London Stock Exchange profits up ahead of takeover

The London Stock Exchange Group underlined its appeal to suitors by revealing a sharp jump in profits as the UK company continues to press ahead with plans for a £20 billion takeover by Deutsche Börse.

The LSE saw a big lift in revenues in 2015 from the first full year of contribution from Russell Investments, the US-based indices provider it acquired for $2.7 billion in 2014.

Russell, which provides indices that are widely used by US institutional investors for equities and exchange traded funds, accounted for £953 million of the LSE’s £2.29 billion in revenue, driving most of a 78 per cent increase.

The LSE said it was on track to spin off Russell Investment Management, the company’s asset management unit, for $1.15 billion in the first half of this year to help pay off its debt.

Pre-tax profits from continuing operations jumped 58 per cent to £288 million from £182 million. Revenue from post-trade services and capital markets dipped slightly.

The LSE said talks with Deutsche Börse remain ongoing, reiterating that there can be no certainty that any transaction would take place.

Xavier Rolet, LSE chief executive, said joining the two would represent a “compelling opportunity to strengthen each other in an industry-defining combination” by creating a pan-European exchange dominant in derivatives, clearing and financial market data.

The LSE said both exchanges’ key businesses would continue under their current names following the possible takeover, announced last week.

The UK bourse is considering shifting its French clearing house and London interest rate derivatives business to help push through the deal – partly to ease concerns over how the group would be regulated if the UK votes to leave the EU.

“Against this backdrop one thing is certain – we remain committed to delivering enhanced service,” the LSE said. – Copyright The Financial Times Limited 2016