IPO activity powers LSEG to 4.6% H1 rise in total income
06 August 2021 UK
Image: stock.adobe.com/Victor_Moussa
London Stock Exchange Group has announced positive performance across all divisions in its H1 2021 interim results, translating into 4.6 per cent YoY growth in total income.
In the post-trade area, LSEG revenues rose 8.4 per cent YoY for H1, but total income was down 2.1 per cent, particularly as a result of weak net treasury income.
The group realised significant improvement in revenue from non-cash collateral, which was up 17.5 per cent boosted by strong activity through RepoClear, its cash bond and repo clearing service.
RepoClear volumes also contributed to stronger post-trade revenues from securities and reporting, which climbed 15.3 per cent YoY, powered by rising activity through this clearing facility from European debt issuance.
However, net treasury income was down 25.3 per cent, with cash collateral balances and rates of return reverting to 鈥渕ore normalised levels鈥� after the exceptional market conditions witnessed in H1 2020 at the height of the pandemic.
Post-trade revenues from OTC derivatives contracts improved by 2.4 per cent as the exchange continued to attract new client business to this sector.
In the capital markets segment, LSEG revenues rose 9.6 per cent YoY, with revenue from fixed income, derivatives and other services rising 15.4% YoY for the period. This benefited particularly from growth through Tradeweb, fuelled by the continuing migration of trading onto electronic markets and rising revenue from new services.
Strong IPO activity has pushed LSEG鈥檚 equity revenues up by 2.5 per cent, with the exchange reporting the largest number of new equity issues over the period since 2014. But revenue from secondary market trading contracted as volumes normalised relative to the high volatility levels witnessed during H1 2020.
Trading revenues from FX transactions was down 0.8 per cent YoY, with growth from the FXall dealer-to-client service being offset by lower income from its Matching dealer-to-dealer service.
For LSEG鈥檚 Data and Analytics division, total revenues rose 4.8 per cent, with customer and third-party risk solutions being a stand out performer with a 37.5 per cent rise YoY in service revenue.
LSEG reported an overall improvement in its financial position, having reduced leverage to 2.2x net debt/EBITDA following its sale of Borsa Italiana to Euronext for US$5 billion, which completed at the end of April.
It also reported good progress with the integration of its Refinitiv financial market data business, which it purchased from Blackstone and Thompson Financial for US$27 billion in 2019.
Amid shareholder concerns that integration costs were rising for this Refinitiv business, LSEG said that it realised 拢77 million of run-rate cost synergies for this segment during H1 and launched 27 new products as part of a revenue synergy programme.
Across all divisions, LSEG reported a 46.5 per cent rise YoY in adjusted EBITDA for H1 2021. Net profit for the period increased by 18.7 per cent YoY to 拢812m.
LSEG CEO David Schwimmer said: 鈥淲e continue to invest in projects that enhance our customer offering and deliver a more scalable and efficient business, particularly in Data and Analytics. This will support our revenue growth ambitions and lead to further operating margin improvement. The reduction of leverage during the period reinforces our strong financial position.鈥�
In the post-trade area, LSEG revenues rose 8.4 per cent YoY for H1, but total income was down 2.1 per cent, particularly as a result of weak net treasury income.
The group realised significant improvement in revenue from non-cash collateral, which was up 17.5 per cent boosted by strong activity through RepoClear, its cash bond and repo clearing service.
RepoClear volumes also contributed to stronger post-trade revenues from securities and reporting, which climbed 15.3 per cent YoY, powered by rising activity through this clearing facility from European debt issuance.
However, net treasury income was down 25.3 per cent, with cash collateral balances and rates of return reverting to 鈥渕ore normalised levels鈥� after the exceptional market conditions witnessed in H1 2020 at the height of the pandemic.
Post-trade revenues from OTC derivatives contracts improved by 2.4 per cent as the exchange continued to attract new client business to this sector.
In the capital markets segment, LSEG revenues rose 9.6 per cent YoY, with revenue from fixed income, derivatives and other services rising 15.4% YoY for the period. This benefited particularly from growth through Tradeweb, fuelled by the continuing migration of trading onto electronic markets and rising revenue from new services.
Strong IPO activity has pushed LSEG鈥檚 equity revenues up by 2.5 per cent, with the exchange reporting the largest number of new equity issues over the period since 2014. But revenue from secondary market trading contracted as volumes normalised relative to the high volatility levels witnessed during H1 2020.
Trading revenues from FX transactions was down 0.8 per cent YoY, with growth from the FXall dealer-to-client service being offset by lower income from its Matching dealer-to-dealer service.
For LSEG鈥檚 Data and Analytics division, total revenues rose 4.8 per cent, with customer and third-party risk solutions being a stand out performer with a 37.5 per cent rise YoY in service revenue.
LSEG reported an overall improvement in its financial position, having reduced leverage to 2.2x net debt/EBITDA following its sale of Borsa Italiana to Euronext for US$5 billion, which completed at the end of April.
It also reported good progress with the integration of its Refinitiv financial market data business, which it purchased from Blackstone and Thompson Financial for US$27 billion in 2019.
Amid shareholder concerns that integration costs were rising for this Refinitiv business, LSEG said that it realised 拢77 million of run-rate cost synergies for this segment during H1 and launched 27 new products as part of a revenue synergy programme.
Across all divisions, LSEG reported a 46.5 per cent rise YoY in adjusted EBITDA for H1 2021. Net profit for the period increased by 18.7 per cent YoY to 拢812m.
LSEG CEO David Schwimmer said: 鈥淲e continue to invest in projects that enhance our customer offering and deliver a more scalable and efficient business, particularly in Data and Analytics. This will support our revenue growth ambitions and lead to further operating margin improvement. The reduction of leverage during the period reinforces our strong financial position.鈥�
Next industry article →
Financial agreements digitisation could save industry up to $1.2bn, survey finds
Financial agreements digitisation could save industry up to $1.2bn, survey finds
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to 网爆吃瓜 Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to 网爆吃瓜 Finance Times
