In summary, the Exchange has produced another very strong financial performance, benefiting from continued good momentum in all main business areas in the third quarter, compared to the same quarter last year:
- Main Market new issues increased 20 per cent to 36; total new issues, including AIM, up from 148 to 168
- SETS bargains/day up 25 per cent to 218,000
- Professional terminals up 4,000 since Q3 last year to 86,000 at end of December 2005
Reflecting continuing strong performance in Q3, financial results (excluding exceptional items) for the nine months ended 31 December 2005 show:
- Revenue up 16 per cent to £210.6 million
- Adjusted EPS up 43 per cent to 25.5 pence
For the three months ended 31 December 2005, revenue was
For the nine months ended 31 December 2005, revenue was
For the 12 months ended 31 December 2005, adjusted EPS was
Commenting on current trading and prospects, Clara Furse, Chief Executive Officer, said:
“The Exchange has once again delivered very good top line growth in all main business areas and the strong momentum in earnings growth has been maintained, with adjusted EPS growth of 43 per cent for the year so far.
“This performance and the increasing value this creates for shareholders and customers, together with the quality of the Exchange’s brand, technology, franchise and global position, reinforces our dismissal of Macquarie’s offer which entirely fails to recognise the value of the business and its unique position. We remain confident of an excellent outcome for this year and continued strong trading should keep us on course to deliver a strong performance in financial year 2007.”
Issuer Services
In Q3, Issuer Services continued the strong performance seen earlier in the year with revenue increasing 37 per cent to £15.5 million (2004: £11.3 million), mainly reflecting the number and size of UK and international new issues during the period.
During the quarter there was a total of 168 new issues on the Exchange’s markets, up 14 per cent on the same period last year (2004: 148), including 36 on the Main Market (2004: 30). In December alone, a record 83 new companies joined the Exchange’s markets. Money raised on the Main Market increased 145 per cent to £8.1 billion (2004: £3.3 billion) and the average market capitalisation of an IPO increased over 250 per cent to £269 million.
The growth in new issues for the first nine months of the financial year was the principal driver for the 35 per cent rise in Issuer Services’ revenue to £42.3 million (2004: £31.3 million). At 474, the total number of new issues increased 31 per cent over the corresponding period last year (2004: 362). Main Market new issues increased 38 per cent to 83 (2004: 60) while AIM also performed well with a 29 per cent increase in new issues from 302 to 389. As at 31 December 2005, the number of companies on AIM grew to a new record level of 1,399 (2004: 1,021), with the total number of companies on our markets increasing to 3,093 (2004: 2,837).
RNS performed well during Q3 with revenues of £2.5 million for the quarter, up 39 per cent. For the nine months of the financial year to date, revenue increased 26 per cent to £6.7 million, reflecting an increase in the number of company announcements during the year.
Broker Services
Broker Services delivered an excellent performance as revenue in Q3 increased 22 per cent to £30.9 million (2004: £25.4 million). The average number of equity bargains per day increased 22 per cent to 344,000 (2004: 281,000) and value traded totalled £1.4 trillion during the period, an increase of 17 per cent (2004: £1.2 trillion).
Trading volumes on SETS, the Exchange’s electronic order book, continued to grow strongly. The average number of SETS bargains per day for the quarter reached record levels at 218,000, a 25 per cent increase (2004: 175,000), including 229,000 bargains per day in October, a new record month. Value traded on SETS increased 33 per cent to £292 billion (2004: £219 billion). During the quarter, the average value of a SETS bargain increased five per cent to £21,000 (2004: £20,000).
SETS growth was supported by the continued success of SETSmm (up 131 per cent to 37,000 bargains per day) which was extended in December 2005 to include the constituents of the AIM 50 Index as well as the remaining 100 Main Market small cap stocks not already traded on the service. Overall, trading on SETS contributed 69 per cent of Broker Services’ revenue during the quarter.
In Q3, the average number of off-book bargains decreased to 44,000 per day (2004: 47,000) while the average number of international bargains rose to 82,000 per day (2004: 59,000).
For the nine months ended 31 December 2005, Broker Services’ strong performance was reflected in a 19 per cent increase in revenue to £87.8 million (2004: £74.0 million). During the period, the daily average number of equity bargains was 326,000 (2004: 258,000) and the daily average number of SETS bargains was 206,000 (2004: 162,000), a financial year to date increase of 27 per cent. The average value of a SETS bargain was unchanged over the same period last year at £21,000 (2004: £21,000).
Information Services
Information Services made good progress during the quarter. Revenue for Q3 before exceptional items rose eight per cent to £24.4 million (2004: £22.5 million), reflecting an increase in the number of terminals as well as increased contributions from SEDOL and Proquote.
The overall number of terminals taking real time Exchange data increased to 99,000, up 5,000 since the same point last year (31 December 2004: 94,000). The number of terminals attributable to professional users rose to 86,000 (31 December 2004: 82,000). Proquote, the Exchange’s provider of financial market software and data, continued to expand with 3,000 screens (31 December 2004: 2,500).
SEDOL Masterfile, the Exchange’s securities numbering service, continued to make good progress during the period with the number of securities with SEDOL identification increasing from 700,000 at the end of September 2005 to over one million.
Information Services’ turnover for the financial year to date, before exceptional items, increased seven per cent from £64.9 million to £69.5 million, reflecting the increase in number of terminals taking Exchange data and the success of other information products.
Derivatives Services
Derivatives Services, mainly comprising EDX London, the Exchange’s equity derivatives business, contributed revenues of £1.9 million in Q3 (2004: £1.5 million) and £5.8 million for the first nine months of the year (2004: £5.1 million). During the quarter EDX traded 5.5 million contracts (2004: 4.4 million) and 15.6 million contracts were traded in the nine months ended 31 December 2005 (2004: 13.6 million).
Current Trading and Prospects
The positive market trends seen in the first half of the financial year have continued in the second half, with strong growth in new issues on both the Main Market and on AIM and record trading volumes on SETS. In addition, demand for real time data remains good with professional terminal numbers increasing since the same point last year. As stated with the release of the Interim Results, the Exchange is committed to ongoing cost control and should keep operating costs in the second half of the year at the same level as the first half. In addition, costs next year should be maintained at the same level as the current financial year.
Overall, the Exchange is confident of an excellent outcome for the current financial year and continuing strong market conditions should ensure a strong performance for the financial year ended 31 March 2007.