Non-Statutory Financial Statements for 2013

21 May 2014

 

LONDON STOCK EXCHANGE GROUP plc (LSEG)

NON-STATUTORY FINANCIAL STATEMENTS FOR 12 MONTHS TO

31 DECEMBER 2013 FOLLOWING CHANGE TO ACCOUNTING REFERENCE DATE

 

 

 

In March 2014 it was announced that the London Stock Exchange Group plc's accounting reference date would be changed from 31 March to 31 December, with effect from 1 April 2014.

This document contains non-statutory financial statements for the 12 month period to December 2013.  It has been prepared to provide comparative information for future financial results on a December year end basis.  The non-statutory figures include transactions during the period including the LCH.Clearnet Group from the date of acquisition and do not pro-rate any financial results had any of the transactions taken place at the start of the period.

 

 

 

 

Further information is available from:

 

London Stock Exchange Group plc

 

Gavin Sullivan Paul Froud

Media Investor Relations

+44 (0) 20 7797 1222 +44 (0) 20 7797 3322

 

Condensed CONSOLIDATED Income Statement

 

		12 Months to 31 December 2013		Year ended 31 March 2013
		Unaudited		Restated1
	Notes	£m		£m
Revenue		974.0		726.4
Net treasury income through CCP business		107.3		116.7
Other Income		12.2		9.8
Total Income	2	1,093.5		852.9
Expenses
Operating expenses before amortisation of purchased intangible assets and non-recurring items	3	(616.5)		(422.7)
Operating profit before amortisation of purchased intangible assets and non-recurring items		477.0		430.2
Amortisation of purchased intangible assets	4	(108.9)		(88.8)
Non-recurring items	4	(38.7)		7.0
Operating profit		329.4		348.4
Finance income		9.0		2.7
Finance expense		(76.2)		(52.2)
Net finance expense		(67.2)		(49.5)
Profit before taxation		262.2		298.9
Taxation on profit before amortisation of purchased intangible assets and non-recurring items		(109.1)		(95.7)
Taxation on amortisation of purchased intangible assets and non-recurring items	4	22.1		12.3
Total taxation		(87.0)		(83.4)
Profit for the financial period		175.2		215.5
Profit/(loss) attributable to non-controlling interests		5.0		(1.5)
Profit attributable to equity holders		170.2		217.0
		175.2		215.5
Basic earnings per share	5	63.0p		80.4p
Adjusted basic earnings per share	5	104.7p		105.3p
1 Restatement relates to the adoption of the revised IAS 19 'Employee Benefits' (note 1).

 

Condensed CONSOLIDATED balance sheet

 

		31 December	31 March
		2013		2013
		Unaudited
		£m		£m
Assets
Non-current assets
Property, plant and equipment		88.7		80.1
Intangible assets		2,460.4		2,049.3
Investment in associates		0.6		0.6
Deferred tax assets		36.1		19.2
Derivative financial instruments		5.3		4.3
Available for sale investments		4.8		-
Retirement benefit asset		11.6		-
Other non-current assets		16.4		12.0
		2,623.9		2,165.5
Current assets
Inventories		2.5		1.5
Trade and other receivables		214.1		185.7
Other financial assets		7,928.6		-
CCP financial assets		493,979.6		137,620.2
CCP cash and cash equivalents (restricted)		8,805.4		8,476.2
CCP clearing business assets		502,785.0		146,096.4
Current tax		11.0		24.6
Assets held at fair value		30.9		6.1
Cash and cash equivalents		955.4		446.2
		511,927.5		146,760.5
Total assets		514,551.4		148,926.0
Liabilities
Current liabilities
Trade and other payables		382.2		230.0
Derivative financial instruments		17.4		0.1
CCP clearing business liabilities		510,654.8		146,088.1
Current tax		46.8		43.2
Borrowings		304.1		0.4
Provisions		2.8		1.1
		511,408.1		146,362.9
Non-current liabilities
Borrowings		946.1		796.4
Other non-current payables		-		3.4
Derivative financial instruments		5.6		3.5
Deferred tax liabilities		170.7		109.0
Retirement benefit obligations		29.0		25.6
Other non-current liabilities		27.3		-
Provisions		36.8		26.2
		1,215.5		964.1
Total liabilities		512,623.6		147,327.0
Net assets		1,927.8		1,599.0
Equity Capital and reserves attributable to the Company's equity holders
Share capital		18.8		18.8
Retained losses		(110.7)		(126.8)
Other reserves		1,596.1		1,638.5
Total shareholder funds		1,504.2		1,530.5
Non-controlling interests		423.6		68.5
Total equity		1,927.8		1,599.0

 

Condensed CONSOLIDATED cash flow statement

 

		12 months to 31 December 2013		Year ended 31 March 2013
		Unaudited
	Notes	£m		£m
Cash flow from operating activities
Cash generated from operations	7	514.8		487.5
Interest received		4.6		2.4
Interest paid		(66.8)		(43.2)
Corporation tax paid		(74.2)		(64.9)
Withholding tax paid		(23.2)		(39.2)
Net cash inflow from operating activities		355.2		342.5
Cash flow from investing activities
Purchase of property, plant and equipment		(17.5)		(18.2)
Purchase of intangible assets		(52.3)		(28.2)
Investment in other acquisition		(376.7)		(11.2)
Investment in subsidiaries		-		(3.1)
Proceeds from sale of investment		7.1		-
Dividends received		0.3		0.2
Net cash inflow from acquisitions		432.0		1.1
Net cash (outflow) from investing activities		(7.1)		(59.4)
Cash flow from financing activities
Capital raise		114.4		-
Dividends paid to shareholders		(79.7)		(77.4)
Dividends paid to non-controlling interests		(1.5)		(4.3)
Cost of capital raise		(2.7)		-
Proceeds from own shares on exercise of employee share options		1.1		0.3
Purchase of own shares by ESOP Trust		(28.0)		(13.9)
Repayment of borrowings		(84.3)		297.6
Proceeds from borrowings		300.9		(257.8)
Net cash inflow/(outflow) from financing activities		220.1		(55.5)
Increase in cash and cash equivalents		568.2		227.6
Cash and cash equivalents at beginning of period		394.8		216.0
Exchange (loss)/gain on cash and cash equivalents		(7.6)		2.6
Cash and cash equivalents at end of period		955.4		446.2

 

NOTES TO THE FINANCIAL INFORMATION

 

The non-statutory financial statements for London Stock Exchange Group plc ('the Group' or 'the Company') for the 12 months ended 31 December 2013 was approved by the Directors on 15 May 2014.

 

1.   Basis of Preparation and Accounting Policies

 

These non-statutory financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and in accordance with International Accounting Standard (IAS) 34 - 'Interim Financial Reporting, except for the following:

 

The non-statutory financial statements do not contain the minimum content of an interim financial report, including disclosures. In particular, the non-statutory financial statements do not contain a condensed consolidated statement of changes in comprehensive income or a condensed consolidated statement of changes in equity.

 

The accounting policies used are consistent with those set out in the Group's Annual Report for the year ended 31 March 2014, with the exception of the changes in the standards identified below.

 

The non-statutory financial statements are a set of non-statutory unaudited accounts, therefore in accordance with section 435 of Companies Act 2006 the directors confirm:

 

a)     they are not the company's statutory accounts;

b)     statutory accounts relating to the financial year ended 31 March 2013 have been delivered to the registrar and statutory accounts for the financial year ended 31 March 2014 will be delivered to the register within 60 days; and

c)     an unqualified auditor's report has been made on the company's statutory accounts for the years ended 31 March 2013 and 31 March 2014 and neither contained a statement under section 498 of the Companies Act 2006.

 

The following standards and interpretations have been issued by the International Accounting Standards Board (IASB) and IFRS Interpretations Committee (IFRIC) and have been adopted in these non-statutory financial statements:

 

Amendments to IFRS 1, 'First time adoption' - exemption for severe hyperinflation and removal of fixed dates;

Amendment to IFRS 7, 'Financial instruments: Disclosures' - disclosures on transfers of financial assets;

IAS19R 'Amendments to IAS 19 Employee Benefits';
IAS 1 'Presentation of Financial Statements' - Presentation of Items of Other Comprehensive Income; and

IFRS various Annual improvements 2013.

 

The adoption of these standards did not have a material impact on these non-statutory financial statements.

 

The restatement relating to IAS19R resulted in reclassification of net finance expenses with an immaterial impact to profit for the financial year.

 

The following standards and interpretations were issued by the IASB and IFRIC since the last Annual Report, but have not been adopted either because they were not endorsed by the European Union (EU) at 30 September 2013 or they are not yet mandatory and the Group has not chosen to early adopt.  The impact on the Group's financial statements of the future standards, amendments and interpretations is still under review, but the Group does not expect any of these changes to have a material impact on the results or the net assets of the Group:

 

International accounting standards and interpretations	Effective date
IFRS 9, 'Financial instruments	1 January 2013
IFRS 10, 'Consolidated financial statements'	1 January 2013
IFRS 11, 'Joint arrangements'	1 January 2013
IFRS 12, 'Disclosure of interests in other entities'	1 January 2013
IAS 27 (Revised 2011), 'Separate financial statements'	1 January 2013
IAS 28 (Revised 2011), 'Associates and joint ventures'	1 January 2013
IAS 32, 'Financial instruments: Presentation'	1 January 2014
Amendment to IAS 36, 'Impairment of assets' on recoverable amount disclosures	1 January 2014
Amendment to IAS 39 on novation of derivatives and hedge accounting	1 January 2014
IFRIC 21, 'Levies'	1 January 2014

 

The preparation of the non-statutory financial statements requires management to make estimates and assumptions that affect the reported income and expense, assets and liabilities and disclosure of contingencies at the date of the non-statutory financial statements.  Although these estimates and assumptions are based on management's best judgment at the date of the non-statutory financial statements, actual results may differ from these estimates.

 

For these non-statutory financial statements the Group is not adopting the columnar format for its consolidated income statement as stated in the Group basis of preparation and accounting policies.

 

2. Segmental Information
Unaudited segmental disclosures for the 12 months to 31 December 2013 are as follows:
	Capital Markets	Post Trade Services - CC&G and Monte Titoli	Post Trade Services - LCH. Clearnet	Information Services	Technology Services	Other	Eliminations	Group
	£m	£m	£m	£m	£m	£m	£m	£m
Revenue from external customers	296.8	98.7	172.3	339.5	62.2	4.5	0.0		974.0
Inter-segmental revenue	-	0.5	-	-	16.5	-	(17.0)		-
Revenue	296.8	99.2	172.3	339.5	78.7	4.5	(17.0)		974.0
Net treasury income through CCP business	-	59.2	48.1	-	-	-	-		107.3
Other Income	-	-	(2.9)	-	-	15.1	-		12.2
Total Income	296.8	158.4	217.5	339.5	78.7	19.6	(17.0)		1,093.5
Operating profit before amortisation of purchased intangible assets and non-recurring items	133.0	99.5	49.2	161.4	21.4	6.5	6.0		477.0
Amortisation of purchased intangible assets									(108.9)
Non-recurring items									(38.7)
Operating profit									329.4
Net finance expense									(67.2)
Profit before taxation									262.2
Other income statement items
Depreciation and non-acquisition software amortisation	(27.8)	(5.5)	(14.2)	(15.7)	(4.2)	(0.1)	13.8		(53.7)

 

3. Expenses by nature
Expenses comprise the following:
		12 months to 31 December		Year ended 31 March
		2013		2013
		Unaudited
		£m		£m
Cost of sales		71.5		60.0
Employee costs		254.5		167.3
Depreciation and non-acquisition software amortisation		53.7		40.4
IT costs		105.0		64.5
Other costs		131.8		90.5
Total expenses		616.5		422.7

 

4. Amortisation of purchased intangible assets and non-recurring items

		12 Months to 31 December		Year ended 31 March
		2013		2013
		Unaudited
		£m		£m
Amortisation of purchased intangible assets		108.9		88.8
Transaction cost recovery relating to TMX		-		(18.3)
Transaction costs		15.9		7.6
Restructuring costs		16.7		3.7
Integration costs		6.1		-
Total affecting operating profit		147.6		81.8
Total affecting profit before tax		147.6		81.8
Tax effect on items affecting profit before tax
Deferred tax on amortisation of purchased intangible assets		(13.4)		(9.1)
Current tax on amortisation of purchased intangible assets		(1.1)		(2.2)
Tax effect on other items affecting profit before tax		(7.6)		(1.0)
Total tax effect on items affecting profit before tax		(22.1)		(12.3)
Total charge to income statement		125.5		69.5

 

 

5. Earnings per share
		12 Months to 31 December		Year ended 31 March
		2013		2013
		Unaudited
Basic earnings per share		63.0p		80.4p
Adjusted basic earnings per share		104.7p		105.3p
		£m		£m
Profit for the financial period attributable to equity holders		170.2		217.0
Adjustments:
Amortisation and non-recurring items:
Amortisation of purchased intangible assets		108.9		88.8
Transaction costs		15.9		7.6
Transaction cost contribution from TMX Group		-		(18.3)
Restructuring costs		16.7		3.7
Integration costs		6.1		-
Other adjusting items:
Unrealised net investment loss (included in other income)		2.9		-
Tax effect of amortisation and non-recurring items		(22.1)		(12.3)
Tax effect of other adjusting items		(1.0)		-
Adjusted items, amortisation and taxation attributable to non-controlling interests		(14.7)		(2.5)
Adjusted profit for the financial period attributable to equity holders		282.9		284.0
Weighted average number of shares - million		270.1		269.8

 

6. Analysis of net debt
		31 December		31 March
		2013		2013
		Unaudited
		£m		£m
Due within one year
Cash and cash equivalents		955.4		446.2
Bank borrowings		(304.1)		(0.4)
Derivative financial liabilities		(17.4)		(0.1)
		633.9		445.7
Due after one year
(Bank borrowings)/deferred arrangement fees		-		0.1
Bonds		(796.5)		(796.5)
Preferred securities		(149.6)		-
Derivative financial assets		5.3		4.3
Derivative financial liabilities		(5.6)		(3.5)
Total net debt		(312.5)		(349.9)

 

Reconciliation of net cash flow to movement in net debt		12 Months to 31 December		Year ended 31 March
		2013		2013
		Unaudited
		£m		£m
Increase in cash in the period		568.2		227.6
Bond issue proceeds		-		(297.6)
Bank loan repayments less new drawings		(215.9)		257.8
Change in net debt resulting from cash flows		352.3		187.8
Foreign exchange movements		(2.4)		2.6
Movement on derivative financial assets and liabilities		(27.0)		(2.4)
Bond valuation adjustment		(0.5)		0.1
Acquired debt		(242.3)		-
Net debt at the start of the period		(393.0)		(538.0)
Net debt at the end of the period		(312.5)		(349.9)

 

7. Net cash flow generated from operations
		12 Months to 31 December		Year ended 31 March
		2013		2013
		Unaudited
		£m		£m
Profit before taxation		262.2		298.9
Depreciation and amortisation		162.6		129.2
Gain on disposal of property, plant and equipment		0.1		1.5
Profit on disposal of shares in subsidiary/associate		(6.9)		-
Net finance expense		67.2		49.5
Decrease/(Increase) in inventories		(1.0)		0.5
Decrease/(Increase) in trade and other receivables		53.6		(3.0)
(Decrease)/Increase in trade and other payables		(49.2)		(9.6)
Borrowings costs capitalised		-		(0.5)
Goodwill valuation amendment		-		(1.2)
Decrease/(increase) in CCP financial assets		68,110.9		(43,590.5)
(Decrease)/increase in CCP clearing business liabilities		(68,044.6)		43,594.4
Defined benefit pension obligation - contributions in excess of expenses charged		(4.0)		(1.0)
Provisions utilised during the period		(9.7)		(6.1)
(Increase)/decrease in assets held at fair value from operating activities		(25.7)		8.0
Share scheme expense		14.7		13.1
Foreign exchange (gains)/losses on operating activities		(15.4)		4.3
Cash generated from operations		514.8		487.5
Comprising:
Ongoing operating activities		546.3		480.5
Non-recurring items		(31.5)		7.0
		514.8		487.5