DJ London Stock Exchange Group PLC Half-year Report
LONDON STOCK EXCHANGE GROUP plc
ANNOUNCEMENT OF INTERIM RESULTS
FOR THE 6 MONTHS ENDED 30 JUNE 2016
Unless otherwise stated, all figures below refer to continuing operations(1) for the six months ended 30 June 2016. Comparative figures are for continuing operations for the six months ended 30 June 2015 (H1 2015).
— Continued good financial performance with growth across all core business areas – in particular, in Information Services, including strong results at FTSE Russell, in Capital Markets and at LCH
— Revenue up 9% to GBP721.9 million (H1 2015: GBP663.0 million); total income up 11% to GBP785.8 million (H1 2015: GBP705.9 million)
— Adjusted operating profit(2) up 9% at GBP333.3 million (H1 2015: GBP305.7 million) as operating expenses remained well controlled while continuing to invest in growth opportunities; operating profit of GBP199.0 million (H1 2015: GBP210.5 million)
— Profit after tax of GBP114.5 million (H1 2015: GBP130.8 million) which included non-recurring merger related expenses; and, after accounting for the previously announced tax effects of the Russell IM sale, becomes a loss after tax of GBP15.9 million on a reported basis including discontinued operations (H1 2015: GBP165.1 million)
— Adjusted EPS(2) up 16% at 57.7 pence (H1 2015: 49.9 pence); basic EPS down 18% to 27.4 pence (H1 2015: 33.4 pence)
— Interim dividend increased 11.1% to 12.0 pence per share (H1 2015: 10.8 pence per share) in line with our stated dividend policy — Strong balance sheet position with leverage reduced to 1.3 x net debt:EBITDA
Strategic highlights
— Merger with Deutsche Börse, announced in March 2016, making good progress – shareholder approvals achieved in July and work underway on regulatory consents
— Sale of Russell Investment Management successfully completed on schedule, for gross proceeds of US$1,150 million – resulting in an implied multiple of 18x EBITDA (pre synergies) for the retained, high growth Russell Indices business, now integrated with FTSE
— New products and services announced during the period, including LCH Spider, a new rates portfolio margining service, ELITE Club Deal, an online private placement platform for SMEs, and CurveGlobal, a derivative trading venture which is expected to launch in Q3 2016
— The Group is well positioned, as a diversified open access market infrastructure business, to navigate political and macroeconomic changes in the period ahead
Commenting on performance for the period, Xavier Rolet, Group Chief Executive, said:
“The Group has delivered another good financial performance, with growth across all of our core business areas. In particular, FTSE Russell has performed well and LCH has made further good progress in its OTC clearing services. Our Capital Markets businesses have also performed well in a period marked by volatile market conditions.
“The Group is well diversified both by business activity and by geography, with operations in the UK, continental Europe, United States and Asia. By successfully operating a full range of open access market infrastructure services, we are well positioned to navigate political and macroeconomic changes.
“During the period, we announced our all share merger with Deutsche Börse, to create a global markets infrastructure group, anchored in Europe, with substantial revenue and cost synergies benefitting our customers and shareholders. We are delighted to have achieved shareholder approvals and are now focused on securing regulatory consents.”
(1) continuing operations exclude businesses sold, primarily being Russell Investment Management and Proquote
(2) before amortisation of purchased intangible assets, goodwill impairment and non-recurring items
Organic growth is calculated in respect of businesses owned for at least 6 months in either period and so excludes Exactpro, XTF, Proquote and Russell Investment Management. The Group’s principal foreign exchange exposure arises from translating our European based Euro and US based USD reporting businesses into Sterling.
ANNOUNCEMENT OF INTERIM RESULTS
FOR THE 6 MONTHS ENDED 30 JUNE 2016
Unless otherwise stated, all figures below refer to continuing operations(1) for the six months ended 30 June 2016. Comparative figures are for continuing operations for the six months ended 30 June 2015 (H1 2015).
— Continued good financial performance with growth across all core business areas – in particular, in Information Services, including strong results at FTSE Russell, in Capital Markets and at LCH
— Revenue up 9% to GBP721.9 million (H1 2015: GBP663.0 million); total income up 11% to GBP785.8 million (H1 2015: GBP705.9 million)
— Adjusted operating profit(2) up 9% at GBP333.3 million (H1 2015: GBP305.7 million) as operating expenses remained well controlled while continuing to invest in growth opportunities; operating profit of GBP199.0 million (H1 2015: GBP210.5 million)
— Profit after tax of GBP114.5 million (H1 2015: GBP130.8 million) which included non-recurring merger related expenses; and, after accounting for the previously announced tax effects of the Russell IM sale, becomes a loss after tax of GBP15.9 million on a reported basis including discontinued operations (H1 2015: GBP165.1 million)
— Adjusted EPS(2) up 16% at 57.7 pence (H1 2015: 49.9 pence); basic EPS down 18% to 27.4 pence (H1 2015: 33.4 pence)
— Interim dividend increased 11.1% to 12.0 pence per share (H1 2015: 10.8 pence per share) in line with our stated dividend policy — Strong balance sheet position with leverage reduced to 1.3 x net debt:EBITDA
Strategic highlights
— Merger with Deutsche Börse, announced in March 2016, making good progress – shareholder approvals achieved in July and work underway on regulatory consents
— Sale of Russell Investment Management successfully completed on schedule, for gross proceeds of US$1,150 million – resulting in an implied multiple of 18x EBITDA (pre synergies) for the retained, high growth Russell Indices business, now integrated with FTSE
— New products and services announced during the period, including LCH Spider, a new rates portfolio margining service, ELITE Club Deal, an online private placement platform for SMEs, and CurveGlobal, a derivative trading venture which is expected to launch in Q3 2016
— The Group is well positioned, as a diversified open access market infrastructure business, to navigate political and macroeconomic changes in the period ahead
Commenting on performance for the period, Xavier Rolet, Group Chief Executive, said:
“The Group has delivered another good financial performance, with growth across all of our core business areas. In particular, FTSE Russell has performed well and LCH has made further good progress in its OTC clearing services. Our Capital Markets businesses have also performed well in a period marked by volatile market conditions.
“The Group is well diversified both by business activity and by geography, with operations in the UK, continental Europe, United States and Asia. By successfully operating a full range of open access market infrastructure services, we are well positioned to navigate political and macroeconomic changes.
“During the period, we announced our all share merger with Deutsche Börse, to create a global markets infrastructure group, anchored in Europe, with substantial revenue and cost synergies benefitting our customers and shareholders. We are delighted to have achieved shareholder approvals and are now focused on securing regulatory consents.”
(1) continuing operations exclude businesses sold, primarily being Russell Investment Management and Proquote
(2) before amortisation of purchased intangible assets, goodwill impairment and non-recurring items
Organic growth is calculated in respect of businesses owned for at least 6 months in either period and so excludes Exactpro, XTF, Proquote and Russell Investment Management. The Group’s principal foreign exchange exposure arises from translating our European based Euro and US based USD reporting businesses into Sterling.