Member Article

LSE commits to London but merger costs see profits drop 7%

The London Stock Exchange’s pretax profits have suffered a 7% fall in the last six months due to costs associated with its proposed merger with German exchange Deutsche Boerse.

Profits fell to £95.4m in the half-year period up to June, marking a 7% drop on the £115.5m it enjoyed at the same point last year with a big chunk of that fall accountable to the £55m transaction costs related to the impending merger.

The transaction, which was announced in March and would create one of the world’s biggest exchanges, is still ongoing, with shareholder approval achieved in July and regulatory approval to follow.

Commenting as part of its half-year report, Xavier Rolet, Group Chief Executive, said: “During the period, we announced our all share merger with Deutsche Boerse, to create a global markets infrastructure group, anchored in Europe, with substantial revenue and cost synergies benefiting our customers and shareholders.

“We are delighted to have achieved shareholder approvals and are now focused on securing regulatory consents.”

Meanwhile, speaking to City AM, Rolet reaffirmed the LSE’s commitment to retaining its headquarters in London despite the ongoing uncertainty surrounding Brexit and the financial service sector’s continued access to the European single market.

Referencing the Referendum Committee which has been set up by the LSE and Deutsche Boerse to handle any fall-out from June’s EU referendum, Rolet pointed out that the UK will still be a member of the EU for two year’s after Article 50 has been invoked.

He added: “The deal isn’t subject to change. Its terms are set and the legal framework does not accommodate any other outcome

“The Referendum Committee is designed, over the course of time – there’s no timeline set in that respect – to make any non-binding recommendations to the separate boards and the unified board, post-closing, as regards any customer or shareholder issues that may arise as a result of the outcome of the referendum.”

“Post-closing, the company will be a normal, UK-governed company that will have to adjust to what happens in the world – seize opportunities, continue to service its customers.”