Company meets – nay, exceeds – expectations: share price plummets.
LSE is having rather a hard time of it. The company reported an enviable, albeit predictable, set of positive results.
Revenue up 70 per cent to £345.5 million; a five per cent increase on a pro forma basis (flat at constant currency) assuming Borsa Italiana had been acquired on 1 April 2007
Operating profit before amortisation of purchased intangibles and exceptionals up 57 per cent to £179.9 million; five per cent pro forma growth (flat in constant currency)
Profit before tax up 30 per cent to £127 million
Basic EPS of 30.3 pence, and adjusted basic EPS up ten per cent to 39.3 pence
Interim dividend per share up five per cent to 8.4 pence per share .
…but its share price was down 7 per cent during early trade on Thursday. It’s the continuation of something of a catastrophic trend:
Reasons to be sullen:
The proximate cause of such good results, the extremely volatile market is alas out of the ordinary, which might explain investor caution.
There are strategic problems for the LSE too – like the collapse of Lehman, and with it, the disruption to the Baikal project – the joint venture ‘dark liquidity pool’.
And more germane to Thursday’s dip in share price, this:
The Exchange made on-market purchases of 5.9 million shares during the first half of the year, for a total consideration of £51.5 million, and has completed purchases of almost £100 million in the past year. As at 30 September 2008, the number of ordinary shares in issue was 270,518,518.
The Board remains committed to returning capital when it is in shareholders’ interest to do so but believes that following the significant changes in global financial market conditions, it is currently prudent to retain a more robust balance sheet and to provide financial flexibility to pursue investment opportunities. It is therefore bringing to an end the £500 million share buyback programme currently in place.
Dame Clara, though, is on her way out. Which may prove a turning point: an end to the LSE’s defensive stance at last, and perhaps, a more open approach when it comes to consolidation in the exchange business.
Well, that might happen.
Related link:
Clara’s shorts – FT Alphaville
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