Financial results
This is the first set of financial results reported since the listing on 20 July. Financial performance in the first six months of the year has been strong, despite economic uncertainty and market volatility. Turnover from continuing operations increased 18 per cent to £106.8 million (2000: £90.6 million). Operating profit from continuing operations before exceptional items was up 18 per cent to £34.2 million (2000: £29.1 million). The operating margin for continuing operations and excluding joint ventures rose slightly to 33.3 per cent.
After taxation of £12.3 million, profit for the period was £22.6 million. Adjusted earnings per share before exceptional items increased 18 per cent to 9.0 pence (2000: 7.6 pence).
Broker Services
Turnover from Broker Services for the half-year ended 30 September 2001 contributed 37 per cent of total turnover. This represented 35 per cent growth over the same period last year, up from £29.6 million to £39.9 million.
Broker Services delivered a number of new business initiatives in the period,
many developed in conjunction with our customers. These included the
successful introduction of the International Retail Service, which provides UK
retail investors with easy access to trading in international securities, and
the International Order Book, which offers investors an open and flexible
trading platform for developing market depositary receipts.
Issuer Services
Turnover from Issuer Services for the half-year decreased 11 per cent from £15.5 million to £13.8 million. The division contributed 13 per cent of total
turnover.
The performance of Issuer Services reflected the lower number of new issues in
the period. The amount of new capital raised was three per cent lower at £105
billion (2000: £108 billion), although the amount raised by UK listed
companies was higher at £18 billion (2000: £14 billion). The number of
companies traded on our markets as at 30 September 2001 was 2,919 (2000:
2,874). This includes 606 companies on AIM, our international market for
growing companies, an increase of 29 per cent over the same time last year
(2000: 471).
During the half-year, Issuer Services completed the successful national
rollout of landMARK, our attribute market that highlights companies in each
region of the UK, and we are fully prepared to commercialise RNS following
completion of FSA's review into regulatory news dissemination.
Information Services
Information Services was the largest contributor to turnover for the
half-year. Information Services revenue was 14 per cent higher, up from £40.4
million to £46.2 million, representing 43 per cent of total turnover.
Increased Information Services turnover reflected higher demand for Exchange
market data and the consequent rise in the number of terminals receiving
Exchange data on a real time basis. The number of terminals as at 30
September 2001 was approximately 109,000 (2000: 104,000). Of those,
approximately 101,000 terminals were attributable to our professional customer
base, a nine per cent increase over last year.
Information Services launched a new service, Tick Data, in September. This
service provides historical intra-day trading data, building on our suite of
products distributed via our website, and opens up opportunities for widening
our customer base. We have also continued to develop our new communication
service, Extranex, which will enable the Exchange to deliver new products and
services to customers. An Extranex pilot will commence early next year.
Interim dividend
The Directors propose an interim dividend of 1.1 pence per share to those
shareholders on the register on 7 December 2001, for payment in January 2002.
Management
We continued to strengthen our executive management team throughout the
period. Key appointments during the half-year included the appointment of
Marc Bailey, Director of Business Development, Phil Bruce, Head of Corporate
Strategy and David Lester, Chief Information Officer.
Other activities
Listing and bonus issue
Shares in London Stock Exchange plc were listed on the main market of the
Exchange on 20 July 2001. This followed approval of amendments to the
Articles of Association of the Exchange at an Extraordinary General Meeting of
shareholders on 19 July 2001. Simultaneously with listing, the Exchange
completed a bonus issue of shares on the basis of 9 new ordinary shares for
each share held.
JSE Securities Exchange South Africa agreement
In July, we signed two commercial agreements with the JSE Securities Exchange
South Africa. The Technology Agreement is for the provision by the Exchange
of our leading-edge technology platform SEQUENCE (including SETS) and
information dissemination system LMIL. The Business Agreement provides for
each exchange to assist in the marketing of the other's data together with
arrangements to facilitate cross-membership and dual trading.
Property
In June, we signed a 25-year lease for new headquarters at Paternoster Square
in the City of London. We are due to move to the new premises in 2004. As
part of that move, we appointed City Offices London Management Ltd to advise
the Exchange on maximising the value of the 1.4 acre Exchange Tower site prior
to any sale in the open market.
Technology developments
During the first half, we continued our technology development and investment
programme. In July, WorldCom was appointed to help install the high capacity
network that will link the Exchange and its customers using Internet Protocol
communication technology. In August, we extended our Services Management
Agreement with Accenture plc to provide facilities management services for our
trading and information systems for up to a further five years.
Current trading and prospects
Since 30 September 2001, our trading performance has continued to be
satisfactory, with trading volumes continuing at a high level. It is
difficult to predict what effect current economic uncertainty will have on our
business, although the Directors anticipate new issue activity will remain low
as a result of the weak IPO market.
The Directors believe the first half results provide a solid foundation for
the full year and view the prospects for the Exchange with confidence.
