The London Stock Exchange gave an indication yesterday of why it had attracted one potential partner in Deutsche Börse and a string of other possible suitors with a strong set of results for 2015.
Total revenues were up by 78 per cent to £2.28 billion, while turnover from continuing activities, disregarding several large acquisitions, increased by 11 per cent. Adjusted pre-tax profits came in 31 per cent higher at £643.4 million, while a final dividend of 25.2p implies an annual increase of 20 per cent, disregarding the effects of a change in the financial year’s end.
Xavier Rolet, the chief executive, continued to champion the proposed merger with Deutsche Börse, after news of talks between the two leaked last week. He said it was a “potential merger of equals” and a “compelling opportunity to strengthen each other in an industry-defining combination”.
He refused to discuss other potential approaches, including by Intercontinental Exchange, owner of the New York Stock Exchange, which this week said it was considering an offer. CME, operator of the Chicago Mercantile Exchange, is also thought to be considering a bid, while global exchanges such as Hong Kong are also seen as potential suitors.
Under Mr Rolet, the LSE has made several acquisitions, including that of Frank Russell in the United States, whose operation providing indices has been merged with the London exchange’s FTSE index business. The addition of the Russell business was behind a 41 per cent rise in revenues from information services to £525 million.
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The LSE has sold Russell Investment Management, which came with the deal and was not regarded as a good fit with the rest of the group, for $1.15 billion. The proceeds will be used to reduce debt.
Mr Rolet said that the increase in the dividend reflected the stock exchange’s financial strength and confidence in its further progress.
The capital markets division, the original heart of the business, was flat, with revenues down 1 per cent at £330.3 million. London continues to attract most European flotations, but the total raised across its exchanges, including the Borsa Italiana in Milan, fell by 2 per cent to £41.7 billion. There were 88 new issues in the main UK market, after 75 in 2014, but there was a decline in listings on the less regulated Alternative Investment Market.
There also are questions over how the merger with Deutsche Börse may pan out. A note from Jonathan Goslin, at Numis Securities, suggested three potential barriers, including fears about monopolies in certain areas. He thought, too, that the two groups had different views on how to structure their clearing businesses and that there was danger that national pride might mean British politicians might be unhappy seeing the LSE having a foreign owner.
LSE shares, which have been trading at an all-time high amid the bid fervour, subsided 40p to £28.53.