Earnings rise at LSE as it continues expanding

London Stock Exchange group reported “strong financial performance” in its first half on Thursday, with income growth across all business areas and 23% AEPS growth.

The FTSE 100 self-listed exchange said its “successful strategy” based on customer partnership, innovation and an open access model, had strongly positioned the group to make further progress as a global financial markets infrastructure business.

In the six months to 30 June, LSE said its “continued strong financial performance” included income growth across its core business areas, particularly in information services - including strong results at FTSE Russell, and OTC clearing at LCH.

Revenue was up 18% to £853m, while total income improved 20% to £946m.

Adjusted operating profit rose 20% to £398m, with underlying operating expenses on an organic and constant currency basis up 5% as the group continued to invest in growth and efficiencies.

On a reported basis, operating profit improved to £305m from £199m, while profit before tax was up 69% to £277m, profit after tax was £208m compared to £114m at the same time last year, and £186m including discontinued operations compared to a loss of £16m.

Adjusted earnings per share were up 23% at 71.2p, and basic earnings per share improved 84% to 50.4p.

“The group has produced a strong financial performance, with good income growth across all of our core business areas,” said group chief executive Xavier Rolet.

“FTSE Russell and LCH OTC clearing services performed strongly, with double-digit growth at both businesses.”

The board confirmed its interim dividend had increased 20% to 14.4p per share, in line with its stated dividend policy, while the company’s £200m share buyback was “ongoing”.

It said it had retained its “strong balance sheet position”, with leverage of 1.2x adjusted pro forma net debt-to-EBITDA, notwithstanding continued investment spend, the acquisition of Mergent and ongoing share buybacks.

LSE also announced the acquisition of The Yield Book and Citi Fixed Income Indices, including the World Government Bond Index, for total cash consideration of $685m (£535m).

“As well as continuing to deliver organic growth, during the period we announced the acquisition of The Yield Book and Citi Fixed Income Indices business,” Rolet added.

“At our Investor Update in June, we set out targets for further strong financial performance, based on continued execution of our successful growth strategy.”

Rolet said the group remained “well-placed”, diversified both by business activity and by geography.

“Our open access approach and strong customer partnerships also position us well for the implementation of MiFID II, starting in just over 20 weeks' time.”