LSEG Preliminary results
13 May 2011
ANNOUNCEMENT OF PRELIMINARY RESULTS OF LONDON STOCK EXCHANGE GROUP PLC FOR THE YEAR ENDED 31 MARCH 2011
- Good growth in total income - up 7 per cent to £674.9 million (2010: £628.3 million);
- Adjusted operating profit1 increased 22 per cent to £341.1 million (2010: £280.3 million); statutory operating profit increased 55 per cent to £283.0 million (2010: £182.3 million) and profit before tax rose 65 per cent to £238.2 million (2010: £144.3 million)
- Adjusted basic earnings per share1 up 23 per cent to 73.7 pence (2010: 60.1 pence); basic earnings per share up 67 per cent to 56.4 pence (2010: 33.8 pence)
- Proposed final dividend up 12.5 per cent to 18.0 pence per share; total dividend for the year increased 9.8 per cent to 26.8 pence per share
- Good growth in number of new issues, up 68 per cent to 185, with a more than trebling of money raised to £13.1 billion (2010: £3.9 billion)
- Millennium Exchange, the Group's new high performance trading system, successfully rolled out to Turquoise and the UK equities markets - delivering world leading consistent performance, 10 times faster than previous system
- Turquoise Derivatives pan-European equity derivatives trading service launched in the spring, following integration with the Group's London-based EDX derivatives exchange; FTSE 100 Index Futures to begin trading in June 2011
- Announced recommended merger with Canada's TMX Group, with work ongoing to secure necessary approvals
1 before amortisation of purchased intangibles and non-recurring items
Chris Gibson-Smith, Chairman of London Stock Exchange Group, said:
"We have achieved much in the past year and the actions we have taken to ensure the Group remains efficient, competitive and focused on developing growth opportunities mean we are in a strong position.
"We aim to develop the Group further, with increasing international scale, together with extended reach and scope, to provide competitive services to global customers. This approach underpins the rationale for our proposed merger with TMX Group, announced in February."
Commenting on the year, Xavier Rolet, Chief Executive, said:
"We have made good progress. The 22 per cent increase in adjusted operating profit underlines our improved financial performance and we have taken significant steps in delivering on our growth strategy.
"We continue to operate in a highly dynamic and evolving global industry. Enhancing our competitiveness and improving customer service remain key priorities. We are also fully focused on pursuing a range of growth opportunities which will remain pivotal to further progress in the year ahead."
Other Financial and Operational Headlines:
- Operating expenses (before amortisation of purchased intangibles and non-recurring items) down 4 per cent to £336.9 million; reduced by 8 per cent on an organic2, constant currency basis
- Adjusted earnings per share also benefits from a lower group effective tax rate than forecast at the half year, reflecting theimpact of the respective tax rates in the UK and Sri Lanka on the licence to use the Millennium Exchange platform in the UK. With announced reduction in UK corporate tax rates, the underlying Group effective rate is expected to fall marginally next year
- Net cash flow from operations increased strongly to £381.8 million (2010: £301.2 million) with free cash flow per share of 80.4 pence (2010: 65.6 pence); gearing further reduced, to 1.0x net debt:EBITDA (2010: 1.5x)
- UK average daily equity value traded increased two per cent to £4.7 billion, and share of total order book trading remained stable through the year, averaging 63.5 per cent; Italian average daily equity volumes grew two per cent to 257,000 trades and share of value traded steady at 84.0 per cent
- MTS fixed income trading performed well, with a 13 per cent rise in cash trading and a 54 per cent increase in money markets (repo); derivatives trading volumes at IDEM rose 13 per cent and the SOLA trading system was successfully rolled out in Italy in December 2010
- Total income for Post Trade Services increased 30 per cent; clearing volumes increased eight per cent; reflecting the strong growth in Italian fixed income, derivatives and equities trading. The average level of initial margin collateral held in the CC&G clearing business increased 53 per cent, combining with good risk and treasury management to deliver a three-fold increase in net treasury income
- Demand for real time data remained good, with 93,000 professional users of LSE information at year end, unchanged from the previous year; new services introduced for customers, including direct billing, separate post trade only data feeds and new tariffs for non-display data use
- Strong performance from non real time data businesses, with revenues up 27 per cent (up 13 per cent organically), reflecting growing contributions from SEDOL, UnaVista, FTSE, Proquote and a first full year contribution from Turquoise
- Technology Services revenues up 23 per cent to £48.6 million, including £18.2 million contribution from MillenniumIT
- MillenniumIT won contracts to supply financial technology systems to a number of third parties, including Johannesburg Stock Exchange and the Mongolian Stock Exchange (as part of a broader strategic partnership with the Group)
2 before prior year acquisitions, one-off costs for replacement of TradElect and adjustment for estimated inflation
Current Trading and Outlook
In primary markets, the pipeline of companies seeking to raise capital on our markets looks encouraging. In April there were 20 new issues, including 13 on the UK Main Market, and the indications for May are also good.
Trading on MTS remained good overall in April, with cash markets average daily value traded up 7 per cent although repo was down 3 per cent on the same month last year.
Overall trading on the Group's derivatives platforms has also increased with the total number of contracts up 19 per cent year on year. UK equity order book trading declined 10 per cent in April, impacted by the holiday pattern during the month; in Italy the average daily volume traded decreased marginally, by 2 per cent, on April last year. Average value traded on Turquoise's lit book increased 28 per cent year on year, and rose 96 per cent on the dark mid-point book.
In Post Trade operations, net treasury income remained strong in April at £7 million, although the current treasury income run rate may moderate over the year.
The Group is a business in transformation, operating in a highly dynamic and evolving global industry. The development of growth opportunities, especially in the areas of Post Trade, Derivatives and Financial Technology, continued delivery on cost reductions, enhancing our competitiveness and improving customer service will remain pivotal to further progress in the year ahead.
Further information is available from:
London Stock Exchange Group plc
Victoria Brough Media +44 (0) 20 7797 1222
Paul Froud Investor Relations +44 (0) 20 7797 3322
Citigate Dewe Rogerson
Patrick Donovan/Grant Ringshaw +44 (0) 20 7638 9571
The Group will host a presentation of its Preliminary Results for analysts and shareholders today at 09:30am at 10 Paternoster Square, London EC4M 7LS. The presentation will be accessible via live web cast, which can be viewed at www.londonstockexchange.com. For further information, please call the Group's Investor Relations team on +44 (0) 20 7797 3322.
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