Shares in London Stock Exchange (LSE) outperformed the sliding market on Friday, losing just 0.8% to £77.48, thanks to a rise in 2019 profits and a positive performance from the recently-acquired Russell index business.

For the year to 31 December, revenues rose 8% to £2.056bn, in line with forecasts, while adjusted operating profits rose 14% to £1.065bn.

The newly-integrated FTSE Russell business delivered a 10% increase in revenues thanks to 6% organic growth.

IN GOOD SHAPE

Chief executive David Schwimmer called 2019 ‘another strong year, delivering a good financial performance, making meaningful progress executing on our strategic objectives, and taking significant steps on a number of group-wide initiatives.’

Despite what Schwimmer called ‘an evolving macroeconomic and geopolitical landscape’, the stock exchange turned in a solid performance with double-digit growth in its London Clearing House business as well as FTSE Russell.

Meanwhile it negotiated an 8% reduction in its cost of sales with the banks and thanks to continued price discipline it managed to limit the increase in operating costs to just 1% before depreciation and amortisation.

GREEN INITIATIVES

The LSE continues to expand its customer base both through targeted acquisitions and through new and innovative products which its clients want.

It recently acquired Beyond Ratings which specialises in providing investors with environmental, social and governance (ESG) data on fixed income products rather than equities.

At the same time, FTSE Russell launched a Climate World Government Bond Index, the first sovereign bond index to incorporate climate risk factors.

Rounding out its eco-friendly offering, the capital markets unit launched the Green Economy Mark which allows investors to identify issuers which generate half or more of their revenues from green initiatives, and the Sustainable Bond Market which is dedicated to social and sustainability bonds.

REFINITIV POTENTIAL

Schwimmer was most keen to extol the virtues of his $27bn mega-deal to acquire data and analytics firm Refinitiv.

‘Our proposed acquisition of Refinitiv, a leading provider of data, analytics and financial markets services, will significantly accelerate our strategy to be a leading global financial markets infrastructure provider’ he trumpeted, adding that detailed integration planning was under way and that he expected the deal to close in the second half of 2020.

However the European competition commission in Brussels has yet to give its blessing to the deal, and there is a possibility that LSE may have to sell some assets to get the go-ahead including its Italian stock exchange subsidiary although Schwimmer wouldn’t be drawn on a potential disposal.

‘With respect to Borsa Italiana, it has been an integral part of the business... and there is no expectation or intention that any of that should change,’ he added.

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Issue Date: 28 Feb 2020