Today is Dame Clara Furse’s last day as CEO of the London Stock Exchange, but sadly there was no fairytale ending: she said this morning that the LSE sank £251m into the red last year thanks to a big write-down in the value of Borsa Italiana, the Italian stock exchange it bought in 2007. Not the kind of send-off she was probably hoping for. That said, annual revenues were actually up 23% to £671m, amid signs that share trading is starting to pick up again – which is good for the LSE, and a positive sign for the economy as a whole…
It’s been a tough year for the LSE: with trading volumes down and very few companies choosing to float (for obvious reasons), plus added competition from new market entrants, the exchange was bound to feel the pinch. Despite the headline boost, revenues were actually down 6% on an underlying basis, while a ‘technical accounting adjustment’ in the value of Borsa, to the tune of £484m, turned the previous year’s profit of £227m into a £251m loss (although the LSE insists the merger is going well).
As Furse hands over the reins to ex-Lehman banker Xavier Rolet (now there’s a epithet to be proud of), the City has been picking over her record during her eight years in charge. In general, Dame Clara has a lot to be proud of: when she took over the share price was about £2; it’s now around the £7 mark, while revenues have tripled. She’s built the LSE into one of the world’s most important exchanges, while fending off the unwelcome advances of a range of different suitors – Deutsche Borse, Nasdaq, Euronext – to maintain its independence. And as one of the first women to hold such a senior role in the City, she’s certainly been a trail-blazer.
On the other hand, opponents argue that the LSE may have missed a trick or two under Furse’s leadership. They point to her failure to tie up a deal with derivatives exchange Liffe (her former employer), and worry that the recent consolidation in the sector has left LSE lacking the scale to compete with new entrants – it’s already seen its share of the FTSE 100 stocks drop from 90% to 70% in the last year. And shareholders could have done even better: LSE shares were trading at around £20 back in 2006, when Nasdaq offered £12.43 a share.
The market’s clearly getting more competitive, so Rolet will have a tough job on his hands. But regardless of today’s results, Dame Clara surely leaves the LSE in a better state than she found it.
In today's bulletin:
Yell chairman pensioned off amid RBS row
Mixed news for LSE as Dame Clara bows out
Recession big in Japan as economy slumps 4%
Small firms fear burgeoning health and safety costs
Do it right: Seven ways to leave gracefully