LSE robust despite trouble at the top

Information services revenue was boosted by around a third, thanks to the acquisition of US-based data provider Mergent and fixed-income analytics provider The Yield Book. Yet even on an organic basis, sales were up 13 per cent at constant currencies, with FTSE Russell continuing to attract exchange traded fund (ETF) providers to track its indices (around $600bn in ETF assets under management track FTSE Russell indices). Since acquiring the business in 2014, it has also achieved its three-year target of $78m in cost synergies ahead of time, as well as generating an additional $48m in revenue as a result of the combination.

The group increased its stake in global clearing business LCH to almost 66 per cent, up from 58 per cent. Over-the-counter (OTC) sales were up 17 per cent, as cleared trade volume jumped more than a quarter to 1.23m transactions. Non-OTC also reported solid revenue growth thanks to an increased in fixed-income clearing. Adjusted cash profit margins improved 8 percentage points to 44 per cent, closing in on management’s 50 per cent target by 2019.

However, sales at the CC&G and Monte Titoli post-trade business declined 2 per cent, following a downturn in derivatives clearing volumes. The capital markets business benefited from a rebound in UK equity issuance on the primary markets, which raised £44.2bn – a gain of almost three-quarters on the prior year. Trading on the secondary markets was weaker. The average daily equity value traded on its pan-European equities platform, Turquoise, declined more than a quarter, while fixed-income and derivatives income was also down.

Bloomberg analyst consensus gives adjusted EPS of 175.4p for the December year-end, up from 145p in 2017.