Buoyant equity markets, especially in the April to June quarter, helped the London Stock Exchange (LSE) grow adjusted operating profit by almost a quarter at the half-year stage to £286m. Although market conditions have been rather more challenging in recent months, management sound bullish about future prospects.
Indeed, the capital markets unit - covering both primary and secondary market activities - saw revenue jump 13 per cent to £165m. Significantly, primary market revenue rose 21 per cent following a string of IPOs. The pace of flotations certainly weakened after June, reflecting the uncertainty created by the Scottish referendum followed by last month's equity market wobble. That backdrop convinced companies such as banking group Aldermore and housebuilder Miller to pull planned flotations. But management still reckons there’s a good pipeline of companies looking to join the market, with chief executive Xavier Rolet expecting a bounce-back by early next year.
Meanwhile, efforts to diversify the revenue stream will receive a boost when the exchange's £1.6bn acquisition of US index specialist Frank Russell completes early next year. That deal - part-funded by September's £938m rights issue - will leave the exchange making a third of its revenue in North America, and could generate £46m of annual cost synergies.
Broker Numis Securities expects full-year adjusted pre-tax profit of £484m, giving EPS of 94.1p (from 107.1p in 2014).
LONDON STOCK EXCHANGE (LSE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,054p | MARKET VALUE: | £7.1bn | |
| TOUCH: | 2,053-2,055p | 12-MONTH HIGH: | 2,077p | LOW: 1,417p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 722p* | NET CASH: | £796m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)† | Dividend per share (p)† |
|---|---|---|---|---|
| 2013 | 504 | 116 | 25.5 | 9.3 |
| 2014 | 593 | 137 | 24.5 | 9.7 |
| % change | +18 | +18 | -4 | +4 |
Ex-div: 4 Dec Payment: 6 Jan *Includes intangible assets of £2.5bn, or 730p a share †Adjusted for September 2014's rights issue | ||||
