Interim Management Statement for the period to 17 July 2012

  • Good Group performance achieved against backdrop of testing markets - total income up 10 per cent on Q1 last year at £209.5 million
  • Information Services revenues rose 68 per cent, reflecting the benefits of the FTSE acquisition; up 2 per cent on an organic constant currency basis, with increased revenue from other information products offsetting declines in real time data income
  • Post Trade Services total income remained resilient (and on a constant currency basis increased 8 per cent), reflecting good growth in treasury management income offset by a reduction in clearing and settlement revenues following lower trading in the period
  • Capital Markets revenues decreased 15 per cent following subdued primary market activity (compared with a strong equivalent quarter last year), together with a slowdown in secondary market trading as markets continued to be affected by macro economic uncertainties
  • MillenniumIT successfully went live on three markets in three continents during the period: five different trading platforms, including cash equities, fixed income and structured products at Borsa Italiana, now hosted in Milan, successfully migrated to Millennium Exchange; Johannesburg Stock Exchange and the Mongolian Stock Exchange also went live on MillenniumIT
  • Regulatory and anti-trust processes are continuing in respect of the shareholder approved acquisition of 60 per cent stake in LCH.Clearnet; the competition authorities in the UK, Spain and Portugal are reviewing the proposed transaction.

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

“We have delivered a good overall performance, reflecting our broad suite of products and services and the increased diversification of the Group.

“In particular, we have seen a strong contribution from FTSE, which continues to demonstrate good growth. In addition, this has been a great quarter for MillenniumIT which successfully saw Borsa Italiana, Johannesburg Stock Exchange and the Mongolian Stock Exchange all go live on its ultra-low latency trading technology. MillenniumIT technology has now been contracted by over thirty exchanges or other securities platform customers across Europe, Asia, Africa and the Americas.

“Our focus remains on developing partnerships with our customers, executing on our strategy and delivering on cost control and benefits from recent transactions.”

Financial Position

The amount the Group sets aside to meet regulatory, clearing and commercial requirements has increased as expected from £165 million to £200 million, reflecting an increase in the regulatory capital requirements of CC&G following previously disclosed discussions with Banca d’Italia. The additional amount will be met from the Group’s existing cash resources. The Group also continues to review and contribute to a wide range of on-going EU and US draft regulatory proposals.

The Group reduced its net debt in the quarter with net cash generation resulting from normal 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.

The average €:£ exchange rate weakened by 9 per cent in Q1 compared to the same period last year, from €1:13 to €1.23. Each €0.05 movement in the average €:£ rate would have changed the Group’s operating profit by approximately £12 million in the last financial year.

Current Trading and Outlook

The Group has made a good start to the new financial year, although market conditions have remained weak and the summer period is expected to be quiet.

Notwithstanding continuing market and economic uncertainties, the Group remains well positioned and will continue to focus on delivering benefits from recent transactions and its more diversified range of products and services.

Further information is available from:

London   Stock Exchange Group plc

Victoria   Brough – Media

Paul   Froud – Investor Relations

+44   (0) 20 7797 1222

+44   (0) 20 7797 3322

     

Citigate   Dewe Rogerson

Patrick   Donovan/Grant Ringshaw

+44   (0) 20 7638 9571

Q1 Revenue Summary

Revenues for three months ended 30 June 2012, with comparatives against performance for the same period last year. Growth rates for Q1 performance are also expressed on a constant currency basis. All figures are unaudited.

       

Organic and

 

Three months ended

 

constant

 

30 June

 

currency

 

2012

2011

Variance

variance1

 

£m

£m

%

%

Revenue

       

Capital   Markets

67.5

79.7

(15%)

(12%)

Post   Trade Services

22.8

26.0

(12%)

(5%)

Information   Services

75.3

44.7

68%

2%

Technology   Services

12.1

10.6

14%

21%

Other

1.3

1.4

(7%)

(7%)

Total   revenue

179.0

162.4

10%

(5%)

Net   treasury income through CCP business

28.5

25.8

10%

21%

Other   income

2.0

2.0

0%

0%

Total   income

209.5

190.2

10%

(1%)

         
         

Organic   Excluding FTSE revenue and royalties and TRS

 

Total   revenue

145.2

159.2

(9%)

(5%)

Total   income

175.7

187.0

(6%)

(1%)

1Exchange rates for the relevant period are detailed at the end of this section
Adjustments to calculate organic growth:

1) Removal of FTSE revenue from current year and royalties from last year (Information)

2) Removal of TRS revenue from current year (Information)

More detailed revenues by segment are provided in tables below:

Capital Markets

 

Three months ended

 

Variance at

 

30 June

 

constant

 

2012

2011

Variance

currency

Revenue

£m

£m

%

%

Primary   Markets

       

Annual   fees

9.8

9.9

(1%)

1%

Admission   fees

7.9

12.2

(35%)

(34%)

 

17.7

22.1

(20%)

(18%)

Secondary   Markets

       

Cash   equities UK & Turquoise

21.1

24.3

(13%)

(13%)

Cash   equities Italy

6.6

7.7

(14%)

(6%)

Derivatives

3.6

4.3

(16%)

(8%)

Fixed   income

8.1

9.8

(17%)

(11%)

 

39.4

46.1

(15%)

(11%)

Other

10.4

11.5

(10%)

(4%)

Total   revenue

67.5

79.7

(15%)

(12%)

Post Trade Services

 

Three months ended

 

Variance at

 

30 June

 

constant

 

2012

2011

Variance

currency

 

£m

£m

%

%

Revenue

       

Clearing

9.0

9.9

(9%)

(1%)

Settlement

3.6

4.8

(25%)

(18%)

Custody   & other

10.2

11.3

(10%)

(2%)

Total   revenue

22.8

26.0

(12%)

(5%)

Net   treasury income through CCP business

28.5

25.8

10%

21%

Total   income

51.3

51.8

(1%)

8%

Information Services

       

Organic and

 

Three months ended

 

constant

 

30 June

 

currency

 

2012

2011

Variance

variance

 

£m

£m

%

%

Revenue

       

Real   time data

23.7

25.2

(6%)

(4%)

Other   information services

18.6

16.3

14%

12%

FTSE   royalties

-

3.2

-

-

FTSE   revenue

33.0

-

-

-

Total   revenue

75.3

44.7

68%

2%

Total   revenue excluding FTSE revenue and royalties & TRS revenue

41.5

41.5

0%

2%

Note:

Adjustments to calculate organic growth:

1) Removal of FTSE revenue from current year and royalties from last year (Information)

2) Removal of TRS revenue from current year (Information)

Technology Services

 

Three months ended

 

Variance at

 

30 June

 

constant

 

2012

2011

Variance

currency

 

£m

£m

%

%

Revenue

       

MillenniumIT

4.9

3.2

53%

75%

Technology

7.2

7.4

(3%)

0%

Total   revenue

12.1

10.6

14%

21%

Basis of Preparation

Results for Borsa Italiana for the periods ended 30 June 2012 have been translated into Sterling using the average monthly exchange rate for the period of €1.23: £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 2012

Closing   €:£ rate at 30 June 2012

Average   €:£ rate 3 months ended 30 June 2011

Closing   €:£ rate at 30 June 2011

       

€1.23

€1.24

€1.13

€1.11

Appendix

Capital   Markets - Primary Markets

     
         
 

Three months ended

 

30 June

Variance

 

2012

 

2011

%

New   Issues

       

UK   Main Market, PSM & SFM

7

 

26

(73%)

UK   AIM

20

 

24

(17%)

Borsa   Italiana

2

 

4

(50%)

Total

29

 

54

(46%)

         

Company   Numbers (as at period end)

       

UK   Main Market, PSM & SFM

1,416

 

1,466

(3%)

UK   AIM

1,114

 

1,151

(3%)

Borsa   Italiana

290

 

297

(2%)

Total

2,820

 

2,914

(3%)

         

Market   Capitalisation (as at period end)

       

UK   Main Market (£bn)

1,855

 

2,006

(8%)

UK   AIM (£bn)

61

 

76

(20%)

Borsa   Italiana (€bn)

327

 

432

(24%)

Borsa   Italiana (£bn)

264

 

390

(32%)

Total   (£bn)

2,180

 

2,472

(12%)

         

Money   Raised (£bn)

       

UK   New

0.6

 

10.6

(94%)

UK   Further

1.7

 

2.0

(15%)

Borsa   Italiana new and further

0.3

 

6.0

(95%)

Total   (£bn)

2.6

 

18.6

(86%)

 

Capital   Markets - Secondary Markets

     
         
 

Three months ended

 

30 June

Variance

Equity

2012

 

2011

%

Totals   for period

       

UK   value traded (£bn)

268

 

290

(8%)

Borsa   Italiana (no of trades m)

15.3

 

15.6

(2%)

Turquoise   (€bn)

110.2

 

105.3

5%

         

SETS   Yield (basis points)

0.67

 

0.73

(8%)

         

Average   daily

       

UK   value traded (£bn)

4.5

 

4.8

(6%)

Borsa   Italiana (no of trades '000)

246

 

248

(1%)

Turquoise   (€bn)

1.75

 

1.67

5%

         

Derivatives   (contracts m)

       

Turquoise

7.5

 

10.3

(27%)

IDEM

12.3

 

16.8

(27%)

Total

19.8

 

27.1

(27%)

         

Fixed   Income

       

MTS   cash and Bondvision (€bn)

564

 

722

(22%)

MTS   money markets (€bn term adjusted)

15,739

 

15,947

(1%)

MOT   number of trades (m)

1.32

 

0.90

47%

 

Post   Trade Services

       
         
 

Three months ended

 

30 June

Variance

 

2012

 

2011

%

CC&G   Clearing (m)

       

Equity   clearing (trades)

16.0

 

16.5

(3%)

Derivative   clearing (contracts)

12.3

 

16.8

(27%)

Total   Contracts

28.3

 

33.3

(15%)

Open   interest (contracts as at period end)

4.5

 

4.4

2%

Initial   margin held (average €bn)

9.7

 

8.5

14%

         

Monte   Titoli

       

Pre   Settlement instructions (trades m)

7.1

 

8.5

(16%)

Settlement   instructions (trades m)

6.4

 

9.2

(30%)

Total   Settlement

13.5

 

17.7

(24%)

Custody   assets under management (average €tn)

3.17

 

3.08

3%

 

Information   Services

       
         
 

As at

 
 

30 June

Variance

 

2012

 

2011

%

UK   Terminals

       

Professional   - UK

36,000

 

38,500

(6%)

Professional   - International

52,000

 

54,500

(5%)

Total  

88,000

 

93,000

(5%)

         

Borsa   Italiana Professional Terminals

143,000

 

132,000

8%

Total Income – Quarterly

       

FY 2012

         

FY 2013

£   millions

     

Q1

Q2

Q3

Q4

FY 2012

 

Q1

                     

Annual   Fees

     

9.9

10.2

10.0

9.4

39.5

 

9.8

Admission   Fees

     

12.2

8.2

7.1

9.5

37.0

 

7.9

Cash   equities UK & Turquoise

     

24.3

27.8

21.1

22.2

95.4

 

21.1

Cash   equities Italy

     

7.7

8.5

7.2

8.0

31.4

 

6.6

Derivatives

     

4.3

4.7

3.9

3.8

16.7

 

3.6

Fixed   Income

     

9.8

9.0

8.0

8.9

35.7

 

8.1

Other

     

11.5

11.7

11.6

11.4

46.2

 

10.4

Capital   Markets

     

79.7

80.1

68.9

73.2

301.9

 

67.5

Clearing

     

9.9

11.7

10.2

9.3

41.1

 

9.0

Settlement

     

4.8

5.0

4.3

4.8

18.9

 

3.6

Custody   & other

     

11.3

9.7

10.0

10.6

41.6

 

10.2

Post   Trade Services

     

26.0

26.4

24.5

24.7

101.6

 

22.8

Real   time data

     

25.2

25.0

25.4

27.2

102.8

 

23.7

Other   information

     

16.3

15.8

16.3

17.2

65.6

 

18.6

FTSE   royalties

     

3.2

3.5

6.4

0.0

13.1

 

-

FTSE   revenue

         

4.7

32.7

37.4

 

33.0

Information   Services

     

44.7

44.3

52.8

77.0

218.9

 

75.3

                     

MillenniumIT

     

3.2

6.4

5.5

7.2

22.2

 

4.9

Technology

     

7.4

7.8

7.6

7.6

30.4

 

7.2

Technology   Services

     

10.6

14.2

13.1

14.8

52.6

 

12.1

                     

Other

     

1.4

0.7

1.5

1.2

4.8

 

1.3

                     

Total   Revenue

     

162.4

165.7

160.8

190.9

679.8

 

179.0

                     

Net   treasury income through CCP business

     

25.8

28.5

33.5

39.1

126.9

 

28.5

Other   income

     

2.0

2.1

2.0

2.0

8.1

 

2.0

                     

Total   income

     

190.2

196.3

196.3

232.0

814.8

 

209.5

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