News Column

London Stock Exchange Revenue Up By 50% But Profit Falls On Expenses

May 15, 2014

Samuel Agini

LONDON (Alliance News) - London Stock Exchange Group PLC Thursday said its full-year revenue rose by 50% as it continued its diversification strategy, but it said pretax profit fell due to higher operating expenses due to the acquisition of clearing house LCH.Clearnet last year, for which it unveiled more ambitious cost-savings targets.

In a statement, the London Stock Exchange said revenue increased to GBP1.09 billion in the year ended March 31, compared with GBP726.4 million a year earlier, driven by capital markets contributions from LCH.Clearnet. The stock exchange has been riding the UK economic recovery, which has prompted the return of investors to its equity markets. The group said it helped companies raise over GBP34 billion in new and further equity issues across its markets.

However, pretax profit fell to GBP284.3 million from GBP298.9 million, as a result of rising operating expenses, which rose by GBP333.7 million to GBP856.5 million.

Operating costs relating to LCH.Clearnet amounted to GBP240.6 million. The stock exchange said it has identified additional costs savings as part of integrating LCH.Clearnet, moving to increase annualised cost savings to EUR60.0 million from EUR23.0 million by the end of 2015. Costs to achieve the savings are expected to be EUR43.0 million, with EUR31.0 million included in 2014 results. The savings are being made through a combination of operations restructuring and headcount reductions amongst other initiatives. The stock exchange said the savings will "more than offset" expected cost increases at LCH.Clearnet over the same period.

"We have accelerated our cost saving targets at LCH.Clearnet Group, and we see opportunities for growth as the regulatory landscape evolves," Chief Executive Xavier Rolet said in a statement.

The CEO, who is celebrating his fifth year in the role, said the London Stock Exchange's expansion in capital markets infrastructure is delivering "tangible success."

"We have produced a good full-year financial performance with increased top line, operating profits and earnings, reflecting both strong organic growth and the benefits from recent additions to the group.

Rolet declined to give further details regarding the stock exchange's interest in the potential acquisition of US-based Russell Investments, the asset manager and owner of the Russell Indexes.

Nevertheless, he outlined his thoughts on how the industry will develop going forward in light of the new European rules. The CEO said he has been encouraged by new European regulations which will "promote competition, empowering investors through enhanced choice, lower costs and greater capital efficiency."

"The provisions for open access in clearing and access to benchmarks will help reduce the fragmentation of risk in closed silos and promote lower cost, more efficient and robust competitive markets," Rolet said.

London Stock Exchange increased its full-year dividend by 4.4% to 30.8 pence a share.

In early trade Thursday, London Stock Exchange shares lead the FTSE 100, up 3.6% at 1,867.00 pence.

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Source: Alliance News

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