The London Stock Exchange has reported a net loss of £338 million for the year ending March 2009 after taking a goodwill impairment charge of £484 million on its acquisition of Borsa Italiana.
The LSE's slide into the red comes as the Exchange faces increasing competition from a slew of nimble competitors who have taken a 30% share of trading in FTSE 100 stocks.
The 12-month net loss compares with a with a profit of £168.3 million the year before.
Commenting on the results, LSE chairman Chris Gibson Smith described the goodwill impairment as "a technical accounting adjustment reflecting the major deterioration in current economic conditions".
He adds: "The assessed value of Borsa Italiana remains comfortably above the £1.3 billion value at the time of completion of the merger given the strengthening of the euro."
The merger integration programme is "well ahead of plan", says Gibson Smith, with an expected 60% increase in cost synergies to £32 million to be achieved in the March 2010 financial year.
The full-year results were presented for the last time by outgoing CEO Clara Furse. All eyes will now turn to her replacement Xavier Rolet for guidance on how he plans to turn the business around in the face of intensifying competition and weak markets.
In a press briefing mid-morning, Rolet hinted that the Exchange will be looking to make advances in derivatives, and will once again be re-examining its technology platform. "Cost, technology and market share are all linked," he told reporters.
In particular, the LSE is examining options to buy or develop technology that would cut the time it takes for a trade to less than a millisecond. The LSE currently offers trading at 3.7 milliseconds - slower than many rival platforms.