LSE Releases Positive Q1 Figures
Thursday, July 21, 2011

The London Stock Exchange Group (LSEG) has posted its latest management statement, which shows that income and primary market revenues were up in the three months to June, 2011.

The statement, released on July 20, shows what the Group's chief executive has called "strong first quarter results". Total revenue reached GBP190.2m (USD306.7m), an increase of 14% on the same period last year, when the figure stood at GBP167.3m.

Primary markets revenue rose by 22%. According to LSEG, this reflects a 26% increase in the number of new issues to 54, and a 65% rise in the total money raised, with notable new issues including Glencore, DP World, Bumi and, in Italy, Salvatore Ferragamo.

The statement also shows that, in secondary markets, fixed income trading revenue increased 32%. Growth in the MTS cash and money (repo) markets was, however, offset by a drop of 9% and 11% respectively in revenue from both UK and Italian cash equities trading, reflecting weaker trading levels in markets as a whole. In addition, derivatives revenues fell by 12%, with a 9% decline in volumes on IDEM (the Italian Derivatives Exchange Market) compared to a record Q1 last year.

On the other hand, Post Trade Services total income increased 58%, resulting from a more than four-fold growth in net treasury income from clearing operations as demand for short-term cash deposits remained strong. The statement shows that Information Services revenues rose 6% and that the total number of professional users of real time information remained unchanged in the UK, while declining by 8,000 year-on-year in Italy, although income from real time data increased with changes to non-display charging. Technology Services revenues fell 16% while revenues from other information products increased 11%, reflecting growth across a range of products, including SEDOL, UnaVista and FTSE.

The Group was also able to reduce its net debt in the quarter with cash received from the sale of Servizio Titoli (EUR32.4m) and strong net cash generation reflecting seasonal inflows from charges for annual services invoiced at the start of the financial year. The Group did, however, incur costs associated with its failed merger deal with the TMX Group, which collapsed on June 29, but these are expected to be immaterial, given TMX's payment of expense fees to the tune of CAD10m (USD10.6m).

Overall, the statement stresses that LSEG's new financial year has started well, with good year on year growth. It clarifies that the summer period is expected to be quieter than Q1, particularly in primary markets, but the Group believes that the new issues pipeline further out in the year remains encouraging, subject to market conditions. The Group states that net treasury income has remained very strong and is expected to be above last year, driven in part by the current favourable credit spread in the money market.

Commenting on the results, chief executive Xavier Rolet said: “With an increase in total income of 14% and growth in many business areas, these strong first quarter results confirm that we continue to make good progress. Notable good performances included primary markets, fixed income trading, Information Services and net treasury income within the Post Trade operations which again produced a very strong performance."

“We remain focused on developing the business, including initiatives in derivatives, fixed income and technology sales. Other projects are in development and we will continue to assess a range of options to deliver further growth and shareholder value”, he concluded.