LSE posts rise in full-year profits

AP News
Posted: May 13, 2011 10:11 AM
LSE posts rise in full-year profits

The London Stock Exchange, which owns markets in Britain and Italy and is planning a merger with the owner of the Toronto bourse, reported a 70 percent rise in full year profits on Friday after a rise in new issues on the market.

The LSE posted net earnings of 151.6 million pounds ($246.7 million) for the year to March 31, up from 90.4 million pounds the previous year.

Revenue at the world's fourth biggest stock exchange rose 1.7 percent to 615.9 million pounds from 605.6 million. Total income, including revenue from its CCP clearing business, rose 7.4 percent to 674.9 million pounds from 628.3 million pounds.

Chairman Chris Gibson-Smith said the group's efforts to make up for a loss in its share of UK equities trading in recent years by diversifying the business are paying off.

"We have achieved much in the past year and the actions we have taken to ensure the group remains efficient, competitive and focused on developing growth opportunities mean we are in a strong position," Gibson-Smith said.

The strong result allowed the LSE to raise its final dividend by 13 percent to 18 pence. That helped bolster its share price, which was trading 2.4 percent higher at 838.5 pence in mid-afternoon trade.

"The group's outlook is positive, with improving performances in derivatives and post trade services, and necessary approvals for its acquisition of TMX Group are being sought," said Jonathan Jackson, head of equities at Killik & Co.

Gibson-Smith said the group's growth strategy included "increasing international scale, together with extended reach and scope, to provide competitive services to global customers."

"This approach underpins the rationale for our proposed merger with the TMX Group," he added.

That planned deal to give the LSE control of the Toronto Stock Exchange, announced in February, remains under review by the Canadian government.

The all-share merger would result in listings in both Britain and Canada, but LSE will hold 55 percent of the new company and TMX will have 45 percent.

Politicians in Ontario and Quebec have raised concerns about the impact of having Canada's major financial markets included in an international group headquartered in London and Toronto.

The LSE, which acquired Borsa Italiana two years ago, said in a separate statement on Friday that it and the TMX Group have filed applications with Canadian provincial securities regulatory authorities in Ontario, Quebec, Alberta and British Columbia. The bourse did not provide details of the filings, saying that those authorities would publish the applications "according to their individual processes."

The LSE said that new issues rose 68 percent to 185, with money raised more than trebling to 13.1 billion pounds. The current financial year has also started well, with 20 new issues in April. The indications for May are also good, the group said.

It added that overall trading on its derivatives platforms has increased, with the number of contracts up 19 percent year on year, while the UK equity order book trading declined by 10 percent in April, which it blamed on a series of public holidays that month.

The bourse recently rolled out Millennium Exchange, its new high-performance trading system, on its pan-European Turquoise trading platform and the U.K. equities markets.

Derivatives trading was launched on Turquoise in the spring, following integration with the group's London-based EDX derivatives exchange. FTSE 100 Index Futures is due to begin trading in June 2011.

The move to swifter technology is critical for the London exchange to compete with newer rivals such as Chi-X Europe and Bats Europe, but progress has not come without difficulties. The LSE blamed a two-hour disruption to Turquoise in November on a "suspicious glitch."