· Strong Q1 performance – double-digit income growth for Information Services, LCH and Capital Markets
· Q1 total income up 13% year-on-year to £520 million (up 13% on an organic and constant currency basis)
· David Schwimmer to join LSEG as CEO on 1 August 2018
Q1 summary:
· Information Services: revenues up 16% (up 11% on an organic and constant currency basis) – with continued double-digit growth at FTSE Russell
· Post Trade: LCH income up 18% (up 20% at constant currency), with 15% revenue growth in OTC from record volumes at SwapClear and ForexClear
· Capital Markets: revenues up 14% (up 13% at constant currency), with good primary markets activity and secondary markets revenue up on higher equity volumes
· Technology Services: revenues down 5% on an organic and constant currency basis (down 37% reflecting disposal of the MillenniumIT ESP and Exactpro businesses)
David Warren, Interim Chief Executive and Group CFO, said:
“The Group has delivered a strong first quarter performance. All of our key businesses continue to perform well, with strong growth in FTSE Russell, LCH and Capital Markets. During the period, we further increased our stake in LCH and acquired full ownership of the FTSE TMX Global Debt Capital Markets business. We continue to invest in new product initiatives while maintaining a focus on improving efficiencies as we work to deliver on our financial targets. The Group is strategically well placed to further develop its many growth opportunities, working in partnership with our customers.”
Organic growth is calculated in respect of businesses owned for at least 3 months in either period and so excludes The Yield Book and Citi Fixed Income Indices, ISPS, 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.
New products and investment in opportunities continued across the business:
– LSEG increased its stake in LCH Group to 68%, acquiring an additional 2% following a sale by a minority shareholder
– FTSE Russell acquired minority interests to assume 100% ownership of FTSE TMX Global Debt Capital Markets Limited
– MiFID II opportunities progressing well – Turquoise Plato Block Discovery Large in Scale volume up 40% in Q1 2018 vs Q4 2017, and UnaVista and TRADEcho reporting solutions seeing good flows
– LCH – SwapClear to launch Non-deliverable Interest Rate Swaps and ForexClear FX Options in Q2 (subject to approvals)
– CurveGlobal completed its second funding round, launched a customer partnership programme and set to launch SONIA future contracts on 30 April 2018
– LSEG Technology, working with HKEX, completed the go-live of the Orion Central Gateway using MillenniumIT to provide low latency, scalable and resilient connectivity
– ELITE added 50 new companies in Italy; community of now over 800 companies from 34 countries. ELITE and Monsha'at partner to launch ELITE in Saudi Arabia
Financial Position
The Group's financial position remains strong and flexible, broadly unchanged from that reported at 31 December 2017. As at 31 March 2018, the Group had committed facility headroom of over £750 million available for general corporate purposes. During the period, the Group issued euro commercial paper at favourable rates, further diversifying its sources of funding.
On 27 March 2018, S&P moved its A- long term rating of LSEG from stable to a positive outlook. Moody's rates LSEG A3 with a stable outlook.
The euro strengthened by 3% and the US dollar weakened by 12% against sterling compared with the same period last year. To illustrate our exposure to movements in exchange rates, a €0.05 change up or down in the average euro:sterling rate would have resulted in a corresponding change to continuing operations total income of c£7 million for Q1, while a US$0.05 move would have resulted in a c£5 million change.