Join our community of smart investors

LSE stops the rot

RESULT: New initiatives help the London Stock Exchange to stabilise its market share against rival platforms
November 18, 2010

The London Stock Exchange has responded well to the tough trading climate and competition from rival platforms, pushing first-half adjusted operating profits up 15 per cent to £155m. What's more, the exchange is also benefiting from the acquisition last year of rival trading platforms Turquoise and Millennium IT.

IC TIP: Hold at 726p

And there are further plans in the pipeline designed to generate more business, including the rollout of a new a high-performance trading system and a range of product initiatives for trading equity derivatives on Turquoise in the second quarter of 2011.

However, trading in the first half was still challenging and the rise in pre-tax profits was achieved mainly through a reduction in operating expenses. Total revenue from the LSE's core primary markets activities actually fell from £151m to £137m, as cash equities and derivative secondary market businesses both suffered double-digit declines. To a degree this was countered by a strong revival in the number of new issues, which more than doubled to 88, with £17.6bn of capital raised. And while the average number of daily bargains in the LSE and Borsa Italiana slipped 3 per cent to 853,000, average daily traded values moved up 6 per cent to £7.6bn.

Broker Numis Securities is forecasting full-year adjusted pre-tax profits of £248m and EPS of 63.6p (from £242m and 60.1p in 2010).

LONDON STOCK EXCHANGE(LSE)
ORD PRICE:726pMARKET VALUE:£2bn
TOUCH:725-727p12-MONTH HIGH:876pLOW: 540p
DIVIDEND YIELD:3.4%PE RATIO:19
NET ASSET VALUE:342p*NET DEBT:31%

Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20093017918.58.4
201029810023.28.8
% change-1+26+25+5

Ex-div: 1 Dec

Payment: 5 Jan

*Includes intangible assets of £1.41bn, or 519p a share

.

More analysis of company results