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London Stock Exchange: Q1 2006 trading statement
The London Stock Exchange said trading revenues for the first quarter (to June 2006) had reached record levels.
Revenue rose 25% to £84.3m which was driven by record trading volumes on the Exchange’s electronic order book and growth in the number of terminals taking Exchange data.
The Exchange benefited from generally robust markets which contributed to a greater volume of trades as well as a higher number of new listings (which eventually increase the number of trades). The increase in new listings, particularly from overseas is being helped by onerous requirements being imposed on listed companies in America.
The average daily number of SETS trades rose 69% to 332,000 while average daily value traded rose 74% to £6.6bn. The number of professional terminals rose by 6,000 units since June 2005 to reach 89,000. Since March 2006, the Exchange has added 1,000 professional terminals.
New listings in the first quarter reached 138, a dip from the 184 recorded in the first quarter of 2005 but a fairly healthy level nonetheless.
The exchange said good cost control contributed to improved operating margins, which is welcome, given our concern with rising costs when we last looked at the company. (See our previous piece)
Overall, prospects are tied to the markets and rising interest rates and slowing economic growth are likely to dampen growth prospects. The share price of the company has been held up by a flurry of takeover bids but and it is difficult to justify the stock’s current price purely on the basis of its earnings.
The share trades at 1130p, on a prospective PE (2007 earnings) of 19.6x, at the top of the sector range with a poor yield of 1.9%.
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