998LSE DAW AR 2001 Front
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LondonStockExchangeAnnualReport2001 Creatingopportunities,deliveringresults AnnualReport2001 ©June2001 LondonStockExchangeplc LondonEC2N1HP Telephone+44(0)2077971000 www.londonstockexchange.com RegisteredinEnglandandWalesNo2075721 TheLondonStockExchangecrestandlogoandAIM, extraMARK,landMARK.RNS,SEAQ,SEQUENCE,SETSand techMARKaretrademarksofLondonStockExchangeplc. FTSEisaregisteredtrademarkofLondonStockExchange plcandTheFinancialTimesLimitedandisusedbyFTSE InternationalLimitedunderlicence. DesignbyDragon PhotographybyMartinLevenson PrintedbyFirstImpression Shareholderinformation Financialcalendar Final dividend payment August 2001 Half year end 30 September 2001 Interim dividend payment January 2002 Contents Financial year end 31 March 2002 2 Business and financial highlights 4 Chairman’s statement 8 Chief Executive’s review 12 Providing the right environment 16 Creating new trading opportunities Registeredoffice Registrarinformation 22 Tailoring services for the private investment community London Stock Exchange Lloyds TSB Registrars London The Causeway 26 Delivering the information and transparency essential for all our customers EC2N 1HP Worthing West Sussex 30 Financial review Registeredcompanynumber BN99 6DA 32 The Board of Directors Telephone:+44 (0)1903 502541 35 Directors’ report and accounts 2075721 Website:www.lloydstsb-registrars.co.uk 65 Shareholder information CorporateInvestorRelationscontacts Substantialshareholders Mailing address: (notified of 3% holding or more) London Stock Exchange Attn: Investor Relations As at 23 May 2001 the Company had been notified of London EC2N 1HP the following substantial interests in accordance with Sections 198 to 208 of the Companies Act 1985: Email:[email protected] Shareholderhelpline UBS AG 4.07% Fidelity International Limited 3.05% +44 (0)20 7797 3322 Website:www.londonstockexchange.com Sharetrading At an Extraordinary General Meeting held on 15 March 2000, shareholders approved the necessary resolutions to enable the Exchange to become a public company. The Company re-registered itself as a public company and changed its name to ‘London Stock Exchange plc’ on 8 June 2000. Dealing of the Exchange’s shares is conducted via an off-market trading facility operated by Cazenove & Co. The Company proposes to seek admission of its shares to the Official List. Creatingopportunities, deliveringresults Weareastrongcompanywithtalentedpeople andpowerful,flexibletechnology.Weprovide awiderangeofmarketservicestosupportall ourcustomers—issuers,professionalinvestors, privateclientbrokersandindividualinvestors. Thisyear,wereportstrongfinancialresults andarangeofexcitinginitiativesand developmentsforourcustomerstoenhance theirbusinesses.Bycreatingopportunities forourcustomers,weaimtomaximisevalue forourshareholders. LondonStockExchange 1 Ayearofstrongperformance Turnoverhasincreasedby18percentfrom£164million to£193million,leadingtogrowthof34percentin adjustedearningspersharefrom113.1pto152.0p. 2000/2001 1999/2000 Turnoveroncontinuingactivities £193m £164m Operatingprofitoncontinuing activitiesbeforeexceptionalcosts £58m £42m Profitbeforetax £30m £49m Basicearningspershare 51.4p 108.1p Adjustedearningspershare 152.0p 113.1p Dividendpershare 32.0p — Turnoveroncontinuingactivities Operatingprofitoncontinuing Adjustedearningspershare yearended31March(£million) activitiesbeforeexceptionalcosts yearended31March(pence) yearended31March(£million) 200 80 200 193 150 60 150 164 58 152 147 100 40 100 113 42 50 50 20 62 21 0 0 0 1999 2000 2001 1999 2000 2001 1999 2000 2001 2 LondonStockExchange AnnualReport2001 Totalrevenue yearended31March2001 Broker Services Issuer 33% £64m Services £32m 17% TheExchangederivesrevenuesfromitsactivities 6% Other inthreemainbusinessdivisions: IssuerServices, £12m 44% Information BrokerServicesand InformationServices. Services £85m Issuers UK andinternationalmoneyraised IssuerServicesrevenue bycompanies(£billion) yearended31March(£million) 40 40 UK International 13 30 30 11 32 13 4 20 25 IssuerServices derives 26 20 4 23 20 19 21 itsrevenuefromfees 19 14 10 13 foradmissiontotrading 10 0 1997 1998 1999 2000 2001 andfromannualfees 0 1997 1998 1999 2000 2001 Brokers NumberofUK andinternational BrokerServicesrevenue equitybargains(million) yearended31March(£million) UK International 40 80 12 30 8 60 64 28 54 7 BrokerServices derives 20 25 40 6 41 39 itsrevenueprincipally 39 5 17 10 15 20 11 fromchargeslevied 0 ontrades 0 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 Information Numberofterminals InformationServicesrevenue (thousand) yearended31March(£million) 120 InformationServices 100 100 80 85 107 derivesitsrevenue 80 91 73 60 72 82 principallyfromcharges 65 77 60 63 64 40 40 leviedonterminals 20 withaccesstoExchange 20 0 tradeandpricedata 0 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 LondonStockExchange 3 Chairman’sstatement Inourfirstyearofoperationasapubliclimitedcompany,the LondonStockExchangehasachievedmuchaswehavebuiltonour corestrengthsandpreparedthewayforthefuturedevelopment ofthecompanybothinreachandscaleofbusiness.Ourdecision todemutualisehasenabledustofocusmoreclearlyontheinterest ofallourcustomersandondeliveringvaluetoourshareholders. 4 LondonStockExchange AnnualReport2001 Strategicissues There are challenging times ahead. This last year has The bigger changes are required in Europe. We driven home – to everyone – the fundamental changes welcome the thrust of the Lamfalussy Report on that are taking place in the economic and political moves to a well functioning single market. We context in which exchanges must trade and compete. welcome the gathering consensus around how to In the past, exchanges have typically been in a organise the clearing and settlement infrastructure. dominant position in a domestic market, often carrying And we welcome the moves by other exchanges to inappropriate public policy regulatory functions and, expose themselves to market disciplines. All this is usually, running a domestic silo of trading, clearing absolutely necessary if Europe is to have the efficient and settlement. Companies, their advisers, and capital market it needs to compete. The costs of investors have reinforced this local exchange bias. today’s rules and structures are enormous. And the governance of exchanges has reflected this These changes to the landscape are underway. world. Competitive market disciplines were missing The question is: What does the London Stock and the capacity to change was weak or absent. Exchange need to do in order to thrive and grow No more. And in many ways your company is in the as the landscape changes? The answer is that vanguard of the change. We have moved from mutual we have to succeed in: to reformed governance. We are a commercial • being a strong commercial company in our own organisation, now preparing to move to fully listed right. This year’s results demonstrate that we have status to give us keener disciplines, better flexibility a sound foundation. Moving to listing will cement in and more capacity to respond to customer needs. the disciplines required to sustain that performance But structural changes – changes in the landscape – • using our considerable influence are required too, before we can exploit the economies to change the of scale of our systems, our technology intellectual landscape within which we must compete. We’re property rights, our worldwide, fine brand and the doing that, and doing it with enthusiasm, because sound regulatory framework in which we operate we are particularly well positioned to exploit more from the UK. Some of the structural changes are open markets across Europe and elsewhere unfortunately in the UK itself – most notably the bizarre • having a commercial growth strategy that builds notion that stamp duty on equity cash transactions on our strengths, and the capacity to execute that can be part of a modern competitive economy. strategy outstandingly well. The first report from Clara Furse, our new Chief Executive, sets out in some detail our progress and ambition on this front. LondonStockExchange 5 Chairman’sstatement Ourpeople Listing On 24 January, I welcomed Clara Furse to the At the time of demutualisation in March 2000, the Exchange and resumed my role as Non-Executive Board concluded that an interim period was required Chairman. Clara brings with her valuable experience during which the business could evolve and the in the technology sphere together with a strong benefits of moving to a fully commercial basis of international focus and firm belief in the strengths operation could begin to take effect. Your company of the Exchange. I look forward to working with is now proposing to list its shares on the main market Clara and her new management team as she takes of the London Stock Exchange and to remove the the Exchange on to the next stage of its development. 4.9 per cent limit on shareholdings. The Board has also been reconstituted to reflect As a fully listed company, your company will have better the future needs of the company. The number freely transferable shares and access to capital of independent non-executive directors has also markets, providing greater strategic flexibility to play been increased in line with the UK Code on Corporate a leading role in the development of our marketplace. Governance. We welcome to the Board as non- executive directors Baroness Cohen, Oscar Fanjul, Nigel Stapleton and Robert Webb QC. We are grateful to Graham Allen, Ian Plenderleith, Simon Robertson, Hector Sants and Nigel Sherlock for their valued contributions.