London Stock Exchange posts 31% uptick in pre-tax profit

London Stock Exchange Group reported strong underlying growth in capital markets accompanied by rising pre-tax profits in a trading update on Friday, as suitors Deutsche Borse and Intercontinental Exchange line up to pitch a potential merger.

The firm recorded a rise in total income of 72% to £2.38bn, from £1.38bn in 2014. Total revenue was up 78% to £2.29bn. Revenue was up 11% on a continuing operations basis, and up 15% when LME clearing was excluded.

LSE described operating expenses as 'well controlled', rising 1% during the year on an organic and constant currency basis to £1.05bn. That made for a total adjusted operating profit of £709.6m, up 27% from £558m, and a reported operating profit of £499.9m, up from £346m in 2014.

Adjusted profit before tax rose 31% to £643.4m, up from £491.7m a year earlier. The exchange's adjusted earnings per share were up 25% to 129.4p, from 103.3p. Basic earnings per share grew to 94.6p, from 56.5p.

"The group has produced another strong financial performance, and continues to make excellent progress executing our strategy to be a leader in global markets infrastructure," said LSE group chief executive Xavier Rolet.

"We have delivered underlying growth in each of out business areas and maintained good cost control. We have further strengthened the group through integrating recent acquisitions and developing innovative new products."

Rolet said FTSE Russell, its global indexes business, had shown strong growth and integration savings were firmly on track.

LCH.Clearnet also delivered a good performance in its OTC clearing services, he explained, with its new portfolio margining service LCH Spider launching shortly.

Rolet said the group was well-positioned across all its businesses with a number of growth opportunities delivering significant efficiencies and services on an open access basis to customers globally.

"We have recently confirmed that we are in detailed discussions with Deutsche Borse regarding a potential merger of equals," Rolet said.

"This represents a compelling opportunity to strengthen each other in an industry-defining combination, by creating a global market infrastructure group with significant benefits for our customers and shareholders," he concluded.

LSE's board proposed a final dividend increase to 25.2p per share, taking the total dividend for the year to 36p per share, a 20% increase.