LSE profits up, says world is changing
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The London Stock Exchange bolstered its case for remaining independent today by reporting a sharp jump in first-half profits and revenues. Pre-tax profits rose to £76.7m from £29.4m, reflecting in part an exceptional charge last year from the cost of defending itself against successive – but unsuccessful – bidders. Revenue rose 20 per cent to £163.3m with broker services – share trading activity – accounting for nearly half of that. LSE chairman Chris Gibson-Smith said the results reflected “a secular change in equities trading facilitated by the roll-out of new technology, rapid growth in algorithmic/black box trading, direct market access by traditional fund managers and hedge funds and derivatives traders using our market for hedging purposes.”
Severstal GDRs have been priced in the middle of the range, a day after Chelyabinsk Zinc Plant was priced above the top end of its range. As we reported on Saturday, there is a lively debate taking place in the City at the moment about this influx of foreign companies and whether to regulate the risk or simply allow the market to price it.
Scottish Power has confirmed it has received a takeover approach. Some think it has come from RWE; we think Vattenfall is interested. Scottish Power shares are up about 4 per cent in heavy volume.
More Bluetooth blues, again from CSR. The chip specialist reported Q3 figures in line with its previously-cut guidance but further reduced its Q4 guidance. Confusingly, I’m sure ARM Holdings was saying only last week that it was selling more Bluetooth chips. Phil Stafford will explain all.
Things are looking good for John Pluthero‘s incentive scheme at Cable and Wireless. The telecoms group today said its UK recovery plan was ahead of expectations in the first half and raised its full-year earnings guidance for the troubled division. Earnings before interest, tax, depreciation and amortisation (ebitda) in the UK were £73m in the first half and it now expects full-year ebitda of £145m-£150m, excluding its wholesale broadband business. You can get a measure of Pluthero’s self-confidence in his interview with Andrew Parker a month ago, but we’ll have more on what he thinks later. Pluthero told analysts today that he doesn’t expect the UK business to be cash flow positive for another two years.
On a related but separate matter, Swisscom’s chief executive says he would like to buy back Vodafone’s 25 per cent stake in his mobile business.
Today’s new business figures from Standard Life came in just short of analysts’ expectations.
Rentokil’s third quarter figures have been held back by difficulties in its textiles and washroom services arm. Pre-tax profits on continuing operations rise 3.6 per cent to £51.2m for the quarter. Chief executive Doug Flynn continues to predict a return to “modest profit growth in 2007”.
Fuel prices hit FirstGroup’s first-half profits. Pre-tax profits at the bus group fell 28 per cent to £39.7m, although this was also because of lower property disposal proceeds, one-off mobilisation costs and higher interest payments.
Rumour of the day: Wolverhampton & Dudley shares are up on talk of a £17 a share bid from private equity.
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