Strip out various exceptionals relating to last year's acquisition of clearing house LCH.Clearnet and the London Stock Exchange's (LSE) full-year pre-tax profit jumped 17 per cent year on year to £446m. That reflects robust financial market conditions, with IPO activity having reached its highest level for six years. Total capital raised across the LSE's equity markets soared 90 per cent to £34.2bn, sending operating profit at the capital markets division up 22 per cent to £145m.
But it's the LCH.Clearnet deal that has grabbed most attention. Its SwapClear subsidiary, the world's largest clearer of over-the-counter (OTC) interest-rate swaps, is part-owned by a group of banks. New European regulations designed to reduce systemic risk are forcing OTC contracts through clearing houses, and the revenue-sharing arrangement with SwapClear's bank owners has therefore been scaled back. Over 60 per cent of revenues now go to LSE-owned LCH.Clearnet.
Integrating LCH.Clearnet is expected to deliver £49m of cost savings, too - compared with £19m originally targeted. More deals look possible: the LSE is eyeing indexing specialist Frank Russell, which would cost about $3bn (£1.8bn).
After modest upgrades, broker Numis Securities expects EPS of 125p for 2015 (107p in 2014).
LONDON STOCK EXCHANGE (LSE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,848p | MARKET VALUE: | £5.01bn | |
| TOUCH: | 1,848-1,849p | 12-MONTH HIGH: | 2,053p | LOW: 1,278p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 563p* | NET DEBT: | 16% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 606 | 144 | 34 | 24.4 |
| 2011 | 616 | 238 | 56 | 26.8 |
| 2012 | 680 | 640 | 194 | 28.3 |
| 2013 | 726 | 299 | 80 | 29.5 |
| 2014 | 1,088 | 284 | 63 | 30.8 |
| % change | +50 | -5 | -22 | +4 |
Ex-div: 23 Jul Payment: 19 Aug *Includes intangible assets of £2.5bn, or 913p a share | ||||
