First-half results from the London Stock Exchange (LSE) reflected both increased competition which has eaten into LSE's market share by undercutting its fees and the continued depressed volumes and new issues activity in its core markets.
In capital markets, which accounts for almost half of LSE's revenue, annual fees and cash equities and derivatives income all fell sharply compared with the first half of 2008 although fixed-income revenues rose modestly. Volumes traded in the UK were hit by the wider economic picture and also by aggressive competition from rival platforms as LSE's share of the London market slipped from 78.6 to 70.7 per cent. So LSE has changed its tariff structure to position itself better against its rivals although this has reduced its yield by 15 per cent. Overseas, performance in its Borsa Italia business showed a significant improvement over the second half of last year, but was well down on the comparable period last year.
The burst of major capital raisings which has characterised the London markets in recent months helped LSE's primary markets business record an improvement over the second half of last year, although revenues were still down 9 per cent on the comparable six month period in 2008.
LONDON STOCK EXCHANGE (LSE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 839p | MARKET VALUE: | £2.3bn | |
| TOUCH: | 838.5-839p | 12-MONTH HIGH: | 949.5p | LOW: 355.75p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | NA | |
| NET ASSET VALUE: | 374p* | NET DEBT: | 43% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 343 | 127.0 | 30.3 | 8.4 |
| 2009 | 311 | 79.4 | 18.5 | 8.4 |
| % change | - | - | - | - |
Ex-div: 2 Dec Payment: 5 Jan *Includes intangible assets of £1.5bn, or 563p a share | ||||
LSE is also working hard on improving its trading platforms and during the period acquired Sri Lankan technology company MillenniumIT to beef up its trading platform technology. Indeed post trade services and IT services showed more resilience that the capital markets division.
Cazenove is forecasting full year adjusted EPS of 60.9p (2009: 74.2p).
