Interim management statement for the period to 26 January 2012

  • Continued strong operational and financial performance in Q3
  • Total income up 17 per cent on Q3 last year at £196.3 million (up 13 per cent on organic constant currency basis); 9 months year-to-date up 19 per cent, to £582.8m (up 18 per cent on organic constant currency basis)
  • Post Trade Services total income increased 50 per cent, driven by further sequential (over Q2) growth in treasury management income from clearing operations
  • Capital Markets revenues decreased 4 per cent with growth in annual fee income, derivatives revenues and Italian cash equities trading offset by lower IPO activity and weaker fixed income and UK cash equities trading
  • Information Services revenues rose 24 per cent in total, reflecting operational growth and the initial benefits of the FTSE acquisition which includes adjustment to royalties previously recognised 3 months in arrears; organic growth was good at 4 per cent, with increases in both real time data income and revenue from other information products
  • Technology Services revenues up 15 per cent, mostly driven by growth from MillenniumIT
  • Acquired the outstanding 50 per cent of FTSE, giving the Group full control of this strategically important, high growth global indices business – FTSE EBITDA for the year ended 31 December 2011 grew 34 per cent to £53.6 million
  • Exclusive discussions with LCH.Clearnet and broader related stakeholder engagement continue

 

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

“This has been another good quarter, with strong momentum and top line growth of 17 per cent. As well as a very positive organic performance, we successfully completed our acquisition of FTSE. The new opportunities that come with full control of this high quality, fast-growing international business are significant, and we look forward to developing these with our customers.

“Our diversification strategy continues to pay dividends and the breadth and balance of our offering gives our portfolio a good element of natural hedge, making us well-placed to drive the ongoing performance of the Group. We remain firmly committed to enhancing the Group’s competitiveness, focusing on our customers and to developing our wide range of products and services.”

Financial Position

During Q3 there was a net outflow of cash, including £428 million for the acquisition of the 50 per cent of FTSE International Limited that the Group did not own, £53 million (€62 million) for the purchase of a 13.6 per cent stake in CC&G from Unicredit S.p.A and £15 million for acquisition of the FSA’s transaction reporting service, TRS.

At the end of December 2011, Group net debt had increased to £582 million (or £747 million after setting aside the cash held for regulatory and operational support purposes). As reported at the time of the FTSE transaction, the pro forma leverage of the Group has increased to 1.6 times net debt:adjusted EBITDA, based on EBITDA to 30 September 2011 and on a pro forma basis to include 12 months FTSE EBITDA. We expect that our positive net cash generation will start to reduce our leverage.

To underpin the Group’s financial flexibility in connection with our ongoing discussions with LCH.Clearnet, a new £350 million committed revolving credit facility was signed on 15 December 2011. This facility expires if these discussions are terminated.

Although there was little change to the euro:sterling rate in Q3 compared with the equivalent period last year, the euro has weakened in recent weeks. To illustrate our exposure to movements in this exchange rate, a €0.05 decrease in the average euro:sterling rate would have resulted in a reduction to total income of c£4.3 million for Q3.

FTSE International Limited

Financial results (unaudited) for FTSE International Limited, for the 12 months ended 31 December 2011, confirm a continuation of strong growth. Revenue increased 21 per cent to £119.1 million and EBITDA grew 34 per cent to £53.6 million.

Current trading and Outlook

The Group is well positioned and continues to make progress in executing its stated strategy to ‘get in shape, leverage assets, and seek opportunities’. The Board expects continuing good overall Group performance during the final quarter of the financial year, reflecting the resilience of the business and strength of the portfolio’s offering.

However, the Group is not immune to the current weak market conditions. The fourth quarter has started with subdued secondary market trading, with average daily value traded in UK cash equities down 3 per cent on Q3 although volume traded in Italian cash equities is up 4 per cent on Q3. MTS fixed income trading and IDEM derivative volumes are down on average daily levels in the prior quarter. Information Services, Technology Services and Post Trade Services are all performing well, with net treasury income unaffected by slowing trading levels so far in January.

The Board remains committed to delivering growth through leveraging the many assets within the business, whilst maintaining focus on improving competitiveness, cost management and efficiency.

Further information is available from:
London Stock Exchange Victoria Brough - Media +44 (0) 20 7797 1222
Group plc Paul Froud – Investor Relations +44 (0) 20 7797 3322
Citigate Dewe Rogerson Patrick Donovan/Grant Ringshaw +44 (0) 20 7638 9571

Q3 Revenue Summary

Revenues for three months and nine months ended 31 December 2011, with comparatives against performance for the same period last year. Growth rates for both Q3 and year to date performance are also expressed on a constant currency basis. All figures are unaudited.

 

Three months ended

 

Organic and constant

 

Nine months ended

 

Organic and constant

 

31 December

 

currency

 

31 December

 

currency

 

2011

2010

Variance

variance1

 

2011

2010

Variance

variance1

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

                 

Capital   Markets

68.9

71.5

(4%)

(4%)

 

228.7

213.0

7%

6%

Post   Trade Services

24.5

23.9

3%

11%

 

76.9

72.2

7%

13%

Information   Services

52.8

42.5

24%

4%

 

141.9

126.6

12%

4%

Technology   Services

13.1

11.4

15%

15%

 

37.8

35.9

5%

6%

Other

1.5

1.3

15%

15%

 

3.6

3.5

3%

0%

Total   revenue

160.8

150.6

7%

2%

 

488.9

451.2

8%

7%

Net   treasury income through CCP business

33.5

14.8

126%

126%

 

87.8

31.6

178%

171%

Other   income

2.0

2.0

0%

0%

 

6.1

5.8

5%

5%

Total   income

196.3

167.4

17%

13%

 

582.8

488.6

19%

18%

                   

Share   of profit of JVs and associates2

3.5

0.9

     

5.9

2.5

   
                   

Organic   Excluding FTSE additional royalty, revenue, TRS & Servizio Titoli

         

Total   revenue

152.0

148.7

2%

2%

 

480.1

445.2

8%

7%

Total   income

187.5

165.5

13%

13%

 

574.0

482.6

19%

18%

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

1) Removal of Servizio Titoli revenue last year (Post Trade)

2) Removal of FTSE revenue and additional royalties from current year (Information)

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

2JV share of profits includes £2.3m to align the reporting of FTSE profit share previously accounted for 3 months in arrears

More detailed revenues by segment are provided in tables below:

 

Three months ended

 

Variance at

 

Nine months ended

 

Variance at

 

31 December

 

constant

 

31 December

 

constant

 

2011

2010

Variance

currency

 

2011

2010

Variance

currency

Revenue

£m

£m

%

%

 

£m

£m

%

%

Primary   Markets

                 

Annual   fees

10.0

9.6

4%

4%

 

30.0

28.3

6%

5%

Admission   fees

7.1

9.5

(25%)

(25%)

 

27.5

24.8

11%

11%

 

17.1

19.1

(10%)

(10%)

 

57.5

53.1

8%

8%

Secondary   Markets

                 

Cash   equities UK & Turquoise

21.1

21.6

(2%)

(2%)

 

73.3

70.2

4%

4%

Cash   equities Italy

7.2

6.8

6%

6%

 

23.4

21.5

9%

6%

Derivatives

3.9

3.8

3%

3%

 

12.8

12.2

5%

2%

Fixed   income

8.0

8.3

(4%)

(4%)

 

26.7

22.9

17%

14%

 

40.2

40.5

(1%)

(1%)

 

136.2

126.8

7%

6%

Other

11.6

11.9

(3%)

(2%)

 

35.0

33.1

6%

3%

Total   revenue

68.9

71.5

(4%)

(4%)

 

228.7

213.0

7%

6%

Post Trade Services

 

Three months ended

 

Variance at

 

Nine months ended

 

Variance at

 

31 December

 

constant

 

31 December

 

constant

 

2011

2010

Variance

currency

 

2011

2010

Variance

currency

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

                 

Clearing

10.2

8.4

21%

21%

 

31.7

25.2

26%

22%

Settlement

4.3

4.5

(4%)

(4%)

 

14.1

13.4

5%

2%

Custody   & other

10.0

11.0

(9%)

(9%)

 

31.1

33.6

(7%)

(9%)

Total   revenue

24.5

23.9

3%

3%

 

76.9

72.2

7%

4%

Net   treasury income through CCP business

33.5

14.8

126%

126%

 

87.8

31.6

178%

171%

Total   income

58.0

38.7

50%

50%

 

164.7

103.8

59%

55%

Excluding   Servizio Titoli (disposed with effect from 1 April 2011):

         

Custody   & other

10.0

9.1

10%

10%

 

31.1

27.6

13%

10%

Total   revenue

24.5

22.0

11%

11%

 

76.9

66.2

16%

13%

Total   income

58.0

36.8

58%

58%

 

164.7

97.8

68%

64%

Information Services

 

Three months ended

 

Variance at

 

Nine months ended

 

Variance at

 

31 December

 

constant

 

31 December

 

constant

 

2011

2010

Variance

currency

 

2011

2010

Variance

currency

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

                 

Real   time data

25.4

24.4

4%

4%

 

75.6

72.6

4%

3%

Other   information services

16.3

15.2

7%

7%

 

48.6

45.8

6%

6%

FTSE   royalties

6.4

2.9

     

13.0

8.2

   

FTSE   revenue

4.7

0.0

     

4.7

0.0

   

Total   revenue

52.8

42.5

24%

24%

 

141.9

126.6

12%

11%

Total   revenue excluding FTSE additional royalties & revenue & TRS revenue

44.0

42.5

4%

4%

 

133.1

126.6

5%

4%

Note:

FTSE royalties includes £3.5m to align the reporting of FTSE royalties and profit share previously accounted for 3 months in arrear. FTSE revenue reflects completion of acquisition from 16th December 2011.

Technology Services

 

Three months ended

 

Variance at

 

Nine months ended

 

Variance at

 

31 December

 

constant

 

31 December

 

constant

 

2011

2010

Variance

currency

 

2011

2010

Variance

currency

 

£m

£m

%

%

 

£m

£m

%

%

Revenue

                 

MillenniumIT

5.5

4.1

34%

34%

 

15.0

13.1

15%

16%

Technology

7.6

7.3

4%

4%

 

22.8

22.8

0%

(0%)

Total   revenue

13.1

11.4

15%

15%

 

37.8

35.9

5%

6%

Basis of Preparation

Results for Borsa Italiana for the periods ended 31 December 2011 have been translated into Sterling using the average monthly exchange rate for the period of €1.166: £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 31 December 2011

Closing   €:£ rate at 31 December 2011

Average   €:£ rate 9 months ended 31 December 2011

Average   €:£ rate 3 months ended 31 December 2010

Closing   €:£ rate at 31 December 2010

Average   €:£ rate 9 months ended 31 December 2010

           

€1.166

€1.197

€1.146

€1.163

€1.162

€1.179

Appendix

Capital   Markets - Primary Markets

               
                   
 

Three months ended

 

Nine months ended

 
 

31 December

Variance

 

31 December

Variance

 

2011

 

2010

%

 

2011

 

2010

%

New   Issues

                 

UK   Main Market, PSM & SFM

11

 

25

(56%)

 

50

 

60

(17%)

UK   AIM

17

 

35

(51%)

 

75

 

86

(13%)

Borsa   Italiana

2

 

3

(33%)

 

7

 

6

17%

Total

30

 

63

(52%)

 

132

 

152

(13%)

                   

Company   Numbers (as at period end)

                 

UK   Main Market, PSM & SFM

1,451

 

1,475

(2%)

         

UK   AIM

1,143

 

1,195

(4%)

         

Borsa   Italiana

292

 

296

(1%)

         

Total

2,886

 

2,966

(3%)

         
                   

Market   Capitalisation (as at period end)

                 

UK   Main Market (£bn)

1,824

 

1,952

(7%)

         

UK   AIM (£bn)

65

 

79

(18%)

         

Borsa   Italiana (€bn)

332

 

425

(22%)

         

Borsa   Italiana (£bn)

278

 

366

(24%)

         

Total   (£bn)

2,167

 

2,397

(10%)

         
                   

Money   Raised (£bn)

                 

UK   New

0.9

 

3.6

(75%)

 

12.3

 

8.7

41%

UK   Further

1.0

 

7.0

(86%)

 

4.3

 

18.4

(77%)

Borsa   Italiana new and further

0.7

 

2.0

(65%)

 

9.2

 

3.1

197%

Total   (£bn)

2.6

 

12.6

(79%)

 

25.8

 

30.2

(15%)

 

Capital   Markets - Secondary Markets

               
                   
 

Three months ended

 

Nine months ended

 
 

31 December

Variance

 

31 December

Variance

Equity

2011

 

2010

%

 

2011

 

2010

%

Totals   for period

                 

UK   value traded (£bn)

256.6

 

267.5

(4%)

 

882.3

 

880.9

0%

Borsa   Italiana (no of trades)

15.1

 

14.6

3%

 

49.3

 

46.7

6%

Turquoise   (€bn)

120.9

 

72.7

66%

 

397.2

 

241.2

65%

                   

SETS   Yield (basis points)

0.68

 

0.72

(6%)

 

0.70

 

0.71

(1%)

                   

Average   daily

                 

UK   value traded (£bn)

4.2

 

4.2

0%

 

4.7

 

4.6

2%

Borsa   Italiana (no of trades)

235.6

 

228.7

3%

 

256.5

 

242.1

6%

Turquoise   (€bn)

1.9

 

1.1

73%

 

2.1

 

1.2

75%

                   

Derivatives   (contracts m)

                 

Turquoise

7.4

 

9.0

(18%)

 

29.1

 

26.2

11%

IDEM

9.2

 

9.5

(3%)

 

37.4

 

36.0

4%

Total

16.6

 

18.5

(10%)

 

66.5

 

62.2

7%

                   

Fixed   Income

                 

MTS   cash and Bondvision (€bn)

468

 

649

(28%)

 

1,785

 

1,896

(6%)

MTS   money markets (€bn term adjusted)

11,545

 

15,827

(27%)

 

44,553

 

47,123

(5%)

MOT   number of trades (m)

1.56

 

1.11

41%

 

3.68

 

2.95

25%

 

Post   Trade Services

                 
                   
 

Three months ended

 

Nine months ended

 
 

31 December

Variance

 

31 December

Variance

 

2011

 

2010

%

 

2011

 

2010

%

CC&G   Clearing (m)

                 

Equity   clearing (trades)

15.9

 

15.2

5%

 

52.0

 

49.3

5%

Derivative   clearing (contracts)

9.2

 

9.5

(3%)

 

37.4

 

36.0

4%

Total   Contracts

25.1

 

24.7

2%

 

89.4

 

85.3

5%

Open   interest (contracts as at period end)

4.0

 

3.0

33%

         

Initial   margin held (average €bn)

11.1

 

7.0

59%

 

9.5

 

6.7

42%

                   

Monte   Titoli

                 

Pre   Settlement instructions (trades m)

8.0

 

7.5

7%

 

24.9

 

22.6

10%

Settlement   instructions (trades m)

7.8

 

9.4

(17%)

 

25.2

 

29.3

(14%)

Total   Settlement

15.8

 

16.9

(7%)

 

50.1

 

51.9

(3%)

Custody   assets under management (average €tn)

3.03

 

3.00

1%

 

3.04

 

2.99

2%

 

Information   Services

       
         
 

Three months ended

 

31 December

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

135,000

 

140,000

(4%)

Total Income – Quarterly

     

FY   2011

         

FY 2012

   

£   millions

   

Q1

Q2

Q3

Q4

FY 2011

 

Q1

Q2

Q3

                       

Annual   Fees

   

9.3

9.4

9.6

9.4

37.8

 

9.9

10.2

10.0

Admission   Fees

   

8.8

6.5

9.5

8.3

33.0

 

12.2

8.2

7.1

Cash   equities UK & Turquoise

   

26.7

21.9

21.6

26.2

96.4

 

24.3

27.8

21.1

Cash   equities Italy

   

8.7

6.0

6.8

9.3

30.7

 

7.7

8.5

7.2

Derivatives

   

4.9

3.5

3.8

4.5

16.8

 

4.3

4.7

3.9

Fixed   Income

   

7.4

7.2

8.3

9.5

32.4

 

9.8

9.0

8.0

Other

   

10.7

10.5

11.9

11.2

44.4

 

11.5

11.7

11.6

Capital   Markets

   

76.5

65.0

71.5

78.4

291.5

 

79.7

80.1

68.9

Clearing

   

9.7

7.2

8.4

10.7

35.9

 

9.9

11.7

10.2

Settlement

   

5.0

3.9

4.5

4.8

18.2

 

4.8

5.0

4.3

Custody   & other

   

12.2

10.3

11.0

11.6

45.2

 

11.3

9.7

10.0

Post   Trade Services

   

26.9

21.4

23.9

27.1

99.3

 

26.0

26.4

24.5

Real   time data

   

24.4

23.9

24.4

27.1

99.8

 

25.2

25.0

25.4

Other   information

   

15.5

15.0

15.2

15.0

60.7

 

16.3

15.8

16.3

FTSE   royalties

   

2.6

2.7

2.9

3.1

11.3

 

3.2

3.5

6.4

FTSE   revenue

                   

4.7

Information   Services

   

42.5

41.6

42.5

45.2

171.8

 

44.7

44.3

52.8

                       

MillenniumIT

   

5.0

4.0

4.1

5.0

18.2

 

3.2

6.4

5.5

Technology

   

7.6

7.9

7.3

7.7

30.4

 

7.4

7.8

7.6

Technology   Services

   

12.6

11.9

11.4

12.7

48.6

 

10.6

14.2

13.1

                       

Other

   

1.5

0.7

1.3

1.2

4.7

 

1.4

0.7

1.5

                       

Total   Revenue

   

159.6

140.6

150.6

164.6

615.9

 

162.4

165.7

160.8

                       

Net   treasury income through CCP business

   

5.9

10.8

14.8

19.8

51.3

 

25.8

28.5

33.5

Other   income

   

1.9

1.9

2.0

1.9

7.7

 

2.0

2.1

2.0

                       

Total   income

   

167.8

153.4

167.4

186.3

674.9

 

190.2

196.3

196.3

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