
MTS money markets (EURbn
term adjusted) 28,809 19,588 47%
Total Income - Quarterly
2018 2019
GBP millions Q1 Q2 Q3 Q4 2018 Q1
---------------- ---------------- ---------------- ---------------- ----------------
Index -
Subscription 89 96 94 94 373 99
Index - Asset
based 52 53 59 55 219 52
FTSE Russell 141 149 153 149 592 151
Real time
data 24 23 23 24 94 24
Other
information 36 39 36 44 155 39
-------------
Information
Services 201 211 212 217 841 214
OTC -
SwapClear,
ForexClear &
CDSClear 66 64 65 73 268 76
Non OTC -
Fixed
income, Cash
equities
& Listed
derivatives 33 34 34 35 136 34
Other 19 21 21 22 83 24
------------- ---------------- ---------------- ---------------- ---------------- --------------- ----------------
Post Trade
Services -
LCH 118 119 120 130 487 134
Clearing 10 12 10 9 41 11
Settlement,
Custody &
other 18 12 15 16 61 14
------------- ---------------- ---------------- ---------------- ---------------- --------------- ----------------
Post Trade
Services -
CC&G and
Monte Titoli 28 24 25 25 102 25
Primary
Markets 29 33 20 31 113 28
Secondary
Markets -
Equities 45 44 39 41 169 37
Secondary
Markets -
Fixed
income,
derivatives
& other 33 31 30 31 125 32
------------- ---------------- ---------------- ---------------- ---------------- --------------- ----------------
Capital
Markets 107 108 89 103 407 97
Technology 13 19 16 17 65 14
Other 3 2 2 2 9 2
Total Revenue 470 483 464 494 1,911 486
Net treasury
income
through CCP:
CC&G 10 11 11 11 43 11
LCH 38 45 46 46 175 48
Other income 2 1 1 2 6 1
Total income 520 540 522 553 2,135 546
------------- ---------------- ---------------- ---------------- ---------------- --------------- ----------------
Cost of sales (56) (50) (57) (64) (227) (56)
Gross profit 464 490 465 489 1,908 490
------------- ---------------- ---------------- ---------------- ---------------- --------------- ----------------
Note Information Services:
Mergent and some other minor items (previously reported in FTSE
Russell subscriptions), are now included in Other information
services
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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