A merger between London Stock Exchange (LSE) and Deutsche Borse may have been on the lips of investors and the media alike this month, but the former's management were reluctant to comment on the possible deal when unveiling these results. A potential rival offer from New York Stock Exchange owner Intercontinental Exchange attracted no further mention. Instead the emphasis was on management's efforts to expand the group's global reach, partly by unifying its FTSE Russell indices under a single brand, and growing its footprint in North America and China.
Gross profit for the period hit £1.76bn, from £1.26bn in the previous 12 months. The group's information services business experienced the biggest rise in revenue to £525m, up 41 per cent. This was driven by FTSE growth as well as the benefit of a full year's contribution from the Russell Indexes. The combined FTSE Russell signed more licensing agreements to develop futures and options contracts in the US. Overall, there is now more than $10 trillion (£7 trillion) -worth of assets benchmarked to its indices.
Capital markets generated a 5 per cent increase in operating profits, but largely because operating expenses declined. Primary market revenue ticked up as IPOs on the main market in London rose from 75 to 88, while Aim admittances almost halved. Overall, the total amount of money raised across the business' primary markets fell 2 per cent to £41.7bn.
Post-trade services, which comprise its clearing, settlement and custody activities, fared badly, with operating profits down by almost a fifth to £52m. Clearing business CC&G generates net treasury income by investing the cash margin held, retaining the surplus or deficit after members are paid a return on their cash contributions. However, last year treasury income was flat, partly due to a £9m exceptional gain on the sale of long-dated securities in 2014. LCH.Clearnet, which may be a focus of competition regulators were the Deutsche deal to progress, grew its revenue by 15 per cent to £157m as swap clearing activity intensified.
Analysts at Numis expect adjusted pre-tax profits of £635m in 2016, giving adjusted EPS of 123.7p.
LONDON STOCK EXCHANGE GROUP (LSE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,861p | MARKET VALUE: | £9.97bn | |
| TOUCH: | 2,860-2,862p | 12-MONTH HIGH: | 2,935p | LOW: 2,083p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 788p# | NET DEBT: | 21% | |
| Year to 31 March | Turnover (£bn)* | Pre-tax profit (£m) | Earnings per share (p)** | Dividend per share (p)** |
|---|---|---|---|---|
| 2011* | 0.67 | 238 | 50.6 | 24.2 |
| 2012* | 0.81 | 640 | 175.4 | 25.6 |
| 2013* | 0.87 | 299 | 72.3 | 26.7 |
| 31-Dec | ||||
| 2014 | 0.96ǂ | 182ǂ | 37.9ǂ | 22.5 |
| 2015 | 1.42 | 336 | 94.6 | 36 |
| % change | +48 | +85 | +150 | +60 |
Ex-div:05 May Payment:01 Jun ǂ9-month period #Includes intangible assets of £3.7bn, or 1,064p a share *Adjusted to include 3-for-11 rights issue in Sep 2014 | ||||
