LSE full-year EPS beats view

By Olesya Dmitracova

LONDON (Reuters) - London Stock Exchange Group <LSE.L> posted higher-than-expected adjusted full-year earnings on Wednesday, boosted by a record amount of cash raised by companies on its markets.

Adjusted earnings per share rose to 74.2 pence from 73.1p the previous year, the LSE said, beating an average analyst forecast of 70.2p according to figures from Reuters Estimates.

Companies scrambling for cash raised a record 106 billion pounds in its markets, including 99 billion in secondary issues, and the Exchange said it had attracted 160 new issues.

LSE shares, which have rallied from a more than four-year low around 355 pence seen in March, were slightly higher in opening trade, up 0.9 percent at 706 pence by 8:30 a.m.

Adjusted profit before tax reached 304.7 million pounds, while revenue at 671.4 million pounds, up from a previous 546.4 million, was also better than the 659.9 million analysts had pencilled in.

At the pretax level the Exchange made a loss of 250.8 million pounds after taking a 484 million goodwill impairment on the value of its Borsa Italiana unit, which the LSE acquired in 2007.

The writedown reflected "the major deterioration in current economic conditions," the LSE said in a statement. "Although market conditions are expected to remain testing, the group is well placed for the future," it said, adding that trading levels had shown some signs of improvement since the start of the new financial year.

Cazenove analyst Rae Maile said in a note the Borsa Italiana impairment was not "a material factor for consideration," adding: "More relevant, in our view, is the successful integration process and the increase in scale which the deal has brought the company."

Attention will turn to incoming chief executive, Xavier Rolet, for clues on how he plans to overcome cut-throat competition between exchanges and the effects of the global slowdown.

The LSE said it had made good progress in making gains from the Borsa Italiana acquisition and said it would deliver a further increase in synergies to 32 million pounds, up 60 percent from the first plan.

The exchange said trading levels had shown some signs of improvement since the start of the financial year.

Its market share of FTSE 100 stocks dropped below 70 percent for the first time on May 6, demonstrating the effects of a fierce battle with new low-cost entrants in the market such as Chi-X, Turquoise and Bats.

The LSE said it would pay a full-year dividend of 24.4 pence, up 2 percent from 24.0p a year before.

(Additional reporting by Douwe Miedema and Paul Hoskins; Editing by David Holmes)

Article Published: 20/05/2009