Stock Exchange raises dividend 26%

Stock Exchange raises dividend 26%

The London Stock Exchange yesterday raised its total dividend by 26% for the last financial year even though pre-tax profits remained static at £89m.

It said the payout, which comes on top of a special dividend in August, was in line with optimism about the future of the exchange and denied it was trying to buy favour with frustrated shareholders.

Despite having endured a turbulent period of on-off merger talks, the chairman, Chris Gibson-Smith, said the exchange was going from strength to strength with a 4% increase in gross turnover to £259.7m.

He insisted that it was now working "very closely" with shareholders and there was no question that Clara Furse, the chief executive, should feel her job was in danger.

Asked whether Ms Furse might feel vulnerable after seeing the departure of her rival at Deutsche Börse after it shelved a £1.3bn takeover bid for the London exchange, Mr Gibson-Smith said: "It's not occurred to us."

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Both he and Ms Furse insisted that they were looking for wider opportunities to join in any consolidation of exchanges in Europe and the US.

Ms Furse said it was little surprise that continental rivals had been banging on their door. "If you look at our results and compare them to the cash equity market figures for both Deutsche Börse and Euronext you can see we are a conspicuous success story."

She cited new issues rising from 236 to 514, average daily equity bargains up 16% to 271,000 and computer terminal connections to the exchange rising from 90,000 to 95,000 year-on-year.

But financial results were dented by a 6% rise in operating costs which the exchange attributed "mainly" to IT depreciation charges. There was also £3m growth in staff costs.

Ms Furse shrugged off concerns about hedge funds bringing more volatility to the London market, while the exchange expressed confidence that the regulatory framework on the junior Aim market was working efficiently. It sidestepped questions about whether troubled small cap mining stocks such as Regal Petroleum risked damaging the reputation of the exchange. LSE shares ended the day up 2% at 471p.

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