LONDON STOCK EXCHANGE GROUP plc
TRADING STATEMENT
INCLUDING REVENUES AND KPIs FOR THE THREE MONTHS ENDED
31 MARCH 2020 (Q1)
- Good Q1 performance against unprecedented market backdrop
- Q1 total income up 13% year-on-year to £615 million, driven by increased equity trading in Capital Markets and higher clearing activity across listed and OTC products leading to higher NTI in Post Trade
- Resources focused on ensuring strong operational resilience across the Group's systemically important market infrastructure platforms and services; Group employees working almost entirely on a remote basis across all locations
- Integration planning for Refinitiv transaction progressing well: CFIUS approval received and anti-trust filings prepared in multiple jurisdictions; remain committed to achieving completion in H2 2020
Q1 summary:
- Information Services: revenues up 7% to £215 million – with 8% growth at FTSE Russell. Good growth in both subscription and asset-based revenues, the latter reflecting growth in ETF AUM in prior quarter; ETF AUM fell sharply at the end of Q1, reflecting market turbulence in Marc
- Post Trade: income up 17% to £271 million, with 11% growth in LCH revenue, with strong listed and OTC clearing activity, including record volumes in SwapClear. Good clearing volumes at CC&G drove a 15% revenue increase. Increased clearing activity drove higher cash margin, with consequent stronger NTI, up 39% in LCH and 10% in CC&G
- Capital Markets: revenues up 15% to £112 million, principally reflecting higher equity secondary markets activity in London and Milan
- Technology Services: revenues unchanged at £14 million
Update on the Refinitiv transaction
The Group continues to make good progress on planning for the integration of Refinitiv. A number of workstreams on business structure and opportunities, including synergy realisation, are well developed, and the Integration Management Office has been expanded to bring additional resource to the Group.
The Group also continues to make progress with merger control, foreign investment and financial regulatory filings. US foreign investment clearance has been received from CFIUS. Merger control clearance has been received from Botswana, Japan, Kenya and Ukraine, and merger control reviews have commenced in several other jurisdictions. As disclosed last month, the European Commission has requested a delay to submission of filings by merger parties generally; the Group continues to work constructively with the European Commission case team and will file as soon as it is possible to do so. The Group is committed to completion of the transaction in H2 2020.
Comment on Q1 and outlook:
LSEG recognises the significant impact of the coronavirus Covid-19 global pandemic on its employees, customers and other stakeholders. Employee health and wellbeing has been a key focus. The vast majority of our employees have been working remotely, and we continue to adapt our technology and working practices to this changing environment. LSEG is in regular contact with public health authorities, governments and stakeholders around the world and will continue to adjust our response as needed.
As a systemically important financial markets infrastructure business, LSEG places a high priority on its responsibility to ensure the orderly functioning of markets and continuity of services for its customers and other stakeholders. During this unprecedented period, the Group has prioritised operational resilience across the Group's Capital Markets, Information Services and Post Trade businesses.
In light of current circumstances, LSEG regularly assesses the strength of its balance sheet and stress-tests its liquidity positions under various market scenarios. The Group strongly believes it has sufficient cash resources and access to liquidity to maintain continuity of business and has no need to materially adjust any its operations or incur significant additional costs. As at 31 March 2020, the Group had committed facility headroom of over £600 million available for general corporate purposes. Reflecting the strong 2019 results and ongoing financial strength, the Group intends to pay its final dividend in relation to the 2019 financial year, subject to shareholder approval at today's AGM.
While the Group has performed well in Q1, it is too early to comment specifically on the impact of the coronavirus pandemic on the outlook for LSEG and its customers for the remainder of the year. The Group believes the longer-term drivers of growth in each of its business lines remain intact.
David Schwimmer, CEO said:
“The Group has delivered a good financial performance and strong operational resilience during this unprecedented period. We have had a focus on ensuring orderly functioning of markets and continuity of service to customers across our businesses.”
“A key priority has been the health and wellbeing of our employees around the world. The vast majority of our colleagues are working remotely as a key element of our business continuity measures. I've been impressed by their adaptability, resiliency and commitment to continue to support our customers. Although market conditions are likely to remain challenging in the coming period, we believe the Group is financially strong and has the necessary resources to continue to operate effectively in this environment.”