London Stock Exchange reports profits increase

As London Stock Exchange reports its full year results Graham Spooner, investment research analyst at The Share Centre, explains what this might mean for investors.

“The London Stock Exchange (LSE), which is in ongoing merger talks with Deutsche Boerse, today indicated a 20 percent increase in its full year dividend to 36 pence per share. This follows a strong set of full year results in which operating profits rose to £499.9 million from £346 million, while basic earnings are up to 94.6 pence per share from 56.5 pence in 2014.

“Looking ahead the group expects to make another £40 million in cost savings from the acquisition of Russell Investments and efficiencies from the upgrade of its platform. LSE said the case for merger with Deutsche Boerse is ‘compelling’ but made no mention of a potential rival bid from the owner of the New York Stock Exchange, which was reported this week.

“Investors should acknowledge that the share price has powered ahead over the last five years on the back of improving markets, leading to higher volumes of trading, new issues and, fund raising. The move into other areas of financial services has rewarded shareholders and the group remain confident of being well placed to develop further across their range of businesses and markets. There is a lot already baked into the price and subsequently we continue to maintain our ‘hold’ recommendation on this stock. For those interested in the general financial sector, we prefer St James’s Place for medium-risk investors,” he concludes.