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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| London Stock Exchange Group Plc | LSE:LSE | London | Ordinary Share | GB00B0SWJX34 | ORD SHS 6 79/86P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 8,620.00 | 8,602.00 | 8,606.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMLSE
RNS Number : 5419E
London Stock Exchange Group PLC
19 October 2018
19 October 2018
LONDON STOCK EXCHANGE GROUP plc
TRADING STATEMENT
INCLUDING REVENUES AND KPIs FOR THE THREE MONTHSED
30 SEPTEMBER 2018 (Q3)
-- Good Q3 results - growth across the Group including strong performances from LCH OTC clearing and FTSE Russell
-- Q3 reported revenue up 5% and total income up 8% to GBP522 million; on a like-for-like basis, excluding a GBP9 million year-to-date accounting change impact on adoption of IFRS15 in Capital Markets, revenue would have been up 7% and total income up 9%
-- Reported revenue up 9% and total income up 10% on a nine-month year-to-date basis (including effects of IFRS 15)
-- LSEG acquiring up to a further 15.1% stake in LCH Group, expected to take majority ownership to over 80%; completion targeted by end of Q4
Q3 summary
-- Information Services: revenues up 17% (up 9% on an organic and constant currency basis) - with reported double-digit growth at FTSE Russell
-- Post Trade: LCH income up 15% (up 15% at constant currency), driven by 12% revenue growth in OTC clearing, with strong volumes at SwapClear and ForexClear also contributing to 49% growth in net treasury income
-- Capital Markets: like-for-like revenues up 2% (up 2% at constant currency); adjusting for IFRS 15, Capital Markets reported revenues are 8% lower than the comparative Q3 unadjusted period in the prior year
Commenting on performance in Q3, David Schwimmer, Chief Executive, said:
"The Q3 results show continued momentum across the Group, reflecting another period of operational execution and investment in the business. Information Services and LCH both delivered good year on year growth. We also announced today that we are in the process of acquiring up to a further 15.1% stake in LCH, which is expected to take our majority ownership of this valuable strategic business to over 80%, reflecting our continued confidence in LCH's opportunities for further growth as it develops its business in partnership with its customers.
"Since I joined LSEG in August my initial impressions of the Group's strengths have been reinforced as I have spent time with our businesses and met with key stakeholders. The Group has world class assets, a strong financial position and a proven strategic approach. As today's results show, we have a great platform from which to grow and develop further opportunities as we navigate the evolving economic and regulatory landscape ahead."
Organic growth is calculated in respect of businesses owned for at least 9 months in either period and so excludes ISPS, The Yield Book and Citi Fixed Income Indices, MillenniumIT ESP and Exactpro. The Group's principal foreign exchange exposure arises from translating our European based Euro and US based USD reporting businesses into Sterling.
Investment in growth opportunities and new developments continued across the business during the past quarter:
- LSEG expected to increase its stake in LCH Group to over 80%, acquiring up to an additional 15.1% stake following reductions in holdings by a number of minority shareholders. Targeting completion before end Q4 2018
- LCH ForexClear launched FX options clearing, with connected settlement through CLS settlement - LCH SwapClear cleared its first Secured Overnight Financing Rate (SOFR) swaps
- SEDOL Masterfile expanded its Fixed Income coverage to include 1.5 million US Municipal and US Corporate Bonds with data from Mergent, part of FTSE Russell
- MTS and Johannesburg Stock Exchange opened South Africa's first electronic government bonds trading platform powered by MTS
- LSEG and National Stock Exchange of India signed a MoU to create a dual listing route for Masala bonds and an agreement to look at launching ELITE in India
Financial Position
The Group's financial position continues to be strong with a good level of funding flexibility in place. As at 30 September 2018, the Group had available committed facility headroom of c.GBP500 million having paid the interim dividend to shareholders and other normal course payment obligations. On a pro forma basis, assuming the acquisition of up to a further 15.1% stake in LCH Group for up to c.EUR438 million, the Group's net debt:EBITDA would be towards the top end of our target leverage range, though should reduce quickly as the Group continues to generate strong cash flows.
Credit ratings are unchanged since 30 June 2018, with S&P maintaining a positive outlook around its A- long term rating of LSEG plc and its A+ long term rating of LCH Ltd and LCH SA. Moody's rates LSEG long term A3 with a stable outlook.
The euro strengthened by 1% and the US dollar weakened by 6% against sterling compared with the same period last year. To illustrate our exposure to movements in exchange rates, a EUR0.05 change in the average Euro:Sterling rate would have resulted in a change to continuing operations total income of GBP2 million for Q3, while a US$0.05 move would have resulted in a GBP2 million change.
IFRS 15 accounting change
Since issuing its Interim Report on 2 August 2018, the Group has received clarification guidance from the IFRS Interpretations Committee (IFRIC) regarding the impact of adopting IFRS 15 on admission and listing services provided by the Group's Primary Markets businesses within the Capital Markets segment.
On conversion to the new standard, with effect back dated to 1 Jan 2018, the Group now treats the initial admission and the continual and ongoing listing service as one performance obligation and recognises revenue from initial admissions and further issues over the period the Group has provided the listing service. In the majority of cases this is estimated to be between 4 and 11 years, dependent on the nature of the listing and the service provided. The net GBP9 million revenue reduction taken in Q3 reflects the impact for the 9 months year-to-date.
All new and further listing fees will continue to be billed and cash collected at the point when the service is first provided. Revenues deferred as at 1 January 2018 will result in a recovery of tax paid at the prevailing rate on adoption of IFRS 15 by means of a reduction in the corporation tax payable due to the relevant tax authorities. The Group will subsequently incur corporation tax charge as the deferred revenues from initial admission and further issue fees are recognised in the income statement.
Further information is available from:
Hot Features
Premium
+44 (0) 20 7797
Gavin Sullivan/Lucie Holloway/Ramesh 1222
London Stock Exchange Chhabra - Media +44 (0) 20 7797
Group plc Paul Froud - Investor Relations 3322
A conference call for analysts and investors will be held at 8:30 (UK time) on Friday 19 October. On the call will be David Warren (CFO) and Paul Froud (Head of Investor Relations).
To access the telephone conference call dial 0800 376 7922 or +44 (0) 2071 928 000
Conference ID: 6477 558
Q3 Revenue Summary
Revenues for three months and nine months ended 30 September 2018 refer to continuing operations, with comparatives against performance for the same period last year, are provided below. Growth rates for both Q3 and year to date performance are also expressed on an organic and constant currency basis. All figures are unaudited.
Organic Organic
Three months Nine months
ended and constant ended and constant
30 September currency 30 September currency
--------------- ---------------
2018 2017 Variance variance(1) 2018 2017 Variance variance(1)
Continuing operations: GBPm GBPm % % GBPm GBPm % %
Revenue
Information Services 212 182 17% 9% 624 537 16% 9%
Post Trade Services -
LCH 120 114 5% 6% 357 321 11% 11%
Post Trade Services -
CC&G and Monte Titoli 25 26 (7%) (5%) 77 82 (6%) (7%)
Capital Markets 89 97 (8%) (7%) 305 286 6% 6%
Technology Services 16 23 (32%) 15% 48 64 (26%) 17%
Other 2 1 - - 7 5 - -
----------------------------- ------- ------ --------- ------------- ------- ------ --------- -------------
Total revenue 464 443 5% 4% 1,418 1,295 9% 8%
Net treasury income through
CCP businesses 57 42 36% 35% 160 117 37% 37%
Other income 1 1 - - 4 20 - -
---------
Total income 522 486 8% 7% 1,582 1,432 10% 10%
----------------------------- ------- ------ --------- ------------- ------- ------ --------- -------------
Cost of sales (57) (56) 1% 12% (163) (158) 3% 12%
Gross profit 465 430 8% 6% 1,419 1,274 11% 9%
----------------------------- ------- ------ --------- ------------- ------- ------ --------- -------------
(1) Organic growth is calculated in respect of businesses owned for at least 9 months in either period and so excludes ISPS, The Yield Book and Citi Fixed Income Indices, MillenniumIT ESP and Exactpro. The Group's principal foreign exchange exposure arises from translating our European based Euro and US based USD reporting businesses into Sterling.
Note: Variances in all tables are calculated from underlying numbers
More detailed revenues by segment are provided in tables below:
Information Services
Organic Organic
Three months and and
Nine months
ended constant ended constant
30 September currency 30 September currency
---------------- --------------
2018 2017 Variance variance(1) 2018 2017 Variance variance(1)
GBPm GBPm % % GBPm GBPm % %
Revenue
FTSE Russell Indexes 162 135 20% 9% 471 396 19% 9%
Real time data 23 23 1% 1% 70 70 (1%) (1%)
Other information
services 27 24 13% 13% 83 71 18% 21%
Total revenue 212 182 17% 9% 624 537 16% 9%
-------------------------- ------ ------- --------- ------------ ------ ------ --------- --------------
Cost of sales (17) (15) 15% - (52) (45) 15% 5%
------ ------- ------ ------
Gross profit 195 167 17% 9% 572 492 16% 9%
-------------------------- ------ ------- --------- ------------ ------ ------ --------- --------------
(1) Removal of The Yield Book and Citi Fixed Income Indices (acquired Q3 2017) from FTSE Russell and ISPS from Other information services (disposed Q1 2017)
Post Trade Services - LCH
Three months Nine months
ended Constant ended Constant
30 September currency 30 September currency
--------------- ---------------
2018 2017 Variance variance 2018 2017 Variance variance
GBPm GBPm % % GBPm GBPm % %
Revenue
OTC - SwapClear, ForexClear
& CDSClear 65 59 12% 12% 196 171 14% 16%
Non-OTC - Fixed income,
Cash equities and Listed
derivatives 34 33 2% 2% 101 99 2% 1%
Other 21 22 (5%) (6%) 60 51 19% 18%
------- ------ --------- --------- ------- ------ --------- ---------
Total revenue 120 114 5% 6% 357 321 11% 11%
----------------------------- ------- ------ --------- --------- ------- ------ --------- ---------
Net treasury income 46 31 49% 47% 128 87 48% 49%
Other income 0 (1) - - 0 6 - -
Total income 166 144 15% 15% 485 414 17% 17%
----------------------------- ------- ------ --------- --------- ------- ------ --------- ---------
Cost of sales (31) (23) 36% 36% (83) (63) 32% 31%
------- ------ ------- ------
Gross profit 135 121 11% 11% 402 351 15% 15%
----------------------------- ------- ------ --------- --------- ------- ------ --------- ---------
(1) Pass through of LIBOR data fees Cost of sales have now been netted off against Other income, 2018 Q3 impact GBP2m 9 months impact GBP7m
Post Trade Services - CC&G and Monte Titoli
Three months Nine months
ended Constant ended Constant
30 September currency 30 September currency
--------------- ---------------
2018 2017 Variance variance 2018 2017 Variance variance
GBPm GBPm % % GBPm GBPm % %
Revenue
Clearing 10 9 5% 9% 31 30 5% 4%
Settlement, Custody &
other 15 17 (13%) (13%) 46 52 (12%) (14%)
Total revenue 25 26 (7%) (5%) 77 82 (6%) (7%)
----------------------- ------- ------ --------- --------- ------- ------ --------- ---------
Net treasury income 11 11 1% 2% 32 30 6% 4%
Total income 36 37 (4%) (3%) 109 112 (3%) (4%)
----------------------- ------- ------ --------- --------- ------- ------ --------- ---------
Cost of sales (2) (4) (58%) (58%) (5) (13) (61%) (61%)
------- ------ ------- ------
Gross profit 34 33 3% 4% 104 99 5% 3%
----------------------- ------- ------ --------- --------- ------- ------ --------- ---------
(1) Pass through of T2S costs, Cost of sales have now been netted off against Settlement, Custody & other, 2018 Q3 impact GBP2m, 9 months impact GBP7m
Capital Markets
Three months
Nine months
ended Constant ended Constant
30 September currency 30 September currency
--------------- ---------------
2018 2017 Variance variance 2018 2017 Variance variance
GBPm GBPm % % GBPm GBPm % %
Revenue
Primary Markets 20 30 (32%) (32%) 83 77 7% 6%
Secondary Markets - Equities 39 39 1% 1% 128 123 4% 4%
Secondary Markets - Fixed
income, derivatives and
other 30 28 6% 7% 94 86 9% 9%
Total revenue 89 97 (8%) (7%) 305 286 6% 6%
------------------------------ ------- ------ --------- --------- ------- ------ --------- ---------
Cost of sales (4) (4) (3%) (3%) (13) (13) 1% -
------- ------ ------- ------
Gross profit 85 93 (8%) (8%) 292 273 7% 6%
------------------------------ ------- ------ --------- --------- ------- ------ --------- ---------
IFRS 15 changes
Adoption of IFRS 15 has reduced Q3 2018 Primary Markets revenues by GBP9m, compared to the previous treatment of revenues. On like-for-like basis, adding back the GBP9m, Capital Markets revenues in Q3 would have been 2% higher than Q3 2017.
If the adjustment had been made on 1 January 2018, the Q1, Q2, & Q3 adjustment to the quarterly revenue would have been a GBP3m decrease (2017: GBP1m increase), GBP5m decrease (2017: GBP3m decrease) and GBP1m decrease (2017: GBP5m decrease) respectively.
Primary Markets 2018 Nine months
ended 30 September
Q1 Q2 Q3 2018
GBPm GBPm GBPm GBPm
---------------------------------- ----- ----- ----- --------------------
Revenue (as previously reported) 29 33 30 92
IFRS 15 deferral adjustment (3) (5) (1) (9)
---------------------------------- ----- ----- ----- --------------------
Revenue - revised for IFRS 15 26 28 29 83
---------------------------------- ----- ----- ----- --------------------
The Group has chosen to adopt the modified retrospective approach and is therefore not required to restate financial statement issued prior to 1 January 2018 for the impact of IFRS 15. However for information purposes the P&L impact of IFRS 15 for the year ended 31 December 2017 would have been:
Primary Markets 2017
Q1 Q2 Q3 Q4 2017
GBPm GBPm GBPm GBPm GBPm
---------------------------------- ----- ----- ----- ---- -----
Revenue (as previously reported) 21 26 30 33 110
IFRS 15 deferral adjustment 1 (3) (5) (6) (13)
---------------------------------- ----- ----- ----- ---- -----
Revenue - revised for IFRS 15 22 23 25 27 97
---------------------------------- ----- ----- ----- ---- -----
Technology Services
Three months Organic Nine months Organic
ended and constant ended and constant
30 September currency 30 September currency
--------------- ---------------
2018 2017 Variance variance(1) 2018 2017 Variance variance(1)
Revenue GBPm GBPm % % GBPm GBPm % %
MillenniumIT & other
technology 16 23 (32%) 15% 48 64 (26%) 17%
---------------------------- ------- ------ --------- -------------- ------- ------ --------- --------------
Cost of sales (2) (9) (77%) (24%) (8) (22) (65%) 38%
------- ------ ------- ------
Gross profit 14 14 (4%) 24% 40 42 (5%) 14%
---------------------------- ------- ------ --------- -------------- ------- ------ --------- --------------
(1) Excludes MillenniumIT ESP and Exactpro (disposed Q4 2017 and Q1 2018 respectively)
Basis of Preparation
Results for the period ended 30 September 2018 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
9 months ended Closing rate
at
30 September 30 September
2018 2018
---------------
GBP : EUR 1.13 1.12
---------------
GBP : USD 1.35 1.30
--------------- -------------
Average rate
9 months ended Closing rate
at
30 September 30 September
2017 2017
GBP : EUR 1.15 1.13
GBP : USD 1.28 1.34
--------------- -------------
Appendix - Key performance indicators
Information Services
As at
30 September Variance
------------------
2018 2017 %
ETF assets under management
benchmarked ($bn)
FTSE 396 345 15%
Russell Indexes 267 227 18%
----------------------------- ---------
Total 663 572 16%
----------------------------- -------- -------- ---------
Terminals
UK 68,000 69,000 (1%)
Borsa Italiana Professional
Terminals 107,000 116,000 (8%)
Post Trade Services -
LCH
Three months ended Nine months ended
30 September Variance 30 September Variance
--------------------- --------------------
2018 2017 % 2018 2017 %
OTC derivatives
SwapClear
IRS notional cleared
($tn) 236 197 20% 812 666 22%
SwapClear members 110 105 5% 110 105 5%
Client trades ('000) 332 313 6% 1,117 923 21%
CDSClear
Notional cleared (EURbn) 139 147 (5%) 464 445 4%
CDSClear members 15 13 15% 15 13 15%
ForexClear
Notional value cleared
($bn) 4,282 3,097 38% 12,946 7,943 63%
ForexClear members 32 28 14% 32 28 14%
------------------------------- ---------- --------- --------- ---------- -------- ---------
Non-OTC
Fixed income - Nominal
value (EURtn) 25.1 22.3 13% 74.1 65.2 14%
Listed derivatives (contracts
m) 36.4 33.7 8% 113.3 110.1 3%
Cash equities trades
(m) 179 194 (8%) 593 613 (3%)
------------------------------- ---------- --------- --------- ---------- -------- ---------
Average cash collateral
(EURbn) 86.2 82.1 5% 86.0 85.0 1%
Post Trade Services - CC&G and
Monte Titoli
Three months ended Nine months ended
30 September Variance 30 September Variance
--------------------- --------------------
2018 2017 % 2018 2017 %
CC&G Clearing
Contracts (m) 23.8 22.6 5% 86.3 82.7 4%
Initial margin held (average
EURbn) 12.0 9.4 28% 10.5 11.6 (9%)
Monte Titoli
Settlement instructions
(trades m) 10.3 10.1 2% 34.3 33.0 4%
Custody assets under
management (average EURtn) 3.30 3.30 0% 3.30 3.26 1%
Capital Markets - Primary
Markets
Three months ended Nine months ended
30 September Variance 30 September Variance
--------------------- --------------------
2018 2017 % 2018 2017 %
New Issues
UK Main Market, PSM &
SFM 17 18 (6%) 55 60 (8%)
UK AIM 13 25 (48%) 49 53 (8%)
Borsa Italiana 12 11 9% 25 22 14%
----------
Total 42 54 (22%) 129 135 (4%)
--------------------------- ---------- --------- --------- --------- --------- ---------
Money Raised (GBPbn)
UK New 2.0 2.6 (23%) 3.9 5.0 (22%)
UK Further 3.1 3.6 (14%) 13.8 12.0 15%
Borsa Italiana new and
further 0.6 0.9 (33%) 3.1 13.1 (76%)
Total (GBPbn) 5.7 7.1 (20%) 20.8 30.1 (31%)
--------------------------- ---------- --------- --------- --------- --------- ---------
Capital Markets - Secondary
Markets
Three months ended Nine months ended
30 September Variance 30 September Variance
--------------------- --------------------
Equity 2018 2017 % 2018 2017 %
Totals for period
UK value traded (GBPbn) 329 327 1% 1,098 1,010 9%
Borsa Italiana (no of
trades m) 15.4 15.1 2% 54.8 52.6 4%
Turquoise value traded
(EURbn) 180 225 (20%) 644 781 (18%)
SETS Yield (basis points) 0.65 0.63 3% 0.63 0.63 0%
Average daily
UK value traded (GBPbn) 5.1 5.1 0% 5.8 5.3 9%
Borsa Italiana (no of
trades '000) 240 237 1% 288 275 5%
Turquoise value traded
(EURbn) 2.8 3.5 (20%) 3.4 4.1 (17%)
Derivatives (contracts
m)
LSE Derivatives 1.1 1.5 (27%) 5.2 4.7 11%
IDEM 7.5 6.6 14% 28.2 27.1 4%
Total 8.6 8.2 5% 33.4 31.8 5% --------------------------- ---------- --------- --------- --------- --------- ----------- Fixed Income MTS cash and BondVision (EURbn) 670 733 (9%) 2,558 2,635 (3%) MTS money markets (EURbn term adjusted) 21,134 17,385 22% 65,098 58,740 11%
Total Income - Quarterly
2017 2018
GBP millions Q1 Q2 Q3 Q4 2017 Q1 Q2 Q3
------------ ----------------- -------------- ----------------- ----------------- ----------------- -----------------
Primary
Markets 21 26 30 33 110 29 33 20
Secondary
Markets -
Equities 42 42 39 40 163 45 44 39
Secondary
Markets -
Fixed
income,
derivatives
& other 31 28 28 31 118 33 31 30
------------- ------------ ----------------- -------------- ----------------- ---------------- ----------------- ----------------- -----------------
Capital
Markets 94 96 97 104 391 107 108 89
Clearing 11 9 9 10 39 10 12 10
Settlement,
Custody &
other 17 18 17 18 70 18 12 15
------------- ------------ ----------------- -------------- ----------------- ---------------- ----------------- ----------------- -----------------
Post Trade
Services -
CC&G and
Monte
Titoli 28 27 26 28 109 28 24 25
OTC -
SwapClear,
ForexClear
& CDSClear 57 55 59 60 231 66 64 65
Non OTC -
Fixed
income,
Cash
equities &
Listed
derivatives 33 33 33 34 133 33 34 34
Other 16 13 22 17 68 19 21 21
------------- ------------ ----------------- -------------- ----------------- ---------------- ----------------- ----------------- -----------------
Post Trade
Services -
LCH 106 101 114 111 432 118 119 120
FTSE Russell
Indexes 127 134 135 150 546 150 159 162
Real time
data 23 24 23 24 94 24 23 23
Other
information 24 23 24 25 96 27 29 27
------------- ------------ ----------------- -------------- -----------------
Information
Services 174 181 182 199 736 201 211 212
Technology
Services 20 21 23 27 91 13 19 16
Other 1 4 1 3 9 3 2 2
Total
Revenue 423 430 443 472 1,768 470 483 464
Net treasury
income
through
CCP:
CC&G 10 10 11 11 42 10 11 11
LCH 24 31 31 34 120 38 45 46
Other income 4 14 1 6 25 2 1 1
Total income 461 485 486 523 1,955 520 540 522
------------- ------------ ----------------- -------------- ----------------- ---------------- ----------------- ----------------- -----------------
Cost of
sales (51) (51) (56) (57) (215) (56) (50) (57)
Gross profit 410 434 430 466 1,740 464 490 465
------------- ------------ ----------------- -------------- ----------------- ---------------- ----------------- ----------------- -----------------
Note: Minor rounding differences may mean quarterly and other segmental figures may differ slightly
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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October 19, 2018 02:01 ET (06:01 GMT)
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