LSE is Europe’s leading exchange group in cash equities. MTS is Europe’s largest electronic government bond market, LCH and CC&G offer post-trade services and FTSE Russell provides benchmark indices and related data services.
LSE’s FY19 results announced at the end of February showed total income up 8% y-o-y, gross profit up 10%, an underlying operating expense increase of only 1% reflecting progress in a cost reduction programme and adjusted EBITDA +19%. At the adjusted EPS level there was an increase of 15% to 200.3p and the dividend for the year was 70.0p vs 60.4p.
LSE is continuing to make progress towards its transformational acquisition of Refinitiv, expected to complete H220. Its activities include: data, distribution, analytics and workflow (75% of revenue); FX and fixed income trading venues (19%); and risk and other activities (6%). It has a high proportion of subscription revenues prospectively taking the total for the combined group to c 70%. At an LSE share price of c £62 the Refinitiv enterprise value would be $27bn and the EV/adjusted FY19 EBITDA multiple c 12.5x. Targets include year-five revenue and cost synergies of £225m (3.4%) and £350m (7.1%), respectively, a three-year post deal revenue CAGR of 5–7% and a medium-term EBITDA margin of 50%.