The total value traded on the London Stock Exchange’s SETS equities trading platform fell 22% in the year to 31 March 2009, according to the exchange group’s preliminary annual results statement.
The exchange blamed the decline in annual value traded from £2,276bn to £1,771bn on a 22% fall in the value of the FTSE 100 over the period. The average daily value of equity trading on SETS in the year to March 2009 slipped by 24% to £6.9bn.
With Borsa Italia experiencing a 36% reduction in equity value traded over the period to £684bn, the group experienced an overall downturn in equity trading activity of 27% in the 12 months to the end of March.
Revenues from cash equities trading services fell 16% to £184.1m over the period, with total revenue from trading services across all asset classes declining 11% to £275.3m. Trading services, which consists of the group’s cash equities, derivatives and fixed income trading activities, contributed 41% to overall revenue.
In its results statement, the exchange said overall revenue was up 23% on the previous year at £671.4 million, but only 1% higher on a pro forma basis and 6% down at constant currency, assuming the merger with Borsa Italiana had taken place on 1 April 2007. Operating profit (before goodwill impairment, amortisation of purchased intangibles and exceptional items) for the year to March 2009, was up 17% on 2008 at £338.6 million, but 1% down pro forma, and 7% lower constant currency. Operating costs (£332.8m), goodwill impairment (£484m), exceptional items and amortisation (£64.6m) and net finance expenses (£44.9m) resulted in an overall pre-tax loss of £250.8m.
“The goodwill impairment arising from the all-share merger is a technical accounting adjustment reflecting the major deterioration in current economic conditions. It belies the high quality of, and potential arising from the combination. Indeed, the assessed value of Borsa Italiana remains comfortably above the £1.3 billion value at the time of completion of the merger given the strengthening of the euro,” said Chris Gibson-Smith, chairman of London Stock Exchange Group.
“We have performed well, with revenue up 23%, reflecting the overall resilience and diversification of our business, and full year effect of our merger with Borsa Italiana,” said chief executive Clara Furse. “Each of our divisions responded well in increasingly difficult markets, with information services and clearing operations delivering particularly strong growth, and the exchange playing an essential role in economic recovery during a year of record equity fund raising on its markets. We have also made very good progress in achieving synergies from the merger and will now deliver a further increase in cost synergies to £32 million, up by 60% from the original plan.”
After eight years in her role, Furse will be replaced by former Lehman Brothers executive Xavier Rolet, following today’s results announcement.
The exchange’s share price rose 6.5p from the previous day’s close of 700p in early London trading.