London Stock Exchange Group Plc - Half-year Report

LONDON STOCK EXCHANGE GROUP PLC

INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2019

 

Unless otherwise stated, all figures below refer to continuing operations for the six months ended 30 June 2019 (H1 or H1 2019).  Comparative figures are for continuing operations for the six months ended 30 June 2018 (H1 2018). 

·     Strong financial performance in H1 despite challenging market conditions

·     Continued good growth in Information Services and Post Trade

·     Focus on Group-wide collaboration to drive product innovation and development of growth opportunities

·     Continued successful execution of strategy aligned with core principles of Open Access and Customer Partnership

 

H1 Summary

·     Total Revenue up 7% to £1,018 million (H1 2018: £953 million); total income up 8% to £1,140 million (H1 2018: £1,060 million)

·     FTSE Russell revenue up 9% to £315 million (H1 2018: £290 million) with growth in subscription and asset-based revenues

·     Post Trade revenue at LCH up 12% to £266 million (H1 2018: £237 million), driven by strong growth in OTC volumes notably in the SwapClear service

·     Operating expenses, excluding depreciation and amortisation, were flat and 2% down on a constant currency basis, with good cost control while continuing to invest

·     Adjusted operating profit1 up 11% to £533 million (H1 2018: £480 million); operating profit was up 2% at £399 million (H1 2018: £393 million); profit before tax up 1% to £363 million (H1 2018: £360 million); profit after tax of £265 million (H1 2018: £283 million)

·     Adjusted EPS1 up 13% to 100.6 pence (H1 2018: 88.7 pence); basic EPS down 1% at 70.7 pence (H1 2018: 71.1 pence)

·     Interim dividend increased 17% to 20.1 pence per share (H1 2018: 17.2 pence per share), in line with stated dividend policy

·     Strong balance sheet position with leverage at 1.7 times adjusted net debt: pro forma EBITDA notwithstanding continued investment spend during the period

 

Commenting on performance for the period, David Schwimmer, CEO said:

"The Group has delivered another strong performance with an 8% increase in income during the first half of the year.  In Post Trade, LCH's OTC clearing services have achieved record volumes during the period and have seen strong growth in member and client clearing.  In Information Services, we have acquired Beyond Ratings, a highly regarded provider of ESG data and analytics, which will accelerate our ability to develop differentiated multi-asset solutions in sustainable finance investing.  And, in Capital Markets, despite a slower start to the year, we have seen activity improve in Q2 with companies able to benefit from access to the deep liquidity pools available across our listings and trading businesses. 

 

"We have continued to invest across our businesses, working in partnership with customers to deliver innovative products and services, while continuing to control costs.  The Group remains well positioned in an evolving regulatory and macroeconomic environment and we expect to make further progress in H2.

 

"Today, we have announced a proposed transaction to acquire Refinitiv, a leading global provider of data, analytics and financial markets solutions.  This transformational acquisition creates a multi-asset class capital markets business and brings world class data content, management and distribution capabilities to LSEG, accelerating our strategy and expanding our global footprint.  This positions us in key areas of future growth as a global financial markets infrastructure leader."  

 

Organic growth combined with new product development and investment in opportunities continued throughout the period.  Highlights include:

 

Information Services

·     Acquisition of Beyond Ratings, a highly regarded provider of Environmental, Social and Governance (ESG) data for fixed income investors

·     FTSE Russell launched innovative climate risk government bond index allowing investors to incorporate climate change risk considerations into their fixed income portfolios for the first time

·     FTSE Russell successfully commenced inclusion of China A-Share stocks within its global equity benchmarks increasing connectivity between Chinese companies and international investors

·     ETF AUM benchmarked to FTSE Russell indices increased 9% in the period to $705bn

 

Post Trade

·     Acquisition of a 4.9% stake in Euroclear with a seat on the Board, which has helped strengthen the existing commercial relationships between the businesses

·     SwapClear volumes hit a record €660trn in the period with strong growth in both member and client clearing

·     Continued growth at ForexClear, RepoClear and CDSClear with record volumes cleared across all services

 

Capital Markets

·     Newly launched Shanghai-London Stock Connect welcomed its first issuer Huatai Securities raising over $1.5bn on the Shanghai segment of London Stock Exchange

·     CurveGlobal trading volumes in H1 increased 211% whilst total open interest increased 156% over the last 12 months with strong market share in SONIA products

·     Following acquisition of minority investment in Nivaura, we are working in partnership to make the debt issuance process more efficient and cost-effective