March 02, 2018
London Stock Exchange Group Plc Preliminary Results For The Year Ended 31 December 2017
Unless stated otherwise, all figures in the highlights below refer to continuing operations1 for 12 months to 31 December 2017 and comparisons with the prior 12 month period on the same basis.
- Continued execution of strategy driving strong operational and financial performance – deployment of capital for acquisitions and organic investment to drive multiple growth opportunities
- Strong financial results – headline growth across all core business divisions – Information Services, Post Trade and Capital Markets - underpins confidence in delivery of three-year financial targets
- Well positioned to drive further growth as a diversified, global financial markets infrastructure business – operating on an Open Access basis in partnership with customers
2017 Highlights
- Total revenue up 17% to £1,768 million (2016: £1,515 million)
- Total income up 18% to £1,955 million (2016: £1,657 million)
- FTSE Russell delivered 33% revenue growth (up 15% on an underlying basis); LCH OTC revenues up 21% (up 17% on an underlying basis)
- Adjusted operating expenses2 up 6% on an organic and constant currency basis reflecting continued investment in growth and efficiency projects
- Adjusted operating profit3 up 18% at £812 million (2016: £686 million); operating profit up 47% at £626 million (2016: £427 million); adjusted EBITDA2 up 19% at £915 million (2016: £771 million)
- Adjusted EPS3 up 19% at 148.7 pence (2016: 124.7 pence); basic EPS of 153.6 pence (2016: 63.8 pence)
- Proposed final dividend increased to 37.2 pence per share - a 19% increase in the full year dividend to 51.6 pence per share – reflecting the strong outlook for the Group
- Capital management continues in-line with policy: £200 million share buyback completed; new medium term debt with €1 billion Eurobond issuance to support further growth and leverage reduced to 1.7 times
- New initiatives and achievements in the year include:
- SwapAgent started new service providing efficiencies for non-cleared products
- CurveGlobal making good progress one year on from launch and investing for next stage developments
- Completed acquisitions of The Yield Book and Mergent, further building data and analytics capabilities in our Information Services businesses
- Increased shareholding in LCH Group to 65.9% (up from 57.8%); expect to acquire a further 2% in March 2018
- Strong flow of IPOs in London and Italy helped companies raise over £44 billion in new and further issues
- Turquoise Block Discovery saw 600% rise in total value traded to €54.5 billion as customers started to adjust their trading strategies ahead of MiFID II
- Good progress on recruitment of new CEO with a strong field of high quality candidates
1 Continuing operations exclude businesses sold, being Russell Investment Management.
2 Before depreciation, amortisation and non-underlying items.
3 Before amortisation of purchased intangible assets and non-underlying items.
Organic growth is calculated in respect of businesses owned for at least 12 months in either period and so excludes Russell Investment Management, SwapMatch, ISPS, Mergent and The Yield Book. 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.
Commenting on performance for the year, David Warren, CFO and Interim Group Chief Executive, said:
“We have delivered another year of strong performance with growth across all of our core businesses, including double-digit revenue increases at FTSE Russell and LCH OTC. The Group has also continued to invest in new initiatives and acquisitions to drive further expansion of our global client offering. Reflecting the strong results, as well as confidence in outlook and focus on shareholder returns, the dividend per share increased in line with earnings at 19%, and the Group completed a £200 million buyback during the year.
“The Group is strategically, operationally and financially well positioned to capitalise on a range of opportunities ahead and to enhance shareholder returns. We also remain focused on delivering the financial targets we have set for the next two years. Our Open Access approach in partnership with customers will enable us to benefit from MiFID II and to adapt to an evolving regulatory and macroeconomic environment.”
Financial Summary
Unless otherwise stated, all figures below refer to continuing operations for the year ended 31 December 2017. Comparative figures are for continuing operations for the year ended 31 December 2016. Variance is also provided on an organic and constant currency basis.
| Organic and | ||||
|---|---|---|---|---|
Year ended |
constant |
|||
31 December |
currency |
|||
| 2017 | 2016 | Variance | variance1 | |
| Continuing operations | £m | £m | % | % |
| Revenue | ||||
| Information Services 1 | 736 | 595 | 24% | 13% |
| Post Trade Services - LCH | 432 | 356 | 21% | 17% |
| Post Trade Services - CC&G and Monte Titoli | 109 | 104 | 5% | (2%) |
| Capital Markets 1 | 391 | 368 | 6% | 3% |
| Technology Services | 91 | 88 | 3% | - |
| Other revenue | 9 | 4 | - | - |
| Total revenue | 1,768 | 1,515 | 17% | 10% |
| Net treasury income through CCP businesses | 162 | 125 | 30% | 22% |
| Other income | 25 | 17 | - | - |
| Total income | 1,955 | 1,657 | 18% | 11% |
| Cost of sales | (215) | (175) | 23% | 16% |
| Gross profit | 1,740 | 1,482 | 17% | 10% |
| Operating expenses before depreciation, amortisation and impairment | (816) | (706) | 15% | 6% |
| Depreciation, amortisation and impairment | (103) | (85) | 22% | 7% |
| Total operating expenses | (919) | (791) | 16% | 6% |
| Share of loss after tax of associate | (9) | (5) | - | - |
| Adjusted operating profit 2 | 812 | 686 | 18% | 15% |
| Add back depreciation, amortisation and impairment | 103 | 85 | 22% | 7% |
| Adjusted earnings before interest, tax, depreciation and amortisation 2 | 915 | 771 | 19% | 14% |
| Profit on disposal of businesses | 7 | - | - | - |
| Amortisation of purchased intangible assets and non-underlying items | (193) | (259) | (25%) | (28%) |
| Operating profit | 626 | 427 | 47% | 44% |
| Earnings per share | ||||
| Basic earnings per share (p) | 153.6 | 63.8 | 141% | |
| Adjusted basic earnings per share (p) 2 | 148.7 | 124.7 | 19% | |
| Dividend per share (p) | 51.6 | 43.2 | 19% | |
1Organic growth is calculated in respect of businesses owned for at least 12 months in either period and so excludes Russell Investment Management, SwapMatch, ISPS, Mergent and The Yield Book.
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.
2Before amortisation of purchased intangible assets and non-underlying items.
Unless otherwise stated, all figures refer to the 12 months ended 31 December 2017 and comparisons are against the same corresponding period in the previous year.
Further information
The Group will host a conference call on its Preliminary Results for analysts and institutional shareholders today at 09:00am (GMT). On the call will be David Warren (CFO and Interim CEO) and Paul Froud (Head of Investor Relations).
Participant UK Dial-In Numbers: 0800 376 7922
Participant Std International Dial-In: +44 (0) 2071 928 000
Conference ID # 408 9059
For further information, please call the Group’s Investor Relations team on +44 (0) 20 7797 3322.
The information in the preliminary announcement of the results for the year ended 31 December 2017, which was approved by the Board of Directors on 1 March 2018, does not constitute statutory accounts as defined in Section 435 of the UK Companies Act 2006. The financial statements for the year ended 31 December 2016 were filed with the Registrar of Companies, and the audit report was unqualified and contained no statements in respect of Sections 498 (2) and 498 (3) of the UK Companies Act 2006. The financial statements for the year ended 31 December 2017 will be filed with the Registrar of Companies in due course.
In accordance with the Listing Rules of the UK Listing Authority, these preliminary results have been agreed with the Company’s auditors, Ernst &Young LLP, and the Directors have not been made aware of any likely modification to the auditor’s report to be included in the Group’s Annual Report and Accounts for the year ended 31 December 2017.
The preliminary results have been prepared on a basis consistent with the accounting policies set out in the Group’s Annual Report and Accounts for the year ended 31 December 2017.
To view the full RNS please visit our Investor Relations page.
About LSEG
LSEG (London Stock Exchange Group) is a leading global financial markets infrastructure and data provider, playing a vital social and economic role in the world’s financial system.
With our open approach, trusted expertise and global scale, we enable the sustainable growth and stability of our customers and their communities. We are dedicated partners with extensive experience, deep knowledge and a worldwide presence in data and analytics; indices; capital formation; and trade execution, clearing and risk management across multiple asset classes.
LSEG is headquartered in the United Kingdom, with significant operations in over 60 countries across EMEA, North America, Latin America and Asia Pacific. We employ 25,000 people globally, more than half located in Asia Pacific. LSEG’s ticker symbol is LSEG.
Contacts
Media
Gavin Sullivan
Lucie Holloway
Ramesh Chhabra
+44 (0)20 7797 1222
newsroom@lseg.com
Investor Relations
Paul Froud
44 (0)20 7797 3322