THE London Stock Exchange has reported a 22 per cent rise in operating profits for the last year, but gave no update on the mounting speculation it is to merge with another exchange.

Chief executive Clara Furse said in "difficult market conditions" turnover grew 11 per cent to £215.6m for the year to March 31 while operating profit before exceptionals rose to £70.5m.

Bottom-line pre-tax profits came in at £75.2m, up from £30.4m.

One-off costs for the last year included £3.6m relating to floating the company, while 2001's profits were reduced by costs of its aborted merger with Deutsche Borse and defending itself from a hostile bid from Swedish firm OM.

The LSE said it had seen difficult market conditions over the last year, while since the year end in March, conditions had been similar to the latter part of the financial year.

Trading volumes for broker services and the number of terminals receiving Exchange data were both stable, while it said it was difficult to predict whether the downturn in the flotation market had bottomed out.

It added it did not foresee any "immediate change" to current levels of market activity, expecting "modest revenue growth" at the start of its financial year, increasing in the second half.

Commenting on market conditions, finance director Jonathan Howell said: "The last 12 months have been a very difficult market in the financial services industry, but notwithstanding that we have reported growth.

"It is difficult to predict when the upturn in market conditions will come but in terms of us, the fundamental business we have is sound and we are forecasting growth this year."

However, the group gave no update on mounting speculation it was in talks regarding a merger.

The LSE has been tipped as a takeover or merger candidate following its aborted merger two years ago with Deutsche Borse, the takeover bid from OM and its recent failed attempt to buy London derivatives exchange Liffe.