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LSE gets diversification boost

RESULTS: The London Stock Exchange is reaping the rewards of a more diversified revenue stream, but the shares have come up a long way
November 13, 2013

Half-year figures from the London Stock Exchange (LSE) highlight the exchange's success at further diversifying its revenue stream and turnover was boosted by a £111.2m five-month contribution from the LCH.Clearnet acquisition. That helped operating profit to grow 5 per cent to £227.9m - although adjust for goodwill amortisation and exceptional items and operating profit actually fell to £151m from £186.8m.

IC TIP: Hold at 1,579p

Revenue from the group's capital markets segment - which includes primary and secondary market activities - grew 12 per cent to £145.2m, and capital raised in primary markets more than doubled to £16.3bn. Secondary market activity was more subdued with average daily value traded in UK cash equities ahead by just 2 per cent at £4.2bn, while the number of trades in Italy fell 8 per cent.

Trading on the Turquoise exchange jumped in value by 63 per cent, although the group's derivatives markets experienced much tougher conditions, with volume down 34 per cent in the UK and 24 per cent in Italy. Revenue from information services grew 14 per cent to £168.3m, helped by a 29 per cent increase to £83.9m in revenue from FTSE indices business.

Broker Numis Securities expects full-year pre-tax profit of £419.8m, giving EPS of 101.7p (from £380.7m and 101.6p in 2013).

LONDON STOCK EXCHANGE (LSE)
ORD PRICE:1,579pMARKET VALUE:£4.28bn
TOUCH:1,579-1,582p12-MONTH HIGH:1,706pLOW: 913p
DIVIDEND YIELD:1.9%PE RATIO:26
NET ASSET VALUE:543p*NET DEBT:22%

Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201242416543.09.70
201356511624.910.1
% change+33-30-42+4

Ex-div: 4 Dec

Payment: 6 Jan

*Includes intangible assets of £2.5bn, or 922p a share