LSE.L Regulatory News (LSE)

21 April 2020

LONDON STOCK EXCHANGE GROUP plc

TRADING STATEMENT

INCLUDING REVENUES AND KPIs FOR THE THREE MONTHS ENDED31 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 March

· 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."

Further information is available from:

The Group will host a conference call for analysts and investors today, Tuesday 21 April at 08:30am (UK time). On the call will be David Schwimmer (CEO), David Warren (CFO) and Paul Froud (Group Head of Investor Relations). 

To access the telephone conference call please pre-register using the following link and instructions below: http://emea.directeventreg.com/registration/5831128

· Please register in advance of the conference using the link above. Upon registering with your full name, company name and email address, you will be provided with participant dial-in numbers, Direct Event passcode and unique registrant ID

· In the 10 minutes prior to the call start time, you will need to use the conference access information provided in the email received at the point of registering

Note: Due to regional restrictions some participants may receive operator assistance when joining this conference call and will not be automatically connected.

For further information, please call the Group's Investor Relations team on+44 (0) 20 7797 3322.

Q1 Revenue Summary

Revenues for three months ended 31 March 2020, referring to continuing operations, with comparatives against performance for the same period last year, are provided below. Growth rates for Q1 performance are also expressed on an organic and constant currency basis. All figures are unaudited.

1 Organic growth is calculated in respect of businesses owned for at least the full 3 months in either period and excludes Beyond Ratings. The Group's principal foreign exchange exposure arises from translating and revaluing its foreign currency earnings, assets and liabilities into LSEG's reporting currency of Sterling

The Euro weakened by 1% against Sterling compared with the same period last year while the US $ strengthened by 2%. To illustrate our exposure to movements in exchange rates, a €0.05 change in the average euro:sterling rate would have resulted in a change to continuing operations total income of c£8 million for Q1, while a US$0.05 move would have resulted in a c£7 million change.

More detailed revenues by segment are provided in tables below:

Information Services

1 Removal of Beyond Ratings from Other information services (acquired June 2019)

Note: UnaVista previously reported in Other information services is now reported in Post Trade, historical comparators have been adjusted to reflect this

Post Trade

Capital Markets

Technology Services

Basis of Preparation

Results for the period ended 31 March 2019 have been translated into sterling using the average exchange rates for the period. Constant currency growth rates have been calculated by translating prior period results at the average exchange rate for the current period.

Appendix - Key performance indicators

Note: FTSE ETF assets under management benchmarked KPI has been rebased to remove previously reported active ETFs. The previous year comparator has also been adjusted, with a change of $15 billion

Note: CDSClear notional cleared and LCH Non-OTC volumes have been rebased to count both sides of each cleared trade. This aligns with how activity is reported on LCH's website. The previous year comparator has also been adjusted

Note: The Q1 2019 number of derivative contracts includes 0.8 million from LSE Derivatives. This service no longer accepted new trades from November 2019

Total Income - Quarterly

Note: UnaVista previously reported in Other information services is now reported in Post Trade, historical comparators have been adjusted to reflect this