In a world where supply chains everywhere are suddenly under threat, a long-term bet on highly sought-after and dematerialised products looks canny. Thankfully for investors in London Stock Exchange (LSE), the group’s big play on this theme – the $27bn (£21bn) acquisition of financial data group Refinitiv – is already well-progressed.
The City giant used its full-year numbers to assure investors the deal is on track to complete in the second half of 2020. But there were plenty of encouraging signs elsewhere, not least of which was a 13 per cent rise in adjusted operating profits at constant currency.
Activity in all core divisions picked up. Both the group’s clearing house business LCH and index provider subsidiary FTSE Russell saw double-digit increases in revenues, while the capital markets division’s top line even managed to climb 5 per cent to £426m after a change to the accounting treatment of market listings.
The LSE’s knack for operational gearing also continues. Though investments drove a £65m rise in depreciation, increases in overall operating expenses were muted, in part due to £17m of cost savings from an ongoing staff-cutting programme.
A higher tax charge meant adjusted earnings came in just shy of consensus forecasts for 202.6p per share, though the dividend was near the top end of analysts’ target range. This year, consensus forecasts are for earnings of 222p a share, and 247p in 2021.
| LONDON STOCK EXCHANGE (LSE) | ||||
| ORD PRICE: | 7,630p | MARKET VALUE: | £ 26.7bn | |
| TOUCH: | 7,626-7,636p | 12-MONTH HIGH: | 8,628p | LOW: 4,391p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 64 | |
| NET ASSET VALUE: | 988p | NET DEBT: | 17% | |
| Year to 31 Oct | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 1.32 | 336 | 74.8 | 36.0 |
| 2016 | 1.52 | 364 | 43.5 | 43.2 |
| 2017 | 1.77 | 564 | 146 | 51.6 |
| 2018 | 1.91 | 685 | 138 | 60.4 |
| 2019 | 2.06 | 651 | 120 | 70.0 |
| % change | +8 | -5 | -14 | +16 |
| Ex-div: | 30 Apr | |||
| Payment: | 27 May | |||
| *Includes intangible assets of £4.4bn, or 1,264p per share. | ||||
