TIDMLSEG
RNS Number : 7922H
London Stock Exchange Group PLC
06 August 2021
London Stock Exchange Group plc: H1 2021 Interim Results
This release contains revenues, costs, earnings and key
performance indicators (KPIs) for the six months ended 30 June 2021
(H1). All figures quoted in this release are on an underlying
basis. Figures are stated on both a statutory and pro-forma basis
for H1 2021 and H1 2020. Pro-forma figures assume that the
acquisition of Refinitiv took place on 1 January 2021 and the prior
year comparator assumes that the acquisition of Refinitiv occurred
on 1 January 2020. All pro-forma and statutory figures exclude the
financial contribution from Borsa Italiana which was divested
within the period and classed as a discontinued business in both
periods. Constant currency variance is calculated on the basis of
consistent FX rates applied across the current and prior year
period, the conversions have been made from the transactional
values, which will eliminate any transactional and translational
movements along with any related accounting adjustments. For more
information please refer to "Accounting and modelling notes"
section below. Organic variances have been removed from our
disclosure due to the large variances associated with the
acquisition of Refinitiv.
Highlights
Note: Unless otherwise stated, variances refer to growth rates
on a pro-forma constant currency basis, excluding the impact of a
deferred revenue accounting adjustment(1) , to provide the best
view of underlying performance
-- Good performance across all divisions driving 4.6% growth in total income(1)
-- Adjusted operating expense growth of 1.1% due to lower
phasing of costs in H1; on track for mid-single digit cost growth
for FY 2021 at constant currency (expected to be c.5%), reducing to
low-single digit cost growth in 2022 and 2023
-- Adjusted EBITDA margin of 49.4%(2) ; margin will be lower for
the full year as a result of cost phasing in H2, improving
thereafter to achieve the 50% target and increasing beyond 2023
-- Good financial performance driving 18.6% increase in AEPS to 146.1p (3)
-- Good progress on the integration of Refinitiv with GBP77
million of run-rate cost synergies realised at H1; full year
guidance for run-rate cost synergy delivery increased from GBP88
million to GBP125 million; and 27 new products launched as part of
revenue synergy programme
-- Group in a strong financial position; leverage reduced to
2.2x net debt/EBITDA following successful divestment of Borsa
Italiana
-- Favourable outlook supports increase in interim dividend (up 7%) to 25.0 pence per share
(1) Excluding recoveries and the deferred revenue accounting
impact. The deferred revenue impact is a one-time, non-cash,
negative revenue impact resulting from the accounting treatment of
deferred revenue within Refinitiv's accounts which have been
re-evaluated upon acquisition by LSEG under purchase price
accounting rules. The result of this accounting treatment is a
GBP23m adjustment reducing revenue for H1 2021. The vast majority
impacts the Data & Analytics business with a smaller impact
applied to the FX venues business within Capital Markets. There
will be further immaterial impacts in subsequent periods within
2021. Further information is available in the "Accounting and
modelling notes" section. Constant currency variance shows
underlying financial performance, excluding currency impacts, by
comparing the current and prior year period at consistent exchange
rates.
(2) Adjusted EBITDA margin is Adjusted EBITDA divided by Total
Income (excl. Recoveries)
(3) Adjusted basic earnings per share (AEPS) variance is on a
reported pro-forma basis, not constant currency
David Schwimmer, CEO said:
"LSEG has delivered a good financial performance in the first
half of the year, reflecting revenue growth across all
divisions.
"We are executing well on our integration plans to deliver the
strategic and financial benefits of the Refinitiv transaction. Our
cost synergy programme is ahead of plan with GBP77 million of
run-rate savings achieved at H1 and our revenue synergy programme
is on track.
"We continue to invest in projects that enhance our customer
offering and deliver a more scalable and efficient business,
particularly in Data & Analytics. This will support our revenue
growth ambitions and lead to further operating margin improvement.
The reduction of leverage during the period reinforces our strong
financial position and, with our mix of world-class assets and
unique positioning in growing markets, we look forward to further
progress during the rest of the year."
Financial Summary
Unless otherwise stated, all figures refer to continuing
operations for the six months ended 30 June 2021 (H1 2021).
Comparative figures are for continuing operations for the six
months ended 30 June 2020 (H1 2020). Numbers are presented on both
a statutory and pro-forma basis where indicated.
Statutory underlying
(1)
Continuing operations
H1 2021 H1 2020
GBPm GBPm
-------------- ---------
Data & Analytics 1,959 409
Capital Markets 542 147
Post Trade 450 468
Other 14 4
------------------------------------ -------------- ---------
Total Income (excl. recoveries) 2,965 1,028
Recoveries 148 -
------------------------------------ -------------- ---------
Total Income (incl. recoveries) 3,113 1,028
Cost of sales (394) (114)
------------------------------------ -------------- ---------
Gross profit 2,719 914
Adjusted operating expenses
before depreciation, amortisation
and impairment (1,247) (369)
Income from equity investments 11 -
Share of loss after tax
of associates (2) (2)
------------------------------------ -------------- ---------
Adjusted earnings before
interest, tax, depreciation,
amortisation and impairment 1,481 543
Depreciation, amortisation
and impairment (311) (86)
------------------------------------ -------------- ---------
Adjusted operating profit 1,170 457
Net finance expense (87) (22)
------------------------------------ -------------- ---------
Adjusted profit before
tax 1,083 435
Taxation (228) (89)
------------------------------------ -------------- ---------
Adjusted profit after tax 855 346
Non-controlling interest (97) (34)
------------------------------------ -------------- ---------
Profit for the period 758 312
------------------------------------ -------------- ---------
Adjusted basic earnings
per share (p) (2) 146.0 89.2
Basic earnings per share
(p) (2) 34.3 45.1
Interim dividend per share
(p) 25.0 23.3
------------------------------------ -------------- ---------
(1) Statutory underlying figures for H1 2021 incorporate figures
from Refinitiv for February to June 2021. Figures associated with
the Borsa Italiana Group divestment are excluded from both
periods
(2) Weighted average number of shares used to calculate Adjusted
basic earnings per share and Basic earnings per share on a
statutory underlying basis is 519 million
For the pro-forma table, variances are provided on a reported
and constant currency basis. Commentary is provided on the constant
currency variance (excluding deferred revenue adjustment) to
provide the best insight into underlying performance. Please refer
to the Accounting and Modelling notes section for more information
on relevant accounting adjustments.
Pro-forma underlying(1)
Continuing operations Constant Constant
Currency Currency
Variance Variance
(4) (excl. deferred
revenue adjustment)
(4,5)
H1 2021 H1 2020 Reported % %
(2) Variance
(3)
GBPm GBPm %
--------- --------- ---------- ---------- ---------------------
Data & Analytics 2,272 2,335 (2.7%) 3.9% 4.8%
Capital Markets 619 600 3.2% 9.6% 9.6%
Post Trade 450 468 (3.8%) (2.1%) (2.1%)
Other 15 17 (11.8%) (5.9%) (5.9%)
------------------------------------ --------- --------- ---------- ---------- ---------------------
Total Income (excl. recoveries) 3,356 3,420 (1.9%) 4.0% 4.6%
Recoveries 178 164 8.5% (1.1%) (0.6%)
------------------------------------ --------- --------- ---------- ---------- ---------------------
Total Income (incl. recoveries) 3,534 3,584 (1.4%) 3.7% 4.4%
Cost of sales (454) (486) (6.6%) 0.2% 0.2%
------------------------------------ --------- --------- ---------- ---------- ---------------------
Gross profit 3,080 3,098 (0.6%) 4.3% 5.1%
Adjusted operating expenses
before depreciation, amortisation
and impairment (1,432) (1,507) (5.0%) 1.1% 1.1%
Income from equity investments 11 - - - -
Share of loss after tax
of associates (2) (1) - - -
------------------------------------ --------- --------- ---------- ---------- ---------------------
Adjusted earnings before
interest, tax, depreciation,
amortisation and impairment 1,657 1,590 4.2% 7.9% 9.4%
Adjusted EBITDA Margin
(6) 49.4% 46.5%
Depreciation, amortisation
and impairment (363) (346) 4.9% 7.7% 7.7%
------------------------------------ --------- --------- ---------- ---------- ---------------------
Adjusted operating profit 1,294 1,244 4.0% 8.0% 9.9%
Net finance expense (125) (193) (35.2%)
------------------------------------ --------- --------- ----------
Adjusted profit before
tax 1,169 1,051 11.2%
Taxation (250) (279) (10.4%)
------------------------------------ --------- --------- ----------
Adjusted profit after tax 919 772 19.0%
Non-controlling interest (107) (88) 21.6%
------------------------------------ --------- --------- ----------
Profit for the period 812 684 18.7%
------------------------------------ --------- --------- ----------
Adjusted basic earnings
per share (p) (7) 146.1 123.2 18.6%
------------------------------------ --------- --------- ---------- --- ---------- ---------------------
(1) Pro-forma underlying assumes that the acquisition of
Refinitiv took place on 1 January 2021 for the current financial
year and 1 January 2020 for the prior financial year comparator
figure. Both figures exclude the financial contribution from the
businesses contained within the Borsa Italiana divestment
(2) H1 2020 comparator figure differs to the previous disclosure
due to the treatment of FX and other adjustments. For more
information please refer to the "Accounting and modelling notes"
section
(3) Reported variance is the difference between current and
prior year periods on a pro-forma underlying basis, using
year-to-date FX rates prevalent at each time, therefore any changes
in the FX rates are also reflected in the variance percentage
alongside business performance
(4) Constant currency variance shows underlying financial
performance, excluding currency impacts, by comparing the current
and prior period at consistent exchange rates
(5) The deferred revenue adjustment is explained in the
"Accounting and modelling notes" section
(6) Adjusted EBITDA margin is Adjusted EBITDA divided by Total
Income (excl. Recoveries)
(7) Weighted average number of shares used to calculate Adjusted
basic earnings per share on a pro-forma underlying basis is 556
million.
Pro-forma(1) H1 2021 Highlights
-- Data & Analytics : revenues up 4.8%
o Trading and Banking Solutions revenues down 0.1% - Fixed
income trading, commodities trading, FX and Banking business
growing, offset by decline in Eikon Premium desktops, albeit the
rate of decline has slowed
o Enterprise Data Solutions revenues up 2.4% - continued strong
growth in Pricing and Reference Services (PRS) ahead of market,
with Real Time business also growing
o Investment Solutions revenues up 8.4% - double-digit growth in
asset-based revenue, up 18.2%, as ETF AUM surpassed $1 trillion.
Strong growth in index subscription revenue up 7.9%. Continued
momentum in new product launches and FTSE Russell cross-selling
with PRS
o Wealth Solutions revenues up 0.8% - Data businesses grew well,
partly offset by a decline in Beta volumes compared with strongly
elevated volumes in H1 2020
o Customer and Third-Party Risk Solutions revenues up 37.5% -
strong growth across services and ahead of market; benefit from
acquisitions in 2020
-- Capital Markets: revenues up 9.6%
o Equities revenues up 2.5% - largest number of new issues in
the period since 2014 although benefit from admission fees is
spread across multiple years. Secondary revenues down as volumes
normalised compared to extreme volatility in H1 2020
o FX revenues down 0.8% - Good growth in FXall (dealer-to-client
service), offset by decline in the Matching (dealer-to-dealer)
service, partly reflecting a strong comparator period
o Fixed Income, Derivatives and Other revenues up 15.4% -
reflecting continued strong growth at Tradeweb(2) due to the shift
of trading to electronic markets, new services and market share
gains
-- Post Trade : revenues up 8.4%; total income down 2.1% (impacted by Net Treasury Income)
o OTC Derivatives revenues up 2.4% - good performance against
strong prior year comparator with the platform continuing to
attract new client business
o Securities & Reporting revenues up 15.3% - driven
primarily by strong RepoClear activity attracting clearing volumes
onto the service from European debt issuance
o Non-Cash Collateral revenues up 17.5% - partly reflecting
increased RepoClear activity
o Net Treasury Income down 25.3% - Cash collateral balances and
rate of return remain at more normalised levels, compared with
exceptional prior-year period
(1) Pro-forma assumes that the acquisition of Refinitiv took
place on 1 January 2021 for the current financial year and 1
January 2020 for the prior financial year comparator figure. Both
figures exclude the financial contribution from the businesses
contained within the Borsa Italiana divestment
(2) Tradeweb Q2 2021 results were released on 29 July 2021
Contacts: London Stock Exchange Group plc
Investors
Paul Froud - Group Head of Investor +44 (0) 20 7797 3322
Relations ir@lseg.com
Media
Lucie Holloway / Rhiannon Davies +44 (0) 20 7797 1222
- Financial Communications newsroom@lseg.com
Additional information can be found at www.lseg.com
H1 investor and analyst conference call:
The Group will host a presentation and conference call on its
Interim Results for analysts and institutional shareholders today
at 09:30am (UK time). On the call will be David Schwimmer (Chief
Executive Officer), Anna Manz (Chief Financial Officer) and Paul
Froud (Group Head of Investor Relations).
To access the telephone conference call or webcast please
register in advance using the following link and instructions
below:
https://www.lsegissuerservices.com/spark/LondonStockExchangeGroup/events/7233ea7f-bde2-4dec-8d53-bfc71d10f013
-- Please register with your full name, company name and email address
-- If you wish to participate in Q&A , questions can be
provided in written form via the Q&A tool on the webcast page
or by emailing the LSEG Investor Relations team at ir@lseg.com.
Questions can be submitted in advance and during the event itself.
Written questions will be prioritised as at our 2 July Investor
Education Event
Presentation slides can be viewed at
http://www.lseg.com/investor-relations
For further information, please call the Group's Investor
Relations team on +44 (0) 20 7797 3322
Chief Executive's Statement
Overview of H1
The Group has produced a good half-year financial and operating
performance, with strong momentum on our multi-year journey to
deliver the full potential of the acquisition of Refinitiv. We are
making good progress, delivering on the benefits of the
transaction, particularly in our cost synergy programme where we
are increasing our outlook for synergy realisation this year.
Strong position
We have a diverse set of world-class assets, giving us global
scale, multi-asset class capabilities across the trade lifecycle,
highly recurring revenues with our products and services providing
value across our customers' core operations. We play a leading role
in the sustainable transition through our ESG data, analytics and
indices, capital issuance venues and industry leadership.
We are building on our track record of partnering with our
customers to drive innovation and create value, and on our position
as a trusted operator of large-scale critical market
infrastructure. In utilising these strengths, we are creating an
integrated business that is much more than the sum of the
parts.
Priorities for the Group
Our ongoing priorities are threefold: to integrate our
world-class business; to drive growth; and to build an efficient
and scalable platform, particularly in Data & Analytics. We are
implementing a range of actions across our systems, property and
workforce to progress our integration plans. In driving the top
line, we are using the strengths across the Group to enable
innovation and product benefits for our customers. In delivering
our scalable platforms, we are investing in technology and
infrastructure to drive greater efficiencies and facilitate
sustainable margin enhancement over time. We have made strong
progress across all three key priorities in H1, and this momentum
continues into the second half of the year.
Executing on our integration plan
The Group's divisions are working successfully together to
create new opportunities. These include developing data and
analytics services within Post Trade, the cross-selling of indices
and Pricing and Reference Service (PRS) data and content provision
through the Issuer Services platform. In the near-term, priorities
also include offering transaction execution and cost optimisation
data from our post trade businesses through Workspace and providing
connectivity between the Group's FX venues and ForexClear to
provide additional clearing optionality for customers.
We have made good progress with our revenue synergies, for
instance with cross-selling PRS data to FTSE Russell customers,
while using this data to create and launch new FTSE Russell
products and are on track with our planned delivery, with GBP4
million run-rate achieved in the half.
We are also executing well to deliver our announced GBP350
million of run-rate cost synergies through property consolidation,
technology efficiencies and removal of duplicate roles.
We completed the sale of Borsa Italiana at the end of April, for
a total cash consideration of EUR4.4 billion. As previously
indicated, these proceeds were used to repay the remaining part of
the financing bridge, taken out at the completion of the Refinitiv
acquisition. We have secured long-term financing at historically
attractive rates which puts the Group in a strong financial
position, with leverage reduced to 2.2x within six months post
completing the transaction.
Driving growth
In the first half, Data & Analytics launched a range of new
products, including Refinitiv Active Investor for wealth managers
and FTSE Russell launched the first climate index for the
inflation-linked government bond market. Targeted investment in
projects to enhance services across Data & Analytics have
continued in the period, notably on the further development and
roll out of Workspace in the Wealth and Banking businesses. There
has been positive customer reaction to the new platform, with plans
in place to extend the offering into other businesses within Data
& Analytics.
Capital Markets is attracting record levels of activity through
its strong global offering. In H1, over half of IPOs in London have
been from the technology and internet consumer sectors, with
several high-profile growth companies joining the main market.
London Stock Exchange is a leading global listing and equity
trading venue with increasing focus on capital-raising driving the
transition to sustainable finance. Tradeweb is a leading electronic
trading venue for credit and rates products, with increasing
electronification and share gains driving good growth in the
period. The Group's FX venues are also driving integrated workflow
within a large liquidity pool as electronic trading of FX
increases.
In Post Trade, LCH remains the leading clearer of OTC products
worldwide across asset classes (Rates, FX, CDS) and is developing
its offering to the uncleared space with SwapAgent. In H1,
SwapClear continued to increase the number of clients to the
service, with 47 firms signing up across a diverse range of
geographies. LCH is also a leading clearing service for Repo and
Fixed Income products, and for European equities. During the
period, the RepoClear service grew strongly as it provided netting
efficiencies to customers for higher repo volumes arising from
European debt issuance programmes.
Delivering a scalable platform
We are continuing a targeted investment programme in our
technology and infrastructure to serve our customers better and
facilitate margin enhancement and product profitability. A key part
of this is continuing our ongoing migration of services to the
cloud, which enhances the customer experience and also improves our
scalability, simplifying our data platform by reducing and
consolidating a fragmented offering towards a single point of
access.
Work is underway on the re-platforming of our FX trading venues
to our own proven technology. RepoClear is also moving its clearing
platform onto the same platform as the EquityClear service,
developed by LSEG Technology, to drive further customer
efficiencies. As we deliver on these initiatives, our EBITDA margin
enhancement will continue above the current target 50% level beyond
2023.
Financial pro-forma performance
The Group has delivered good total income (excluding recoveries)
growth in H1, with an acceleration in year-on-year growth from 3.9%
in Q1 to 5.5% in Q2, and on track for c.4-5% growth for 2021. The
growth in H1 has been driven by an increase in recurring revenues
in Data & Analytics and Capital Markets (annual listing fees
and recurring user fees), and stronger volumes in Tradeweb with
high transactional revenues. Net Treasury Income has been at a more
normalised level in the period compared to 2020 H1 which saw
exceptional pandemic-related income from higher returns and cash
margin levels.
Total income by revenue type
Pro-forma underlying (1)
Constant Constant
Currency Currency
Variance(3) Variance
(excl. deferred
revenue adjustment)
(3,4)
H1 2021 H1 2020 Reported % %
Variance(2)
GBPm GBPm %
--------- --------- ------------- ------------- ---------------------
Recurring 2,304 2,374 (2.9%) 3.4% 4.3%
Transactional 930 880 5.7% 10.9% 10.9%
Net Treasury Income 108 149 (27.5%) (25.3%) (25.3%)
Other income 14 17 (17.6%) (18.8%) (18.8%)
--------------------- --------- --------- ------------- ------------- ---------------------
Total income (excl.
recoveries) 3,356 3,420 (1.9%) 4.0% 4.6%
Recoveries 178 164 8.5% (1.1%) (0.6%)
--------------------- --------- --------- ------------- ------------- ---------------------
Total income (incl.
recoveries) 3,534 3,584 (1.4%) 3.7% 4.4%
--------------------- --------- --------- ------------- --- ------------- ---------------------
(1) Pro-forma underlying assumes that the acquisition of
Refinitiv took place on 1 January 2021 for the current financial
year and 1 January 2020 for the prior financial year comparator
figure. Both figures exclude the financial contribution from the
businesses contained within the Borsa Italiana divestment
(2) Reported variance is the difference between current and
prior year periods on a pro-forma underlying basis, using
year-to-date FX rates prevalent at each time, therefore any changes
in the FX rates are also reflected in the variance percentage
alongside business performance
(3) Constant currency variance shows underlying financial
performance, excluding currency impacts, by comparing the current
and prior period at consistent exchange rates
(4) The deferred revenue adjustment is explained in the
"Accounting and modelling notes" section
Adjusted operating expenses before depreciation, amortisation
and impairment grew 1.1%. Costs increased from ongoing factors
including inflation, costs at Tradeweb to support higher revenue
generation, and the annualisation of costs from acquisitions
(SciVantage, GIACT and The Red Flag Group). The Group has continued
to invest in data platform enhancements, including cloud, other
technology enhancements and networks which are increasing the
efficiency and scalability of our businesses. While this investment
continues, we are incurring higher costs as we dual-run new
technology with existing systems and as we support legacy systems
in the near term. Offsetting these increases, the Group has
benefitted from a Covid-19 related underspend on marketing and
travel in H1 and the annualisation of Refinitiv's cost-saving
programme that completed in 2020, with an in-period benefit of
GBP41 million.
We also have strong momentum in the realisation of cost
synergies. In H1, GBP77 million of run-rate cost synergies have
been realised, resulting in an in-period benefit of GBP25 million
on an actual rate basis. The original phasing of the cost synergies
anticipated c.GBP88 million run-rate realised in 2021; we now
expect this run-rate to increase to c.GBP125 million. Revenue
synergies have had a good start, at GBP4 million run-rate achieved,
though will take time to build while requiring upfront investment
already included within our stated investment expectations.
While costs have been well managed and cost growth in the first
half was lower than originally expected, we expect further cost
increases in H2 2021 from the continuation of inflation and other
costs, plus the return of Covid-impacted costs (including travel,
marketing and property services) and ongoing expenses from legacy
IT and incremental cloud costs, as we invest to replace inefficient
systems. We therefore still expect to meet the full year 2021
guidance of mid single digit growth, with c.5% on a constant
currency basis. Because of the mix in FX and FX related
adjustments, on a reported basis we expect the cost growth for 2021
will be around a c.1-2% step down from the new 2020 pro-forma level
of GBP3,023 million.
Looking further out, the Group expects a step-down in levels of
cost increase, to low-single digit overall cost growth in 2022 and
2023 on a constant currency basis. Costs are expected to grow
modestly as technology projects near completion, offset in part by
the benefit from the current faster than planned cost synergy
delivery. We expect technology improvements will deliver
scalability for the Group over the medium-term and enable further
revenue growth.
Depreciation, amortisation and impairment was GBP363 million in
the period. Due to accounting adjustments applied to the 2020
pro-forma and therefore feeding into 2021, please refer to the
section 'Changes to the 2020 pro-forma' for details, the Group now
expects c.GBP790 million for the full year on a constant currency
basis.
Capex in H1 was GBP318 million. This included GBP273 million of
normal course investment and GBP45 million of integration and
separation capex. The Group expects total capex to increase in the
second half towards the c.GBP850 million capex for the full year,
as previously indicated. Ongoing investment in the business over
the next two years is expected to continue at GBP650 million to
GBP700 million (unchanged from the level of investment in both LSEG
and Refinitiv prior to combination). In addition, integration and
separation-related capex, mainly for synergy realisation, will be
completed within this timeframe and within the announced
integration costs at acquisition.
Net finance expense was GBP125 million in the first half. The
full year 2021 financing expense is expected to be GBP205 million
on a constant currency basis, which reflects the longer-term
financing put in place during the period. The tax rate on a
pro-forma basis was 21.4%, reflecting some modestly better tax
benefits from the transaction in the period. The effective tax rate
for the full year is expected to be 21.5%. For 2022 and 2023, the
tax rate is expected to be within a range of 22-24%.
Non-controlling interest was GBP107 million, reflecting the strong
performance at Tradeweb.
Pro-forma cash generated from operating activities was GBP1,490
million, reflecting the addition of the Refinitiv group and a
strong underlying performance. Net cash generated after
transaction-related fees, cost to achieve synergies, capex, net
interest and royalties paid, tax paid, other investing activities
and dividends, was GBP606 million. Discretionary free cash flow per
share on the same basis was 173.4 pence (before the external
dividend payment of GBP357 million).
At 30 June 2021, operating net debt increased to GBP7,095
million, from GBP1,425 million at year end, predominantly due to
the debt taken on as part of the Refinitiv acquisition and after
setting aside GBP1,258 million (31 December 2020: GBP1,242 million)
for regulatory and operational support purposes. The amount set
aside for regulatory and operational purposes by the Borsa Italiana
group was largely replaced by that of the Refinitiv group of
companies, resulting in a GBP16 million increase. Cash generated by
the business funded the Group's investment outflows, dividend
payments, tax payments and regular debt servicing. Operating net
debt: pro-forma EBITDA increased to 2.2 times (from 1.4 times at 31
December 2020), reflecting strong earnings growth balanced against
the increase in operating net debt. The 2.2 times leverage is a
reduction from the originally anticipated level of more than 3
times when the acquisition of Refinitiv was originally announced.
The reduction reflects the cash generated by the business during
the time period to acquisition completion, and the application of
the EUR4.4 billion proceeds from the divestment of Borsa Italiana
towards the reduction in Group debt.
Both Standard & Poor's and Moody's maintained their
respective LSEG credit ratings at A and A3 through the period and,
based on support for the strategic rationale for the Refinitiv
transaction and reference to the Group's deleveraging plans
(including the impact of the sale of the Borsa Italiana group),
Standard & Poor's maintained its outlook at negative, and
Moody's improved its outlook from negative to stable. Two
additional ratings were introduced as part of the Refinitiv
refinancing process where the debt issued by the newly established
subsidiary financing companies, LSEGA Financing plc and LSEG
Netherlands B.V., was awarded the same ratings as their parent
company, LSEG. Standard & Poor's also maintained its long-term
rating of LCH Limited and LCH SA at AA- with a stable outlook
through the period.
The Group had net assets of GBP24,884 million at 30 June 2021
(31 December 2020: GBP4,125 million), including GBP2,748 million in
cash and cash equivalents (31 December 2020: GBP1,785 million).
Board and Management changes
As announced on 28 April 2021, Tsega Gebreyes and Ashok Vaswani
joined the LSEG Board as Independent Non-Executive Directors,
effective 1 June 2021. Tsega joined the Risk and Remuneration
Committees and Ashok the Audit and Risk Committees. As announced at
the same time, Stephen O'Connor, Senior Independent Director (SID),
is stepping down from the Board. Cressida Hogg will assume the role
of SID, effective immediately.
Effective from 1 July 2021, Andrea Remyn Stone became Group
Head, Data & Analytics, following the announcement that David
Craig will leave the Group at the end of 2021. Andrea was
previously Chief Product Officer, Data & Analytics and is
working closely with David to ensure a smooth transition of
operational and integration priorities over the coming months.
Interim Dividend
In line with the Group's dividend policy, the interim dividend
is calculated as one-third of the prior full year dividend.
Accordingly, the Directors have declared an interim dividend of
25.0 pence per share, an increase of 7% (H1 2020: 23.3 pence per
share). The interim dividend will be paid on 21 September 2021 to
shareholders on the register on 20 August 2021.
Outlook
We are pleased with the H1 performance and are highly focused on
continued execution to maintain the good momentum into H2 2021 and
future years. We are executing on a detailed integration and
transformation plan to create a simplified and scalable business,
and we are ahead of plan. We are confident in meeting our financial
targets.
Accounting and modelling notes
New Key Performance Indicators (KPIs)
KPIs that will be reported for Data & Analytics going
forward are:
-- Annual Subscription Value growth for Data & Analytics -
Measures the growth of recurring revenue base and how the book of
business is changing over time. This metric covers c.87% revenues
across the Data & Analytics division and excludes asset-based
revenues in Investment Solutions and Beta revenues in Wealth
Solutions.
-- FTSE Russell ETF AUM - End of period AUM for ETFs created from FTSE Russell indices
-- ESG Passive AUM - End of period global passive AUM in FTSE Russell Sustainable Indices
-- Beta volumes - Volume of trades executed through the platform
Two new KPIs have been included for Post Trade:
-- SwapClear client average 10-year notional equivalent - This
is a recognised risk-based metric used by fixed income market
participants, simplifying and standardising the view across the
book of Swaps in the business. For Post Trade, this is the notional
quantity of 10-year USD Interest Rate Swaps required to hedge the
SwapClear client portfolio risk. There is a good correlation
between this risk metric and SwapClear's revenues (c.85% of the OTC
Derivatives revenue line)
-- Non-cash collateral balances - Average EUR value of non-cash
balances across LCH in the period, and directly linked to the
Non-cash collateral revenue line
Back history for the 6 new metrics is included in a table within
the appendix.
In Capital Markets, we have consolidated the number of metrics
reported within our set of KPIs. Each of the metrics no longer
presented in our results will continue to be available via Group
websites.
Those to be removed/changed are:
-- Secondary Markets: UK Value Traded Total; Turquoise Value
Traded Total; Turquoise Value Traded - Average Daily Value
-- The FX average daily volume KPIs are combining Spot and Other, into a Total
-- Fixed Income, Derivatives and Other: Money Markets - Cash;
Equities - Cash; Equities - Derivatives
Deferred revenue accounting adjustment
As a result of the acquisition of Refinitiv and the associated
purchase price accounting rules, Refinitiv's deferred revenue
balances are subject to a one-time haircut at the time of
acquisition. This is a non-cash adjustment. The negative revenue
impact is mostly in Q1 2021 at approximately GBP22 million, with an
additional GBP1 million in Q2; the remaining impact will be
immaterial over subsequent quarters in 2021. The impact will be
mostly in the Group's Data & Analytics division, with a much
smaller impact on the Group's FX venues business sitting within
Capital Markets.
An adjusted variance, excluding the deferred revenue adjustment,
has been presented to show true underlying business growth on the
prior year.
Changes to the 2020 pro-forma
As stated in the Financial Review within our FY 2020 Preliminary
results, the presented pro-forma financial information was
unaudited and did not include adjustments for inter-company
transactions, reallocations of costs, any fair value adjustments
arising out of the purchase price allocation exercise, any future
changes to accounting estimates or judgements, and were therefore
subject to change, albeit not expected to be material.
At LSEG's Q1 results, an updated pro-forma 2020 was provided for
revenue and cost of sales on a quarterly basis. The revenue was
rebased to use a constant FX approach and included the recognition
of sub-lease revenues and elimination of inter-company revenues.
For H1, further changes have been made to our 2020 pro-forma
through the application of LSEG's accounting treatments.
These changes are:
-- The application of IFRS 16 leasing treatment which adjusts
the costs between depreciation, rental expenses and financing
expense. This increases adjusted operating expenses by GBP49
million in 2020 and reduces underlying depreciation, amortisation
and impairment by GBP34 million
-- For transaction related indemnified costs and incentive plans
which are considered as non-underlying under the Group's policies.
This increases adjusted operating expenses by GBP11 million
The combined impact of these changes is a GBP26 million
reduction to Adjusted Operating Profit in 2020.
These changes do not impact on our 5-7% revenue target from 2020
pro-forma to 2023, or our mid-single digit cost growth in 2021
(both on a constant currency basis). The GBP34 million reduction of
underlying depreciation, amortisation and impairment in 2020, does
however impact on our stated guidance of GBP830m in 2021 as the
base is GBP34m lower in 2020. Updated guidance can be found in the
section of this release covering financial performance.
FX conversion
As a result of the acquisition of Refinitiv, the majority of
LSEG revenues and expenses are in USD followed by GBP, EUR and
other currencies. All guidance given by LSEG, including the
longer-term targets associated with the acquisition of Refinitiv as
well as specific guidance for the 2021 financial year, has been
given on a constant currency basis.
USD GBP EUR Other
2021 H1 Total Income
(1) 59% 18% 15% 8%
---- ---- ---- ------
2021 H1 Underlying
Expenses (2) 52% 23% 11% 14%
---- ---- ---- ------
(1) Total income includes recoveries
(2) Underlying expenses includes cost of sales, underlying
operating expenses and underlying depreciation and amortisation
The results for the period ended 30 June 2021 have been
translated into Sterling using the average exchange rates for the
period. The rates for the largest two currency pairs are shown in
the table below.
Average rate Closing rate Average rate Closing rate
6 months ended at 6 months ended at
30 June 2021 30 June 2021 30 June 2020 30 June 2020
GBP : USD 1.388 1.384 1.261 1.230
---------------- -------------- ---------------- --------------
GBP : EUR 1.152 1.163 1.144 1.094
---------------- -------------- ---------------- --------------
FX sensitivities
The Group's principal foreign exchange exposure arises as a
result of translating its foreign currency earnings, assets and
liabilities into LSEG's reporting currency of Sterling. A 5 cent
movement in the average GBP/US$ rate for the year and a 5 euro cent
movement in the average GBP/EUR rate for the year would have
changed the Group's operating profit for the year before
amortisation of purchased intangible assets and non-underlying
items by approximately GBP24 million and GBP13 million,
respectively.
The Group continues to manage its translation risk exposure by,
where possible, matching the currency of its debt to the currency
of its earnings, to ensure its key financial ratios are protected
from material foreign exchange rate volatility.
Divisional revenue, adjusted operating and non-financial
KPIs
1. Data & Analytics
Pro-forma(1)
Continuing operations Constant Constant
Currency Currency
Variance(3) Variance
(excl. deferred
revenue
adjustment)(3,4)
H1 2021 H1 2020 Reported % %
Variance(2)
GBPm GBPm %
--------- --------- -------------
Trading & Banking Solutions 744 806 (7.7%) (1.3%) (0.1%)
Trading 599 653 (8.3%) (1.7%) (0.6%)
Banking 145 153 (5.2%) 0.6% 1.9%
Enterprise Data Solutions 557 582 (4.3%) 1.2% 2.4%
Real Time Data 359 384 (6.5%) (0.5%) 0.8%
PRS 198 198 - 5.1% 6.1%
Investment Solutions 558 554 0.7% 7.7% 8.4%
Index - Subscription 247 244 1.2% 7.4% 7.9%
Index - AUM 122 112 8.9% 18.2% 18.2%
Investment Solutions Data
& Analytics 189 198 (4.5%) 1.5% 3.6%
Wealth Solutions 238 257 (7.4%) 0.4% 0.8%
Wealth Data & Analytics 139 138 0.7% 5.0% 5.7%
Beta 99 119 (16.8%) (5.3%) (5.3%)
Customer & Third-Party
Risk Solutions 175 136 28.7% 36.0% 37.5%
------------------------------------ --------- --------- ------------- ------------- ------------------
Total Revenue (excl. recoveries) 2,272 2,335 (2.7%) 3.9% 4.8%
Recoveries 178 164 8.5% (1.1%) (0.6%)
------------------------------------ --------- --------- ------------- ------------- ------------------
Total Revenue (incl. recoveries) 2,450 2,499 (2.0%) 3.5% 4.5%
Cost of sales (382) (400) (4.5%) 3.6% 3.6%
------------------------------------ --------- --------- ------------- ------------- ------------------
Gross Profit 2,068 2,099 (1.5%) 3.6% 4.7%
Adjusted operating expenses
before depreciation, amortisation
and impairment (988) (1,060) (6.8%) (0.8%) (0.8%)
------------------------------------ --------- --------- ------------- ------------- ------------------
Adjusted earnings before
interest, tax, depreciation,
amortisation and impairment 1,080 1,039 3.9% 7.9% 10.1%
Depreciation, amortisation
and impairment (280) (264) 6.1% 8.2% 8.2%
------------------------------------ --------- --------- ------------- ------------- ------------------
Adjusted operating profit 800 775 3.2% 7.8% 10.7%
------------------------------------ --------- --------- ------------- ------------- ------------------
Adjusted EBITDA Margin 47.5% 44.5%
Pro-forma Non-financial KPIs(1)
H1 2021 H1 2020 Reported
-------- --------
Variance
-------- --------
%
-------- -------- ---------
Annual Subscription Value
growth (%) (5) 3.9% - -
Subscription revenue growth
(%) (5) 3.1% - -
Index - ETF AUM ($bn) 1,040 669 55%
Index - ESG Passive AUM
($bn) (6) 132 46 187%
Beta transaction volumes
(m) 285 293 (3%)
----------------------------- -------- -------- ---------
(1) Pro-forma assumes that the acquisition of Refinitiv took
place on 1 January 2021 for the current financial year and 1
January 2020 for the prior financial year comparator figure. Both
figures exclude the financial contribution from the businesses
contained within the Borsa Italiana divestment
(2) Reported variance is the difference between current and
prior year periods on a pro-forma underlying basis, using
year-to-date FX rates prevalent at each time, therefore any changes
in the FX rates are also reflected in the variance percentage
alongside business performance
(3) Constant currency variance shows underlying financial
performance, excluding currency impacts, by comparing the current
and prior period at consistent exchange rates
(4) The deferred revenue adjustment is explained in the
"Accounting and modelling notes" section
(5) The variance shown is based on constant currency figures,
therefore the variance is a constant currency variance excluding
the impact of the deferred revenue accounting adjustment
(6) ESG Passive AUM is as at 31 December 2020 and prior period
comparator is at 31 December 2019. The metric is updated
bi-annually with June 2021 available early Q4
2. Capital Markets
Pro-forma(1)
Continuing operations Constant Constant
Currency Currency
Variance(3) Variance
(excl.
deferred
revenue
adjustment)(3,
4)
H1 2021 H1 2020 Reported % %
Variance(2)
GBPm GBPm %
--------- --------- -------------
Equities 120 118 1.7% 2.5% 2.5%
FX 110 121 (9.1%) (0.8%) (0.8%)
Fixed Income, Derivatives
& Other 389 361 7.8% 15.4% 15.4%
------------------------------------ --------- --------- ------------- ------------- ----------------
Total Revenue 619 600 3.2% 9.6% 9.6%
Cost of sales (13) (13) - 16.7% 16.7%
------------------------------------ --------- --------- ------------- ------------- ----------------
Gross Profit 606 587 3.2% 9.4% 9.4%
Adjusted operating expenses
before depreciation, amortisation
and impairment (290) (292) (0.7%) 3.8% 3.8%
------------------------------------ --------- --------- ------------- ------------- ----------------
Adjusted earnings before
interest, tax, depreciation,
amortisation and impairment 316 295 7.1% 15.5% 15.5%
Depreciation, amortisation
and impairment (37) (37) - 11.4% 11.4%
------------------------------------ --------- --------- ------------- ------------- ----------------
Adjusted operating profit 279 258 8.1% 16.0% 16.0%
------------------------------------ --------- --------- ------------- ------------- ----------------
Adjusted EBITDA Margin 51.1% 49.2%
Pro-forma Non-financial KPIs(1)
H1 2021 H1 2020 Reported
-------- --------
Variance
-------- --------
%
-------- -------- ---------
Equities
Primary Markets
New issues 75 30 150%
Total money raised (GBPbn) 15.6 19.2 (19%)
Secondary Markets - Equities
UK Value Traded (GBPbn)
- Average Daily Value 4.7 5.6 (16%)
SETS Yield (bps) 0.72 0.69 4%
FX
Average daily total volume
($bn) 455 436 4%
Fixed income, Derivatives
and Other
Tradeweb Average Daily
($m)
Rates - Cash 348,673 319,578 9%
Rates - Derivatives 272,063 229,185 19%
Credit - Cash 9,951 7,534 32%
Credit - Derivatives 12,628 17,937 (30%)
------------------------------ -------- -------- ---------
(1) Pro-forma assumes that the acquisition of Refinitiv took
place on 1 January 2021 for the current financial year and 1
January 2020 for the prior financial year comparator figure. Both
figures exclude the financial contribution from the businesses
contained within the Borsa Italiana divestment
(2) Reported variance is the difference between current and
prior year periods on a pro-forma underlying basis, using
year-to-date FX rates prevalent at each time, therefore any changes
in the FX rates are also reflected in the variance percentage
alongside business performance
(3) Constant currency variance shows underlying financial
performance, excluding currency impacts, by comparing the current
and prior period at consistent exchange rates
(4) The deferred revenue adjustment is explained in the
"Accounting and modelling notes" section
3. Post Trade
Pro-forma(1)
Continuing operations H1 2021 H1 2020 Reported Constant
Variance(3) currency
Variance(4)
GBPm GBPm % %
-------- --------
OTC Derivatives 169 169 - 2.4%
Securities & Reporting 127 110 15.5% 15.3%
Non-Cash Collateral 46 40 15.0% 17.5%
Net Treasury Income 108 149 (27.5%) (25.3%)
------------------------------------ -------- -------- -------------
Total Income 450 468 (3.8%) (2.1%)
Cost of sales (2) (58) (73) (20.5%) (20.0%)
------------------------------------ -------- -------- -------------
Gross Profit 392 395 (0.8%) 1.5%
Adjusted operating expenses
before depreciation, amortisation
and impairment (2) (146) (139) 5.0% 4.2%
------------------------------------ -------- -------- ------------- -------------
Adjusted earnings before interest,
tax, depreciation, amortisation
and impairment 246 256 (3.9%) -
Depreciation, amortisation
and impairment (47) (44) 6.8% 6.7%
------------------------------------ -------- -------- ------------- -------------
Adjusted operating profit 199 212 (6.1%) (1.4%)
------------------------------------ -------- -------- ------------- -------------
Adjusted EBITDA Margin 54.7% 54.7%
Pro-forma Non-financial KPIs(1)
H1 2021 H1 2020 Reported
Variance
%
-------- -------- ----------
OTC
SwapClear
IRS notional cleared ($trn) 468 643 (27%)
SwapClear members 122 122 -
Client trades ('000) 1,066 997 7%
Client average 10-year
notional equivalent ($trn) 4.4 4.0 10%
ForexClear
Notional value cleared
($bn) 10,776 9,844 9%
ForexClear members 35 35 -
CDSClear
Notional cleared (EURbn) 1,038 1,398 (26%)
CDSClear members 25 26 (4%)
Securities & Reporting
EquityClear trades (m)
(5) 976 1,047 (7%)
Listed derivatives contracts
(m) 150.3 191.5 (22%)
RepoClear - nominal value
(EURtrn) 113.4 102.7 10%
Non-Cash Collateral
Average non-cash collateral
(EURbn) 161.5 156.5 3%
NTI
Average cash collateral
(EURbn) 106.4 116.3 (9%)
------------------------------ -------- -------- ----------
(1) Pro-forma assumes that the acquisition of Refinitiv took
place on 1 January 2021 for the current financial year and 1
January 2020 for the prior financial year comparator figure. Both
figures exclude the financial contribution from the businesses
contained within the Borsa Italiana divestment
(2) Cost of sales incorporates the elimination of intercompany
transactions in the Post Trade division as part of the pro forma
financial disclosure and adjusted operating expenses include
centralised group charges allocated to the Post Trade division as
part of the pro forma cost allocation
(3) Reported variance is the difference between current and
prior year periods on a pro-forma underlying basis, using
year-to-date FX rates prevalent at each time, therefore any changes
in the FX rates are also reflected in the variance percentage
alongside business performance
(4) Constant currency variance shows underlying financial
performance, excluding currency impacts, by comparing the current
and prior period at consistent exchange rates
(5) EquityClear trades exclude interoperability trades, these
will differ to the volumes published on the LCH website which
includes these trades
Synergies and cost to achieve
H1 2021
GBPm
Revenue synergies
Run-rate realised 4
Cost to achieve 17
of which:
Capital expenditure 7
Non-underlying operating
expenses 10
Cost synergies
Run-rate realised 77
In-period benefit 25
Cost to achieve 114
of which:
Capital expenditure 28
Non-underlying operating
expenses 86
As previously stated when announcing the Refinitiv acquisition,
the Group expects to incur a cost to achieve synergies of GBP730
million. This is split by GBP550 million to achieve the cost
synergies and GBP180 million to achieve the revenue synergies. The
Group expects the majority of the total cost to achieve synergies
of GBP730 million will be incurred over the course of 2021 and
2022. This cost to achieve is expected to be split c.30% through
capex and c.70% in non-underlying operating expenses. In H1 2021,
the GBP131 million incurred is split 27% capex and 73%
non-underlying operating expenses.
Appendix - Pro-forma(1) revenues by quarter
The tables below have used FX rates on a YTD average basis which
is the basis upon which the Group presents its financials.
FY2020(1) FY2021(1)
---------------------------------------
GBP millions Q1 Q2 Q3 Q4 2020 Q1 Q2
----------------------------- ------- ------ ------ ------ ------ ------- ------
Trading & Banking Solutions 396 410 399 391 1,596 372 372
----------------------------- ------- ------ ------ ------ ------ ------- ------
Trading 321 332 322 316 1,291 300 299
----------------------------- ------- ------ ------ ------ ------ ------- ------
Banking 75 78 77 75 305 72 73
----------------------------- ------- ------ ------ ------ ------ ------- ------
Enterprise Data Solutions 285 297 290 291 1,163 277 280
----------------------------- ------- ------ ------ ------ ------ ------- ------
Real Time Data 187 197 191 191 766 177 182
----------------------------- ------- ------ ------ ------ ------ ------- ------
PRS 98 100 99 100 397 100 98
----------------------------- ------- ------ ------ ------ ------ ------- ------
Investment Solutions 272 282 278 279 1,111 272 286
----------------------------- ------- ------ ------ ------ ------ ------- ------
Index - Subscription 118 127 125 125 495 121 126
----------------------------- ------- ------ ------ ------ ------ ------- ------
Index - AUM 58 54 56 57 225 58 64
----------------------------- ------- ------ ------ ------ ------ ------- ------
Investment Solutions
Data & Analytics 96 101 97 97 391 93 96
----------------------------- ------- ------ ------ ------ ------ ------- ------
Wealth Solutions 126 131 123 120 500 122 116
----------------------------- ------- ------ ------ ------ ------ ------- ------
Wealth Data & Analytics 66 72 71 69 278 69 70
Beta 60 59 52 51 222 53 46
Customer & Third-Party
Risk Solutions 67 69 69 78 283 85 90
----------------------------- ------- ------ ------ ------ ------ ------- ------
Data & Analytics 1,146 1,189 1,159 1,159 4,653 1,128 1,144
----------------------------- ------- ------ ------ ------ ------ ------- ------
Equities 62 56 52 57 227 61 59
----------------------------- ------- ------ ------ ------ ------ ------- ------
FX 64 57 56 57 234 57 53
----------------------------- ------- ------ ------ ------ ------ ------- ------
Fixed Income, Derivatives
& Other 186 175 170 178 709 201 188
----------------------------- ------- ------ ------ ------ ------ ------- ------
Capital Markets 312 288 278 292 1,170 319 300
----------------------------- ------- ------ ------ ------ ------ ------- ------
OTC 87 82 80 85 334 87 82
----------------------------- ------- ------ ------ ------ ------ ------- ------
Securities & Reporting 59 51 58 62 230 65 62
----------------------------- ------- ------ ------ ------ ------ ------- ------
Non-Cash Collateral 19 21 21 21 82 22 24
----------------------------- ------- ------ ------ ------ ------ ------- ------
NTI 67 82 63 57 269 55 53
----------------------------- ------- ------ ------ ------ ------ ------- ------
Post Trade 232 236 222 225 915 229 221
----------------------------- ------- ------ ------ ------ ------ ------- ------
Other 11 6 6 6 29 5 10
----------------------------- ------- ------ ------ ------ ------ ------- ------
Total Income (excluding
recoveries) 1,701 1,719 1,665 1,682 6,767 1,681 1,675
----------------------------- ------- ------ ------ ------ ------ ------- ------
Recoveries 87 77 82 92 338 88 90
----------------------------- ------- ------ ------ ------ ------ ------- ------
Total Income (including
recoveries) 1,788 1,796 1,747 1,774 7,105 1,769 1,765
----------------------------- ------- ------ ------ ------ ------ ------- ------
Cost of sales (242) (244) (228) (232) (946) (231) (223)
----------------------------- ------- ------ ------ ------ ------ ------- ------
Gross Profit 1,546 1,552 1,519 1,542 6,159 1,538 1,542
----------------------------- ------- ------ ------ ------ ------ ------- ------
(1) Pro-forma assumes that the acquisition of Refinitiv took
place on 1 January 2021 for the current financial year and 1
January 2020 for the prior financial year comparator figure. All
figures exclude the financial contribution from the businesses
contained within the Borsa Italiana divestment
Appendix - Pro-forma(1) P&L by half
GBP millions FY2020 (1) FY2021
(1)
H1 H2 2020 H1
------------------------------------ -------- -------- -------- --------
Total Income (incl. recoveries) 3,584 3,521 7,105 3,534
Cost of sales (486) (460) (946) (454)
------------------------------------ -------- -------- -------- --------
Gross profit 3,098 3,061 6,159 3,080
Adjusted operating expenses
before depreciation, amortisation
and impairment (1,507) (1,516) (3,023) (1,432)
Income from equity investments - - - 11
Share of loss after tax
of associates (1) (3) (4) (2)
------------------------------------ -------- -------- -------- --------
Adjusted earnings before
interest, tax, depreciation,
amortisation and impairment 1,590 1,542 3,132 1,657
Adjusted EBITDA Margin
(2) 46.5% 46.1% 46.3% 49.4%
Depreciation, amortisation
and impairment (346) (401) (747) (363)
Adjusted operating profit 1,244 1,141 2,385 1,294
------------------------------------ -------- -------- -------- --------
Net finance expense (193) (376) (569) (125)
------------------------------------ -------- -------- -------- --------
Adjusted profit before
tax 1,051 765 1,816 1,169
Taxation (279) (276) (555) (250)
------------------------------------ -------- -------- -------- --------
Adjusted profit after tax 772 489 1,261 919
Non-controlling interest (88) (86) (174) (107)
------------------------------------ -------- -------- -------- --------
Profit for the period 684 403 1,087 812
------------------------------------ -------- -------- -------- --------
Adjusted basic earnings
per share (p) 123.2 72.5 195.7 146.1
------------------------------------ -------- -------- -------- --------
(1) Pro-forma assumes that the acquisition of Refinitiv took
place on 1 January 2021 for the current financial year and 1
January 2020 for the prior financial year comparator figure. All
figures exclude the financial contribution from the businesses
contained within the Borsa Italiana divestment
(2) Adjusted EBITDA margin is Adjusted EBITDA divided by Total
Income (excl. Recoveries)
Appendix - Pro-forma(1) new KPIs by quarter
FY2020 FY2021
Q1 Q2 Q3 Q4 2020 Q1 Q2
----------------------------- ------ ------ ------ ------ ------ ------ ------
Data & Analytics
----------------------------- ------ ------ ------ ------ ------ ------ ------
Annual Subscription Value
growth (%)(2) - - - - - 3.0% 3.9%
----------------------------- ------ ------ ------ ------ ------ ------ ------
Subscription revenues
growth (%)(2) - - - - - 3.5% 2.6%
----------------------------- ------ ------ ------ ------ ------ ------ ------
Index - ETF AUM ($bn) 583 669 718 869 869 956 1,040
----------------------------- ------ ------ ------ ------ ------ ------ ------
Index - ESG Passive AUM
($bn) (3) - 63 - 132 132 - -
----------------------------- ------ ------ ------ ------ ------ ------ ------
Beta transaction volumes
(m) 159 134 121 125 539 161 124
----------------------------- ------ ------ ------ ------ ------ ------ ------
Post Trade
----------------------------- ------ ------ ------ ------ ------ ------ ------
Client average 10-year
notional equivalent ($trn) 4.6 3.4 3.2 3.8 3.7 4.8 3.9
----------------------------- ------ ------ ------ ------ ------ ------ ------
Average non-cash collateral
(EURbn) 148.9 164.1 165.5 165.7 161.1 160.6 162.5
----------------------------- ------ ------ ------ ------ ------ ------ ------
(1) Pro-forma assumes that the acquisition of Refinitiv took
place on 1 January 2021 for the current financial year and 1
January 2020 for the prior financial year comparator figure.
(2) The variance shown is based on constant currency figures,
therefore the variance is a constant currency variance excluding
the impact of the deferred revenue accounting adjustment. The
underlying constant currency figures on a consistent basis to
calculate this are available from Q1 2020, meaning the first
variance is from Q1 2021
(3) ESG Passive AUM is updated bi-annually with June 2021
available early Q4
Appendix - Summary of guidance
The following is a summary of the guidance provided within this
release.
-- Total Income (excluding recoveries) - Good performance in H1,
on track for c.4-5% constant currency growth for 2021
-- Adjusted operating expenses - On track to meet c.5% rise in
operating expenses on constant currency basis. Incorporating FX,
cost expected to step down c.1-2% from the new 2020 pro-forma(1)
level of GBP3,023 million.
-- Cost synergies - Expect to achieve c.GBP125m run rate cost synergies by the end of 2021
-- Depreciation, amortisation and impairment - c.GBP790m for
2021 on constant currency basis, reflecting accounting allocation
changes(1)
-- Net Finance Expense - c.GBP205m for 2021 on a constant currency basis
-- Tax - Effective Tax rate of 21.5% for 2021. Expect a tax rate of 22-24% for 2022 and 2023
-- Capex - Total capex of c.GBP850m in 2021 including
GBP650m-GBP700m of ongoing capex and c.GBP150m integration and
separation capex
(1) Please refer to the section 'Changes to the 2020 pro-forma'
for more details on the accounting allocation changes.
Condensed CONSOLIDATED Income Statement
Six months ended 30 June
Six months ended 30 2020
June 2021 Unaudited Unaudited (Re-presented)
----------------------------------- ----------------------------------
Underlying Non-underlying Underlying Non-underlying
items items Total items items Total
Continuing operations GBPm GBPm GBPm GBPm GBPm GBPm
Notes
Revenue 2 2,992 - 2,992 877 - 877
Net treasury income
from CCP clearing
business 2 108 - 108 149 - 149
Other income 2 13 - 13 2 - 2
---------------------------- ----- ---------- -------------- ------- ---------- -------------- ------
Total income 3,113 - 3,113 1,028 - 1,028
Cost of sales 2 (394) - (394) (114) - (114)
Gross profit 2,719 - 2,719 914 - 914
Expenses
Operating expenses
before depreciation,
amortisation and
impairment 3,4 (1,247) (183) (1,430) (369) (88) (457)
Investment income 11 - 11 - - -
Share of loss after
tax of associates (2) - (2) (2) - (2)
Earnings before interest,
tax, depreciation,
amortisation and
impairment 1,481 (183) 1,298 543 (88) 455
Depreciation, amortisation
and impairment 4 (311) (389) (700) (86) (78) (164)
Operating profit/(loss) 2 1,170 (572) 598 457 (166) 291
Finance income 19 - 19 9 - 9
Finance expense (106) (1) (107) (31) (7) (38)
---------- -------------- ------- ---------- -------------- ------
Net finance expense 5 (87) (1) (88) (22) (7) (29)
---------------------------- ----- ---------- -------------- ------- ---------- -------------- ------
Profit/(loss) before
tax 1,083 (573) 510 435 (173) 262
Taxation 6 (228) (38) (266) (89) 18 (71)
---------------------------- ----- ---------- -------------- ------- ---------- -------------- ------
Profit/(loss) for
the period from continuing
operations 855 (611) 244 346 (155) 191
Discontinued operations
Profit/(loss) after
tax for the period
from discontinued
operations 15 84 2,519 2,603 83 (13) 70
---------------------------- ----- ---------- -------------- ------- ---------- -------------- ------
Profit/(loss) for
the period 939 1,908 2,847 429 (168) 261
---------------------------- ----- ---------- -------------- ------- ---------- -------------- ------
Profit/(loss) attributable
to:
Equity holders 758 (580) 178 312 (154) 158
Non-controlling interests 97 (31) 66 34 (1) 33
---------------------------- ----- ---------- -------------- ------- ---------- -------------- ------
Profit from continuing
operations 855 (611) 244 346 (155) 191
---------------------------- ----- ---------- -------------- ------- ---------- -------------- ------
Equity holders 15 80 2,520 2,600 80 (12) 68
Non-controlling interests 15 4 (1) 3 3 (1) 2
---------------------------- ----- ---------- -------------- ------- ---------- -------------- ------
Profit from discontinued
operations 84 2,519 2,603 83 (13) 70
---------------------------- ----- ---------- -------------- ------- ---------- -------------- ------
Profit/(loss) for
the period 939 1,908 2,847 429 (168) 261
---------------------------- ----- ---------- -------------- ------- ---------- -------------- ------
Earnings per share attributable to equity holders:
continuing operations
Basic earnings per
share 7 34.3p 45.1p
Diluted earnings
per share 7 34.1p 44.6p
Adjusted basic earnings
per share 7 146.0p 89.2p
Adjusted diluted
earnings per share 7 145.2p 88.2p
Earnings per share for total operations attributable
to equity holders
Basic earnings per
share 7 535.3p 64.6p
Diluted earnings
per share 7 532.2p 63.8p
Adjusted basic earnings
per share 7 161.5p 112.0p
Adjusted diluted
earnings per share 7 160.5p 110.7p
Dividend per share in respect of the financial
period
Dividend per share
paid during the period 8 51.7p 49.9p
Dividend per share
declared for the
period 8 25.0p 23.3p
---------------------------- ----- ---------- -------------- ------- ---------- -------------- ------
Notes 1 to 17 form an integral part of these interim condensed consolidated
financial statements.
Condensed CONSOLIDATED STATEMENT of comprehensive income
Six months ended
30 June
-------------------------
2021 2020
Unaudited Unaudited
(Re-presented)
-------------------------------------------------- --------- --------------
GBPm GBPm
-------------------------------------------------- --------- --------------
Profit for the period from continuing operations 244 191
--------------------------------------------------- --------- --------------
Other comprehensive income
Items that will not be subsequently reclassified
to profit or loss:
Defined benefit pension scheme remeasurement
gains 77 24
Gain on equity instruments at fair value through
other comprehensive income - 1
Income tax relating to above items (19) (9)
58 16
-------------------------------------------------- --------- --------------
Items that may be subsequently reclassified
to profit or loss:
Net gains on cash flow hedges 22 -
Net gains/(losses) on net investment hedges 72 (152)
Debt instruments at fair value through other
comprehensive income (FVOCI):
- Net (losses)/gains from changes in fair
value (4) 21
- Gains reclassified to the consolidated income
statement on disposal (3) (3)
Exchange (losses)/gains on translation of foreign
operations (264) 273
Income tax relating to above items 1 (3)
(176) 136
-------------------------------------------------- --------- --------------
Other comprehensive (losses)/gains, net of
tax, for continuing operations (118) 152
--------------------------------------------------- --------- --------------
Total comprehensive income for the period from
continuing operations 126 343
Total comprehensive income for the period from
discontinued operations 2,595 152
Total comprehensive income for the period 2,721 495
--------------------------------------------------- --------- --------------
Total comprehensive income from continuing
operations attributable to:
-------------------------------------------------- --------- --------------
Equity holders 74 289
Non-controlling interests 52 54
--------------------------------------------------- --------- --------------
Total comprehensive income for the period 126 343
--------------------------------------------------- --------- --------------
Total comprehensive income from discontinued
operations attributable to:
-------------------------------------------------- --------- --------------
Equity holders 2,592 148
Non-controlling interests 3 4
--------------------------------------------------- --------- --------------
Total comprehensive income for the period 2,595 152
--------------------------------------------------- --------- --------------
Notes 1 to 17 form an integral part of these interim condensed
consolidated financial statements.
Condensed CONSOLIDATED balance sheet
30 June 31 December
2021 2020
Unaudited
Notes GBPm GBPm
------------------------------------------ ------ --------- -----------
Assets
Non-current assets
Property, plant and equipment 931 297
Intangible assets 9 31,764 4,324
Investment in associates 28 25
Deferred tax assets 535 51
Derivative financial instruments 10 3 -
Investments in financial assets 10 287 280
Retirement benefit assets 544 81
Trade and other receivables 10 266 14
34,358 5,072
------------------------------------------ ------ --------- -----------
Current assets
Trade and other receivables 10 1,225 594
Derivative financial instruments 10 6 -
Clearing member financial assets 692,845 758,510
Clearing member cash and cash equivalents 74,725 83,011
--------- -----------
Clearing member assets 10 767,570 841,521
Current tax 152 77
Investments in financial assets 10 - 92
Cash and cash equivalents 10 2,748 1,785
------------------------------------------ ------ --------- -----------
771,701 844,069
------------------------------------------ ------ --------- -----------
Total assets 806,059 849,141
------------------------------------------ ------ --------- -----------
Liabilities
Current liabilities
Trade and other payables 10 1,336 613
Contract liabilities 383 168
Derivative financial instruments 10 30 6
Clearing member liabilities 10 767,589 841,553
Current tax 120 24
Borrowings 10, 11 379 605
Provisions 13 1
------------------------------------------ ------ --------- -----------
769,850 842,970
------------------------------------------ ------ --------- -----------
Non-current liabilities
Borrowings 10, 11 8,156 1,346
Derivative financial instruments 10 29 11
Contract liabilities 94 94
Deferred tax liabilities 1,978 411
Retirement benefit obligations 107 18
Other non-current payables 10 921 152
Provisions 40 14
------------------------------------------ ------ --------- -----------
11,325 2,046
Total liabilities 781,175 845,016
------------------------------------------ ------ --------- -----------
Net assets 24,884 4,125
------------------------------------------ ------ --------- -----------
Equity
Capital and reserves attributable to the
Company's equity holders
Ordinary share capital 39 24
Share premium 972 971
Retained earnings 3,489 911
Other reserves 18,558 1,805
------------------------------------------ ------ --------- -----------
Total shareholders' funds 23,058 3,711
------------------------------------------ ------ --------- -----------
Non-controlling interests 1,826 414
------------------------------------------ ------ --------- -----------
Total equity 24,884 4,125
------------------------------------------ ------ --------- -----------
Notes 1 to 17 form an integral part of these interim condensed
consolidated financial statements.
Condensed CONSOLIDATED cash flow statement
Six months ended 30
June
-----------------------------------------------------------
2021 2020
Unaudited Unaudited
Re-presented
Notes GBPm GBPm
-------------- ------------------------- --------------------------------
Cash flow from operating activities
Cash generated from operations 13 1,326 512
Interest received 7 3
Interest paid (67) (24)
Corporation tax paid (85) (106)
Net cash inflow from operating
activities (1) 1,181 385
-------------------------------------------- --- -------- -----
Cash flow from investing activities
Purchase of property, plant and
equipment (28) (3)
Purchase of intangible assets (217) (82)
Acquisition of subsidiaries (NFI),
net of cash acquired 14 (151) -
Cash acquired on acquisition of
subsidiaries (Refinitiv) 14 931 -
Investment in financial assets classed
as FVOCI 10 (15) -
Proceeds from disposal of business,
net of cash disposed 15 3,592 -
Dividends received from investments
in equity 11 -
Net cash inflow from investing activities 4,123 (85)
-------------------------------------------- --- -------- -----
Cash flow from financing activities
Dividends paid to shareholders 8 (287) (175)
Dividends paid to non-controlling
interests (70) (3)
Proceeds from exercise of employee
share options 2 -
Purchase of own shares by the employee
benefit trust - (4)
Share repurchases pursuant to Tradeweb's
share repurchase program (2) (37) -
Proceeds from exercise of Tradeweb's
employee share option 47 -
Principal element of lease payments (45) (11)
11,
Proceeds from the issue of bonds 12 5,043 -
Repayment of borrowings assumed
on acquisition 12 (10,486) -
11,
Net repayment of commercial paper 12 (77) (101)
11,
Arrangement fees on borrowing facilities 12 (42) -
11,
Additional drawdowns from bank facilities 12 495 170
11,
New loans for acquisition activities 12 9,807 -
Repayments made towards bank credit 11,
facilities and borrowings 12 (8,549) (129)
-------------------------------------------- --- -------- -----
Net cash outflow from financing
activities (4,199) (253)
-------------------------------------------- --- -------- -----
Increase in cash and cash equivalents 1,105 47
Cash and cash equivalents at beginning of
period 1,785 1,493
Net cash flow from discontinued operations 15 (84) 33
Exchange (losses)/gains on cash
and cash equivalents (58) 68
-------------------------------------------- --- -------- -----
Cash and cash equivalents at end
of period 2,748 1,641
-------------------------------------------- --- -------- -----
(1) The Group's net cash inflow from operating activities of GBP1,181
million is after deduction of GBP204 million of expenses related
to non-underlying items. The Group's net cash inflow from investing
activities of GBP4,059 million is after deduction of GBP10 million
non-underlying capital expenditure.
(2) On 4 February 2021, TradeWeb Markets Inc. (Tradeweb) a subsidiary
of the Group, announced a new share repurchase program, primarily
to offset annual dilution from stock-based compensation plans (the
Share Repurchase Program). The Share Repurchase Program authorises
the purchase of up to US$150.0 million of Tradeweb's common stock
through the end of 2023.
Group cash flow does not include cash and cash equivalents held
by the Group's Post Trade operations on behalf of its clearing
members for use in its operations as manager of the clearing and
guarantee systems.
Notes 1 to 17 form an integral part of these interim condensed
consolidated financial statements.
Condensed CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders
-------------------------------------------------------
Total
Ordinary attributable
share Share Retained Other to equity Non- controlling Total
capital premium earnings reserves holders interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- -------- -------- --------- --------- ------------- ---------------- -------
1 January 2020 24 967 668 1,796 3,455 346 3,801
Profit for the period - - 226 - 226 35 261
Other comprehensive income
for the period - - 26 185 211 23 234
Final dividend relating
to the year ended 31 December
2019 (note 8) - - (175) - (175) - (175)
Dividend payments to
non-controlling
interests - - - - - (16) (16)
Employee share scheme expenses - - 21 - 21 - 21
Tax in relation to employee
share scheme expenses - - 7 - 7 - 7
30 June 2020 (Unaudited) 24 967 773 1,981 3,745 388 4,133
---------------------------------- -------- -------- --------- --------- ------------- ---------------- -------
1 January 2021 24 971 911 1,805 3,711 414 4,125
Profit for the period - - 2,778 - 2,778 69 2,847
Other comprehensive income
for the period - - 45 (157) (112) (14) (126)
Issue of shares(1) - 1 - - 1 - 1
Issue of shares in exchange
for acquisition of subsidiaries
(with non-controlling
interest)(2) 15 - 2 16,954 16,971 1,505 18,476
Final dividend relating
for the year ended 31 December
2020 (note 8) - - (287) - (287) - (287)
Dividend payments to
non-controlling
interests - - - - - (76) (76)
Employee share scheme expenses - - 36 - 36 4 40
Tax in relation to employee
share scheme expenses - - 4 - 4 - 4
Disposal of business (note
15) (3) - - - (44) (44) (65) (109)
Adjustments to non-controlling
interest - - - - - (11) (11)
30 June 2021 (Unaudited) 39 972 3,489 18,558 23,058 1,826 24,884
----------------------------------
(1) During the period, the Company issued 1,387,186 new ordinary
shares to the Employee Benefit Trust. Where these shares were used
for the settlement of employee share plans, share premium has been
recognised on the difference between the subscription price and
the par value of the own share.
(2) Under the terms of the Stock Purchase Agreement, LSEG (directly
and through certain wholly owned subsidiaries) acquired the entire
issued share capital of Refinitiv Parent Limited and, in exchange,
LSEG issued 204,225,968 shares (comprising 136,870,442 listed LSEG
ordinary shares and 67,355,526 unlisted LSEG limited-voting ordinary
shares) (further details of the acquisition and shares issued are
provided in note 14). LSEG applied merger relief as required by
section 612 of the Companies Act 2006, as LSEG obtained 100% equity
holding in Refinitiv Parent Limited, and recognised the excess of
the fair value above the nominal share capital as merger reserve.
The purchase consideration for the acquisition of Refinitiv of GBP16,971
million includes the fair value of equity-settled awards (attributable
to pre-acquisition services rendered) of GBP2 million, which is
recognised in the employee share scheme reserve.
(3) Disposal of business relates to GBP44 million transfer of reserves
and the derecognition of non-controlling interest of GBP65 million
on disposal of the Borsa Italiana group.
Notes 1 to 17 form an integral part of these interim condensed consolidated
financial statements.
NOTES TO THE interim condensed consolidated financial
statements
The Interim Report for the London Stock Exchange Group plc (the
'Group' or the 'Company') for the six months ended 30 June 2021 was
approved by the Directors on 6 August 2021.
The Company is a public company, incorporated and domiciled in
England and Wales. The address of its registered office is 10
Paternoster Square, London, EC4M 7LS.
1. Basis of preparation and accounting policies
The interim condensed consolidated financial statements of
London Stock Exchange Group plc and its subsidiaries (collectively,
the 'Group') for the six months ended 30 June 2021 have been
prepared in accordance with the Disclosure and Transparency Rules
of the Financial Conduct Authority and UK-adopted International
Accounting Standard 34 Interim Financial Reporting.
The interim condensed consolidated financial statements are
unaudited but have been reviewed by the auditors and their review
opinion is in included in this report.
The interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual
financial statements, and should be read in conjunction with the
Group's annual consolidated financial statements for the year ended
31 December 2020, which were prepared in accordance with Regulation
(EC) No 1606/2002 as it applies in the European Union. The annual
consolidated financial statements for the year ending 31 December
2021 will apply UK-adopted International Financial Reporting
Standards under the Companies Act 2006.
The principal accounting policies adopted in the preparation of
these interim condensed consolidated financial statements are
consistent with those applied in the preparation of the Group's
annual consolidated financial statements for the year ended 31
December 2020, except for accounting policies expanded due to the
acquisition of Refinitiv and the adoption of amended standards
effective as of 1 January 2021. None of the amendments adopted on 1
January 2021 have had a material impact on the interim condensed
consolidated financial statements of the Group.
The following accounting policies have been expanded due to the
acquisition of Refinitiv:
-- Recoveries revenue consists of fees for third-party content,
such as exchange data that is distributed directly to customers,
and communications fees. Recoveries revenue is generally recognised
over the contract term.
-- Derivative financial instruments: The Group has embedded
foreign currency derivatives primarily in revenue contracts where
the currency of the contract is different from the functional or
local currencies of the parties involved. The Group records these
derivative instruments at fair value in the balance sheet as either
assets or liabilities. Changes in the fair value of derivative
instruments are recognised in the profit or loss, net with
revenue.
The Group has not early adopted any other standards, amendments
or interpretations that have been issued but are not yet
effective.
Comparative amounts presented for the condensed consolidated
balance sheet relate to the Group's position as at 31 December 2020
. All other comparative amounts presented relate to the six months
ended 30 June 2020.
All notes to the financial statements include amounts for
continuing operations, unless otherwise stated.
The statutory financial statements of London Stock Exchange
Group plc for the year ended 31 December 2020 , which carried an
unqualified audit report, have been delivered to the Registrar of
Companies and did not contain a statement under section 498 of the
Companies Act 2006.
The interim condensed consolidated financial statements do not
constitute statutory financial statements within the meaning of
section 434 of the Companies Act 2006.
ACQUISITIONS
On 29 January 2021, the Group acquired Refinitiv Parent Limited
and its subsidiaries (Refinitiv) (note 14). The results of
Refinitiv have been consolidated within the Group since the date of
acquisition. As a result of the acquisition, the Group is reporting
its results in three main segments: Data & Analytics, Post
Trade and Capital Markets. The segmental reporting for the
comparative period has been re-presented to align with this new
structure (note 2).
On 25 June 2021, the Tradeweb group acquired Nasdaq's U.S. fixed
income electronic trading platform, formerly known as eSpeed, the
fully executable central limit order book (CLOB) for on-the-run
U.S. government bonds (note 14).
DISPOSAL
On 29 April 2021, the Group disposed of London Stock Exchange
Group Holdings (Italia) SpA and its subsidiaries (Borsa Italiana
group) (note 15). The Borsa Italiana group was classified as a
discontinued operation and disposal group once the sale became
highly probable on 13 January 2021 (the date the EU Commission
approved the acquisition of Refinitiv) and therefore its profits
and losses and cash flows have been separated from the Group's
continuing operations for the period and are shown as discontinued
operations. The comparative period has been re-presented
accordingly. The Borsa Italiana group operations were not
classified as a disposal group as at 31 December 2020 and the
balance sheet has not been re-presented from that published in the
Annual Report of the Group.
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the interim condensed consolidated financial
statements requires management to make judgements, estimates and
assumptions that affect the reported income and expense, assets and
liabilities, and disclosure of contingencies at the date of the
interim condensed consolidated financial statements. Although these
judgements, estimates and assumptions are based on management's
best judgement at the date of the interim condensed consolidated
financial statements, actual results may differ from these
estimates.
Judgements and estimates are regularly evaluated based on
historical experience, current circumstances and expectations of
future events. The significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty are the same as those described in the last
annual financial statements, except for the judgements and sources
of estimation uncertainty related or due to the acquisition of
Refinitiv, as described below:
-- Intangible assets acquired as part of a business combination :
- The fair value of the intangible assets (and therefore the
resulting goodwill recognised on acquisition) is significantly
affected by a number of factors including management's best
estimates of future performance and estimates of the return
required to determine an appropriate discount rate. Further detail
of the valuation methodologies is provided in note 14.
- The intangible assets are amortised over their estimated
useful economic lives, which is also based on management's best
estimates of the periods over which value from the intangible
assets is realised. Further detail of the estimated useful economic
lives of the intangible assets is provided in note 14.
-- Revenue recognition : Management exercises significant
judgement when assessing whether multiple products and services in
customer contracts are distinct performance obligations that should
be accounted for separately, or whether these should be accounted
for together. In making the determination, management considers,
for example, whether the Group regularly sells a good or service
separately, or whether the goods or services are highly
interrelated. Furthermore, the Group has more than one standalone
selling price for individual products and services due to the
stratification of its offerings by customer. As a result,
management determines the standalone selling price taking into
consideration market conditions and other factors, including the
value of its contracts, the product or service sold, customer's
market, geographic location, and the number and types of users in
each contract.
-- Share-based payments : Estimating fair value for share-based
payment transactions requires determination of the most appropriate
valuation model, which depends on the terms and conditions of the
grant. This estimate also requires determination of the most
appropriate inputs to the valuation model. The Group measured the
fair value of outstanding equity-settled share-based payment awards
granted by Tradeweb as if the acquisition date were the grant date
and used the Black-Scholes model.
-- Provisions for uncertain tax positions : The Group is subject
to tax in numerous jurisdictions and is routinely under audit by
various taxing authorities. There are transactions and calculations
during the ordinary course of business for which the ultimate tax
determination is uncertain, as taxing authorities may challenge
some of the Group's positions and propose adjustments or changes to
its tax filings. Due to the uncertainty involved, there is a
possibility that outcomes may differ from amounts recognised. The
Group believes that its accruals for tax liabilities are adequate
for all open tax years based on its assessment of many factors,
including interpretations of tax law and prior experience. These
liabilities have been recognised as current tax or deferred tax on
the balance sheet based on the expected method of settlement with
the tax authorities.
GOING CONCERN
In assessing whether the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Group can continue in operational existence for the
foreseeable future.
The Group's business activities, together with the factors
likely to affect its future development, performance and position
and its objectives and policies in managing the financial risks to
which it is exposed and its capital are set on pages 2-71 of the
Group's Annual Report for the year ended 31 December 2020. The
Group does not consider the landscape of principal risks and
uncertainties set out on pages 24-39 of Group's Annual Report for
the year ended 31 December 2020 to have changed materially. The
Group's acquisition of Refinitiv, however has changed the nature of
some risks due to, for example, an increased geographical
footprint. The changes are referenced and the principal risks and
uncertainties which may affect the Group in the second half of the
financial year, as applicable, are summarised in the "Principal
Risks" section below.
The Directors consider there to be no material uncertainties
that may cast significant doubt on the Group's ability to continue
to operate as a going concern. The Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future, being at least 12
months from the date of signing of these financial statements.
Accordingly, they continue to adopt the going concern basis in the
preparation of these financial statements.
2. Segmental reporting
The Group now uses three main reporting segments: Data &
Analytics, Capital Markets and Post Trade. Data and Analytics
includes the results formerly reported as Information Services as
well as the core Refinitiv business. Capital Markets includes the
former Capital Markets results plus results of the former
Technology Services segment and the results of TradeWeb and FXall.
Other contains non-core business.
The results are on a continuing basis and exclude the results of
the Borsa Italiana Group for six months ended 30 June 2021 and 2020
(note 15). The results of Refinitiv are included from the date of
acquisition (note 14).
The segmental results for the six months ended 30 June 2020 have
been re-presented using the new reporting segments.
Segment reporting for the six months ended 30 June 2021 are as
follows:
Data and Capital
Analytics Markets Post Trade Other Group
Unaudited GBPm GBPm GBPm GBPm GBPm
Continuing
Revenue 2,107 542 342 1 2,992
Net treasury income from CCP clearing
business - - 108 - 108
Other income - - - 13 13
Total income 2,107 542 450 14 3,113
Cost of sales (324) (11) (59) - (394)
Gross profit 1,783 531 391 14 2,719
Income from investments 11 11
Share of loss after tax of associates - - - (2) (2)
Earnings before interest, tax,
depreciation, amortisation and
impairment 944 276 245 16 1,481
Underlying depreciation, amortisation
and impairment (234) (31) (47) 1 (311)
Operating profit before non-underlying
items 710 245 198 17 1,170
Non-underlying depreciation, amortisation
and impairment (389)
Other non-underlying items (183)
Operating profit 598
Net finance expense (88)
Profit before tax from continuing
operations 510
Profit before tax from discontinued
operations 2,609
Profit before tax 3,119
Net treasury income from the continuing CCP businesses of GBP108
million comprises gross interest income of GBP217 million less
gross interest expense of GBP109 million.
The Group's total income disaggregated by segment, major product
and service line, and timing of total income recognition for the
six months ended 30 June 2021 is as follows:
Data & Capital Post Trade
Analytics markets Services Other Group
Unaudited (Re-presented) GBPm GBPm GBPm GBPm GBPm
Revenue from external customers
Major product & service lines
Trading & banking 619 - - - 619
Enterprise data solutions 472 - - - 472
Investment solutions 524 - - - 524
Wealth solutions 197 - - - 197
Customer & third-party risk solutions 147 - - - 147
Recoveries 148 - - - 148
OTC derivatives - - 169 - 169
Securities & reporting - - 127 - 127
Non cash collateral - - 46 - 46
Net treasury income - - 108 - 108
Equities - 120 - - 120
FX - 91 - - 91
Fixed income, derivatives and other - 331 - - 331
Other - - - 14 14
Total income from continuing operations 2,107 542 450 14 3,113
Timing of total income recognition
Services satisfied at a point in
time 147 367 330 3 847
Services satisfied over time 1,960 175 120 11 2,266
Total income from continuing operations 2,107 542 450 14 3,113
Re-presented segment reporting for the six months ended 30 June
2020 are as follows:
Data & Capital Post Trade
Analytics Markets Services Other Group
Unaudited (Re-presented) GBPm GBPm GBPm GBPm GBPm
Continuing
Revenue 409 147 319 2 877
Net treasury income from CCP
clearing business - - 149 - 149
Other income - - - 2 2
Total income 409 147 468 4 1,028
Cost of sales (35) (3) (76) - (114)
Gross profit 374 144 392 4 914
Share of loss after tax of
associates - - - (2) (2)
Earnings before interest, tax,
depreciation, amortisation
and impairment 236 68 254 (15) 543
Underlying depreciation, amortisation
and impairment (30) (8) (44) (4) (86)
Operating profit before non-underlying
items 206 60 210 (19) 457
Non-underlying depreciation,
amortisation and impairment (78)
Other non-underlying items (88)
---------- --------
Operating profit 291
Net finance expense (29)
Profit before tax from continuing
operations 262
Profit before tax from discontinued
operations 100
-----
Profit before tax 362
-----
Net treasury income from the continuing CCP businesses of GBP149
million comprises gross interest income of GBP381 million less
gross interest expense of GBP232 million.
The Group's total income disaggregated by segment, major product
and service line, and timing of revenue recognition for the six
months ended 30 June 2020 is as follows:
Data & Capital Post Trade
Analytics markets Services Other Group
Unaudited (Re-presented) GBPm GBPm GBPm GBPm GBPm
Revenue from external customers
Major product & service lines
Trading & banking 9 - - - 9
Enterprise data solutions 64 - - - 64
Investment solutions 336 - - - 336
OTC derivatives - - 169 - 169
Securities & reporting - - 110 - 110
Non cash collateral - - 40 - 40
Net treasury income - - 149 - 149
Equities - 118 - - 118
Fixed income, derivatives and
other - 29 - - 29
Other - - - 4 4
Total income from continuing
operations 409 147 468 4 1,028
Timing of total income recognition
Services satisfied at a point
in time 3 86 309 1 399
Services satisfied over time 406 61 159 3 629
Total income from continuing
operations 409 147 468 4 1,028
The Group's total income from continuing operations disaggregated
by geographical location is as follows:
Six months ended
30 June
2021 2020
Unaudited Unaudited
(Re-presented)
GBPm GBPm
UK 953 583
Italy 155 143
France 140 80
USA 1,060 202
Other Europe 287 -
Asia 317 -
Other 201 20
Total 3,113 1,028
3. Operating expenses
Six months ended
30 June
2021 2020
Unaudited Unaudited
(Re-presented)
Continuing Note GBPm GBPm
Employee costs 817 240
IT costs 200 59
Professional fees 136 25
Short-term lease costs 24 -
Foreign exchange (gains)/losses (5) 5
Other costs 75 40
Underlying operating expenses before
depreciation, amortisation and impairment 1,247 369
Non-underlying operating expenses
before depreciation, amortisation
and impairment 4 183 88
Total operating expenses before
depreciation, amortisation and impairment 1,430 457
4. Non-underlying items
Six months ended
30 June
2021 2020
Unaudited
Unaudited (Re-presented)
Continuing Notes GBPm GBPm
---------
Transaction costs 70 86
Restructuring costs 1 2
Integration costs 112 -
Non-underlying expenses before interest,
tax, depreciation, amortisation and impairment 183 88
Depreciation of property, plant and equipment(1) 7 -
Amortisation of intangible assets(2) 382 68
Impairment of goodwill and purchased intangible
assets - 10
Non-underlying depreciation, amortisation
and impairment 389 78
Non-underlying items before interest and
tax 572 166
Non-underlying net finance expense 5 1 7
Non-underlying items before tax 573 173
Deferred tax on amortisation of purchased
intangible assets (15) (6)
Current tax on amortisation of purchased
intangible assets (72) (3)
Tax on other items affecting profit before
tax 125 (9)
Non-underlying tax 38 (18)
Non-underlying items for the period from
continuing operations 611 155
Non-underlying profit for the period from
discontinued operations 15 (2,519) 13
Total non-underlying items affecting profit
for the period (1,908) 168
(1) Depreciation and amortisation of property, plant and
equipment and intangible assets, other than purchased intangible
assets: This relates to incremental depreciation and amortisation
resulting from fair value adjustments on tangible assets and
intangible assets, other than purchased intangible assets, which
were acquired on acquisition of Refinitiv. Depreciation and
amortisation associated with these fair value adjustments is
presented as non-underlying to provide more meaningful information
on the Group's sustainable performance.
(2) Amortisation and impairment of goodwill and purchased
intangible assets: Purchased intangible assets include customer
relationships, trade names, and databases and content, all of which
are recorded as a result of acquisitions. Amortisation and
impairment associated with goodwill and purchased intangible assets
is presented as a non-underlying item in order to provide more
meaningful information regarding the Group's sustainable
performance.
Transaction costs are mainly related to the following
acquisitions:
-- Refinitiv acquisition (note 14) :
- Advisor and professional fees and management retention costs
of GBP44 million ; and
- Post-acquisition Management Incentive Plan (MIP) share-based
payment expense of GBP4 million, and fair value adjustment to the
outstanding Tradeweb equity-settled awards (as if the acquisition
date were the grant date) of GBP17 million.
-- Acquisition by Tradeweb of Nasdaq's fixed income electronic
trading platform ( note 14) : Acquisition related costs of GBP3
million
Integration costs relate to activities to:
-- Integrate the Refinitiv businesses with the Group of GBP93 million; and
-- Separate and restructure the Thomson Reuters Financial &
Risk Business from Thomson Reuters. The separation costs of GBP19
million primarily consist of professional fees, consulting fees and
IT charges.
The finance expense relates to fees to establish the Bridge
Facility to refinance the Refinitiv notes and term loans in full
following completion of the Refinitiv acquisition (further details
of the facility are provided in note 11).
The tax impact of the Group's non-underlying items and its
adjustment to profit or loss of the individual entities of the
Group to which the non-underlying items relate, is computed based
on the tax rates applicable to the respective territories in which
the entity operates. There is no tax impact arising on
non-underlying items which are neither taxable nor
tax-deductible.
5. Net finance expense
Six months ended 30
June
2021 2020
Unaudited Unaudited
(Re-presented)
Continuing Note GBPm GBPm
Finance income
Bank deposit and other interest
income 2 2
Expected return on defined benefit
pension scheme assets 16 1
Other finance income 1 6
Underlying finance income 19 9
Finance expense
Interest payable on bank and other
borrowings (83) (28)
Defined benefit pension scheme interest
cost (14) -
Lease interest expense (6) (2)
Other finance expenses (3) (1)
Underlying finance expense (106) (31)
Non-underlying net finance expense 4 (1) (7)
Net finance expense (88) (29)
Bank deposit and other interest income includes negative interest
earned on the Group's borrowings. Interest payable includes amounts
where the Group earns negative interest on its cash deposits.
6. Taxation
Six months ended
30 June
2021 2020
Note Unaudited Unaudited
Taxation recognised in profit or
loss (Re-presented)
Continuing GBPm GBPm
Current tax expense
UK corporation tax for the period 11 39
Overseas tax for the period 51 38
Adjustments in respect of previous
years 2 -
64 77
Deferred tax expense/(credit)
Deferred tax for the period 216 1
Adjustments in respect of previous
years 1 (1)
Deferred tax liability on amortisation
of purchased intangible assets (15) (6)
202 (6)
Taxation from continuing operations 266 71
Taxation from discontinuing operations 15 6 30
Taxation 272 101
Six months ended 30
June
2021 2020
Taxation on items not recognised in (Re-presented)
profit or loss
Continuing GBPm GBPm
Current tax credit
Tax allowance on share options/awards
in excess of expense recognised (6) (12)
(6) (12)
Deferred tax expense/(credit)
Tax allowance on defined benefit pension
scheme remeasurements 19 9
Tax allowance on share options/awards
in excess of expense recognised 2 5
Tax on movement in value of investments
in financial assets (1) 3
20 17
14 5
--------- --------------
Factors affecting the tax charge for
the period
The income statement tax charge for the period differs from the
standard rate of corporation tax in the UK of 19% (30 June 2020:
19%) as explained below:
Six months ended 30
June
2021 2020
Unaudited Unaudited
(Re-presented)
Continuing GBPm GBPm
--------- --------------
Profit before taxation 510 262
Profit multiplied by standard rate of corporation
tax in the UK 97 50
Expenses not deductible - 7
Overseas earnings taxed at higher rate 7 18
Adjustments in respect of previous years 3 (1)
Deferred tax assets recognised - (3)
Remeasurement impact of tax rate changes 159 -
Taxation charge from continuing operations 266 71
Income tax attributable to discontinued
operations 6 30
272 101
The tax rate applied as at 30 June 2021 is the expected rate for
the full financial year.
On 24 May 2021, an increase in the UK corporation tax rate from
19% to 25% from 1 April 2023 onward was substantively enacted and
on 10 June 2021, Finance Act 2021 received Royal Assent. In
accordance, the deferred tax assets and liabilities have been
remeasured based on these rates during the reporting period.
During the period the Group completed the sale of its entire
shareholding in London Stock Exchange Group Holdings (Italia) S.p.A
and its subsidiaries (Borsa Italiana group).
The gain on disposal of the shares qualifies for UK corporation
tax exemption under the substantial shareholding exemption
rules.
EU State Aid
The Group continues to monitor developments in relation to EU
State Aid investigations. On 25 April 2019, the EU Commission's
final decision regarding its investigation into the UK's Controlled
Foreign Company (CFC) regime was published. It concludes that the
UK legislation up to December 2018 does partially represent illegal
State Aid.
Both the Group, among a number of other UK PLCs, and the UK
Government have submitted appeals to the EU General Court to annul
the EU Commission's findings.
The UK Government is required to continue the process of
recovering the State Aid whilst the decision is under appeal. HMRC
issued determinations to the Group to date of GBP10.5 million,
excluding interest and penalties.
The appeal against the determination to HMRC is likely to be
stayed until the final outcome of all appeals to the EU Courts in
respect of the EU Commission's original decision are known.
The issuance and settlement of any such determinations, however,
does not change the Group's view that in light of the appeals made
by UK PLCs (including the Group), the UK Government's own appeal,
and in consideration of management's own internal view, no
provision is required in relation to the investigation.
Additionally, and in accordance with the provisions of IFRIC 23,
the Group has recognised a receivable against the HMRC
determinations paid to date.
As previously disclosed, the Group has made claims under the CFC
regime and still considers that the maximum potential amount of
additional tax payable excluding compound interest remains between
nil and GBP65 million depending on the basis of calculation.
IRS Audit
The Group is currently under audit in the US by the IRS in
relation to the interest rate applied on certain cross border
intercompany loans from the UK to the US. During the year the IRS
issued a Notice of Proposed Adjustment (NOPA) which seeks to apply
the safe haven rate under the US regulations to the interest
charged on cross border loans.
The maximum exposure under the NOPA is US$130 million, however
this the upper bound of a range of nil to US$130 million plus
interest and penalties over the lifetime of the loans. The Group
disagrees with the NOPA assessment and has sought legal advice to
support its position that the safe haven rate is arbitrary and
should not be sustained. The NOPA has been appealed by the Group
and the audit is ongoing.
7. Earnings per share
Earnings per share attributable to equity holders of the parent company
of the Group, London Stock Exchange Group plc (LSEG or the 'Company')
is presented on four bases: basic earnings per share; diluted earnings
per share; adjusted basic earnings per share; and adjusted diluted
earnings per share. Basic earnings per share is in respect of all
activities and diluted earnings per share takes into account the
dilution effects which would arise on conversion or vesting of share
options and share awards under the Group share option and award schemes.
Adjusted basic earnings per share and adjusted diluted earnings per
share exclude non-underlying items and to enable a better comparison
of the underlying earnings of the business with prior periods.
Six months ended 30 June
2021 2020
Unaudited Unaudited (Re-presented)
Continuing Discontinued Total Continuing Discontinued Total
Basic earnings per share 34.3p 501.0p 535.3p 45.1p 19.4p 64.6p
Diluted earnings per
share 34.1p 498.1p 532.2p 44.6p 19.2p 63.8p
Adjusted basic earnings
per share 146.0p 15.4p 161.5p 89.2p 23.0p 112.0p
Adjusted diluted earnings
per share 145.2p 15.3p 160.5p 88.2p 22.7p 110.7p
Profit and adjusted profit for the financial period attributable
to the Company's equity holders
Six months ended 30 June
2021 2020
Unaudited Unaudited (Re-presented)
Continuing Discontinued Total Continuing Discontinued Total
GBPm GBPm GBPm GBPm GBPm GBPm
Profit for the financial
period attributable
to the Company's equity
holders 178 2,600 2,778 158 68 226
Adjustments:
Non-underlying items
net of tax (note 4) 611 (2,519) (1,908) 155 13 168
Non-underlying items
attributable to non-controlling
interests (31) (1) (32) (1) (1) (2)
Adjusted profit for
the financial period
attributable to the
Company's equity holders 758 80 838 312 80 392
Weighted average number
of shares - million 519 519 519 350 350 350
Effect of dilutive share
options and awards -
million 3 3 3 4 4 4
Diluted weighted average
number of shares - million 522 522 522 354 354 354
The weighted average number of shares excludes those held in the
employee benefit trust. The Group holds no treasury shares.
8. Dividends
Six months ended 30
June
2021 2020
Unaudited Unaudited
GBPm GBPm
Final dividend for 31 December 2019 paid
27 May 2020: 49.9p per Ordinary share - 175
Final dividend for 31 December 2020 paid
26 May 2021: 51.7p per Ordinary share 287 -
287 175
Dividends are only paid out of available distributable
reserves
The Board has proposed an interim dividend in respect of the
six-month period ended 30 June 2021 of 25.0p per share, amounting
to an estimated GBP139 million, to be paid in September 2021. This
is not reflected in these interim condensed consolidated financial
statements.
9. Intangible assets
Purchased intangible assets
Software Software,
Customer licences contract
and supplier and intellectual costs and
Goodwill relationships Brands Database property other Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Cost
1 January 2021 2,402 1,847 953 - 569 1,260 7,031
Acquisition of
subsidiaries (note
14) 16,544 7,528 983 2,398 199 1,608 29,260
Additions - - - - - 254 254
Disposal of business
(note 15) (927) (692) (1) - (66) (179) (1,865)
Disposals - - - - - (7) (7)
Foreign exchange
translation (131) (90) (21) (23) (8) (53) (326)
30 June 2021 (Unaudited) 17,888 8,593 1,914 2,375 694 2,883 34,347
Accumulated amortisation
and impairment:
1 January 2021 546 868 265 - 345 683 2,707
Amortisation charge
for the period - 226 60 99 8 189 582
Disposal of business (55) (409) - - (58) (138) (660)
Foreign exchange
translation (16) (5) (3) - (3) (20) (46)
30 June 2021 (Unaudited) 475 681 322 99 292 714 2,583
Net book values:
30 June 2021 (Unaudited) 17,413 7,912 1,592 2,276 402 2,169 31,764
31 December 2020 1,856 979 688 - 224 577 4,324
Goodwill and purchased intangible assets
During the period,
-- the Group acquired Refinitiv Parent Limited. On acquisition,
the Group recognised goodwill of US$23 billion (GBP16 billion) and
purchased intangible assets, software and other intangible assets
of US$17 billion (GBP13 billion) (details of the acquisition are
provided in note 14).
-- Tradeweb acquired Nasdaq's fixed income electronic trading
platform . On acquisition, the Group recognised goodwill of $88
million (GBP64 million) and purchased intangible assets and
software of US$100 million (GBP73 million) (details of the
acquisition are provided in note 14).
During the period the Group disposed of the Borsa Italiana group
(see note 15) and derecognised goodwill of GBP872 million and
intangible assets of GBP333 million.
There were no acquisitions or disposals in the prior period.
10. Financial assets and financial liabilities
Financial instruments by category
The financial instruments of the Group at 30 June 2021 are categorised
as follows:
Financial assets
Fair value Fair value
through through
Amortised other comprehensive profit
30 June 2021 cost income or loss Total
Unaudited GBPm GBPm GBPm GBPm
-------
Clearing business financial
assets
- Clearing member trading assets 8,342 - 662,648 670,990
- Other receivables from clearing
members 6,313 - - 6,313
- Other financial assets - 15,542 - 15,542
- Clearing member cash and cash
equivalents 74,725 - - 74,725
89,380 15,542 662,648 767,570
Trade and other receivables 1,246 - 6 1,252
Cash and cash equivalents 2,748 - - 2,748
Investments in financial assets
- equity instruments - 287 - 287
Derivative financial instruments - - 9 9
Total financial assets 93,374 15,829 662,663 771,866
There were no transfers between categories during the
period.
Prepayments and contract assets within trade and other receivables
are not classified financial instruments.
Financial assets measured
at fair value
Quoted prices Significant Significant
in active observable unobservable
markets inputs inputs Total
30 June 2021 (Level 1) (Level 2) (Level 3) fair value
Unaudited GBPm GBPm GBPm GBPm
Clearing business financial
assets
- Derivative instruments 81 194,893 - 194,974
- Non-derivative instruments - 467,674 - 467,674
- Other financial assets 15,542 - - 15,542
15,623 662,567 - 678,190
Investments in financial assets
- equity instruments 1 - 286 287
Trade and other receivables
- convertible loan notes - - 6 6
Derivatives not designated
as hedges
- Foreign exchange forward
contracts - 9 - 9
Total financial assets at
fair value 15,624 662,576 292 678,492
Financial liabilities
Fair value
through
Amortised profit
30 June 2021 cost or loss Total
Unaudited GBPm GBPm GBPm
Clearing business financial
liabilities
- Clearing member trading liabilities 8,342 662,648 670,990
- Other payables to clearing
members 96,599 - 96,599
104,941 662,648 767,589
Trade and other payables 1,868 - 1,868
Borrowings 8,535 - 8,535
Derivative financial instruments - 59 59
Total financial liabilities 115,344 662,707 778,051
-------
There were no transfers between categories during the period.
Social security and other taxes within trade and other payables
are not classified as financial instruments.
Financial liabilities measured
at fair value
Quoted prices Significant Significant
in active observable unobservable
markets inputs inputs Total
30 June 2021 (Level 1) (Level 2) (Level 3) fair value
Unaudited GBPm GBPm GBPm GBPm
Clearing business financial
liabilities
- Derivative instruments 81 194,893 - 194,974
- Non-derivative instruments - 467,674 - 467,674
81 662,567 - 662,648
Derivatives not designated
as hedges
- Foreign exchange forward
contracts - 34 - 34
Derivatives designated as
hedges
- Cross-currency interest
rate swaps - 25 - 25
Total financial liabilities
at fair value 81 662,626 - 662,707
The financial instruments of the Group at 31 December 2020 were
categorised as follows:
Financial assets
Fair value Fair value
through through
Amortised other comprehensive profit
31 December 2020 cost income or loss Total
GBPm GBPm GBPm GBPm
Clearing business financial
assets
- Clearing member trading assets 98,736 - 632,699 731,435
- Other receivables from clearing
members 2,484 - - 2,484
- Other financial assets - 24,591 - 24,591
- Clearing member cash and cash
equivalents 83,011 - - 83,011
184,231 24,591 632,699 841,521
Trade and other receivables 544 - 5 549
Cash and cash equivalents 1,785 - - 1,785
Investments in financial assets
- debt instruments - 111 - 111
Investments in financial assets
- equity instruments - 261 - 261
Total financial assets 186,560 24,963 632,704 844,227
There were no transfers between categories during the
period.
Prepayments and contract assets within trade and other receivables
are not classified as financial instruments.
Financial assets measured at
fair value
Quoted prices Significant Significant
in active observable unobservable
markets inputs inputs Total
31 December 2020 (Level 1) (Level 2) (Level 3) fair value
GBPm GBPm GBPm GBPm
Clearing business financial
assets
- Derivative instruments 5,867 2,726 - 8,593
- Non-derivative instruments 6 624,100 - 624,106
- Other financial assets 24,591 - - 24,591
30,464 626,826 - 657,290
Investments in financial assets
- debt instruments 111 - - 111
Investments in financial assets
- equity instruments - - 261 261
Derivatives not designated
as hedges
- Trade and other receivables
- convertible loan notes - - 5 5
Total financial assets at fair
value 30,575 626,826 266 657,667
Financial liabilities
Fair value
through
Amortised profit
31 December 2020 cost or loss Total
GBPm GBPm GBPm
Clearing business financial
liabilities
- Clearing member trading
liabilities 98,736 632,699 731,435
- Other payables to clearing
members 110,118 - 110,118
208,854 632,699 841,553
Trade and other payables 747 - 747
Borrowings 1,951 - 1,951
Derivative financial instruments - 17 17
Total financial liabilities 211,552 632,716 844,268
There were no transfers between categories during the prior period.
Social security and other taxes within trade and other payables
are not classified financial instruments.
Financial liabilities measured
at fair value
Quoted prices Significant Significant
in active observable unobservable
markets inputs inputs Total
31 December 2020 (Level 1) (Level 2) (Level 3) fair value
GBPm GBPm GBPm GBPm
Clearing business financial
liabilities
- Derivative instruments 5,867 2,726 - 8,593
- Non-derivative instruments 6 624,100 - 624,106
5,873 626,826 - 632,699
Derivatives designated as
hedges
- Cross-currency interest
rate swaps - 11 - 11
Derivatives not designated
as hedges
- Foreign exchange forward
contracts - 6 - 6
Total financial liabilities
at fair value 5,873 626,843 - 632,716
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
-- Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
-- Level 2: other techniques for which all inputs, which have a
significant effect on the recorded fair value are observable,
either directly or indirectly; and
-- Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data
For assets and liabilities classified as Level 1, the fair value
is based on market price quotations at the reporting date.
For assets and liabilities classified as Level 2, the fair value
is calculated using one or more valuation techniques (e.g. the
market approach or the income approach) with market observable
inputs. The selection of the appropriate valuation techniques may
be affected by the availability of the relevant inputs as well as
the reliability of the inputs. The inputs may include currency
rates, interest rate and forward rate curves and net asset
values.
When observable market data is not available, the Group uses one
or more valuation techniques (e.g. the market approach or the
income approach) for which sufficient and reliable data is
available. Inputs used in estimating the fair value of Level 3
financial instruments include expected timing and level of future
cash flows, timing of settlement, discount rates and net asset
values of certain investments.
There have been no transfers between levels during the current
period.
The Group determines whether a transfer between levels has
occurred by reviewing the categorisation of assets and liabilities
at the end of each reporting period, based on the lowest level
input that is significant to the valuation.
With the exception of Group borrowings, management has assessed
that the fair value of financial assets and financial liabilities
recognised at amortised cost approximates to their carrying values.
The fair value of the Group's borrowings is disclosed in Note
11.
The nature and composition of the CCP clearing business assets
and liabilities are explained in the accounting policies note in
the Group's annual consolidated financial statements for the year
ended 31 December 2020.
As at 30 June 2021, there were no provisions for impairment in
relation to any of the CCP financial assets (31 December 2020: nil)
and none of those assets are past due (31 December 2020: nil).
Investment in equity instruments
Investments in equity instruments are recognised at fair value
through other comprehensive income, given the intended long-term
nature of these investments. Convertible loan notes are treated as
fair value through profit or loss as they contain a derivative
option. Investments in equity instruments and convertible
instruments are all classified as Level 3, with the exception of a
listed investment, which is Level 1.
In the absence of any relevant third-party data on the fair
values of its Level 3 investments, the Group undertakes its own
internal valuations. The Group regularly reviews the financial
information of its investments which is available publicly or
received as a shareholder.
The value of the investments is calculated primarily using
discounted cash flow forecasts with a terminal growth rate of 2%
and a risk adjusted discount rate. These valuations may then be
benchmarked against other available models, such as the dividend
discount model, regression analysis, and trading multiples.
As at 30 June 2021, the Group estimates the fair value of its
investments to be GBP287 million (31 December 2020: GBP261
million).
As part of the acquisition of Refinitiv in January 2021, the
Group acquired investments with a fair value of GBP22 million as at
30 June 2021.
During the period the Group made additional investments of GBP15
million and there were foreign exchange movements of GBP11
million.
The Group's largest investment is in Euroclear, which has a fair
value of EUR285 million (GBP245 million). The majority of the
remaining investments are not material.
Hedging activities and derivatives
As at 30 June 2021, the Group had derivative financial assets of
GBP9 million (31 December 2020: nil) and derivative financial
liabilities of GBP59 million (31 December 2020: GBP17 million).
None of the assets are designated as hedges and represent
forward foreign exchange derivatives, including embedded
derivatives within revenue contracts where the currency of the
contract is different from the functional or local currencies of
the contracted parties.
Of the derivative liabilities, GBP25 million represents the fair
value of the EUR700 million cross-currency interest rate swap
designated as a hedging instrument. The remaining GBP34 million
derivative liabilities are not designated as hedging instruments
and represent forward foreign exchange derivatives, including
embedded derivatives within revenue contracts.
For the period ended 30 June 2021, a GBP13 million loss on the
EUR700 million cross-currency interest rate swaps (30 June 2020:
GBP41 million loss) was recognised in other comprehensive income
and transferred to the hedging reserve.
The remaining value of GBP17 million relating to the GBP242
million cross-currency interest rate swap held in the hedging
reserve at 31 December 2020 has been recycled to the income
statement during the period as a result of the disposal of the
Borsa Italiana group, which was the underlying asset being hedged.
The net loss of GBP17 million has been included in the profit on
disposal of the Borsa Italiana group (note 15) (30 June 2020:
GBPnil).
Non-derivative hedges
EUR800 million of the Group's bonds and the Group's US dollar
and euro borrowings qualify as hedging instruments and during the
period a net GBP85 million gain (30 June 2020: GBP111 million loss)
was recognised other comprehensive income and transferred to the
hedging reserve.
11. Borrowings
30 June 31 December
2021 2020
Unaudited
GBPm GBPm
--------- -----------
Current
Bank borrowings (7) 135
Commercial paper 86 170
Bonds 300 300
379 605
-------------------- ---------
Non-current
Bonds 6,284 1,347
Bank borrowings 1,871 (2)
Trade finance loans 1 1
8,156 1,346
-------------------- ---------
Total 8,535 1,951
----------------------
The Group has the following committed
bank facilities and unsecured notes:
Notes/Facility Carrying Interest
value at rate
30 June 30 June
Unaudited 2021 2021
Expiry
Type Date GBPm GBPm %
Multi-currency revolving credit LIBOR +
facility Dec 2024 1,425 (3) 0.325
Multi-currency revolving credit LIBOR +
facility Dec 2025 1,075 (4) 0.475
Committed bank facilities 2,500 (7)
Commercial paper Jul 2021 86 86 (0.004)(1)
LIBOR +
EUR500 million term loan Dec 2023 430 429 0.725
LIBOR +
$2,000 million term loan Dec 2023 1,445 1,442 0.725
Committed term loans 1,875 1,871
Unsecured notes
GBP300 million bond, issued November
2012 Nov 2021 300 300 4.75
EUR500 million bond, issued September
2017 Sep 2024 430 429 0.875
EUR500 million bond, issued December
2018 Dec 2027 430 427 1.75
EUR500 million bond, issued September
2017 Sep 2029 430 427 1.75
GBP500 million bond, issued April
2021 Apr 2030 500 493 1.63
EUR500 million bond, issued April
2021 Apr 2025 430 429 0.0
EUR500 million bond, issued April
2021 Apr 2028 430 427 0.25
EUR500 million bond, issued April
2021 Apr 2033 430 423 0.75
$500 million bond, issued April
2021 Apr 2024 361 360 0.65
$1,000 million bond, issued April
2021 Apr 2026 723 719 1.38
$1,000 million bond, issued April
2021 Apr 2028 723 719 2.00
$1,250 million bond, issued April
2021 Apr 2031 903 897 2.50
$750 million bond, issued April
2021 Apr 2041 542 534 3.20
Total unsecured notes 6,632 6,584
Total committed bank facilities
and unsecured notes 8,534
(1) The Commercial paper interest rate reflected is the average
interest rate achieved on outstanding issuances.
The negative balances on the revolving credit facilities represent
the value of unamortised arrangement fees.
The fair value of the Group's borrowings at 30 June 2021 was
GBP8,750 million (31 December 2020: GBP2,082 million).
On 29 January 2021, as part of the Refinitiv acquisition, the
Group completely refinanced the Refinitiv debt portfolio by drawing
down GBP8.0 billion on its dual-currency bridging facility, EUR500
million (GBP430 million) on its euro term loan, US$2 billion
(GBP1.4 billion) on its US dollar term loan and GBP500m million on
its two new multi-currency revolving credit facilities. The term
loans are repayable in December 2023.
On 6 April, the Group issued a series of 9 new senior unsecured
bonds using its newly established Global Medium Term Note Programme
and applied the proceeds to repay the bridging facility. The GBP5.0
billion raised was issued in US dollars, euros and sterling with
maturities between April 2024 and April 2041 and consisting of
US$4.5 billion (GBP3.2 billion), EUR1.5 billion (GBP1.3 billion)
and GBP500 million respectively.
On 29 April, the Group sold its investment in the Borsa Italiana
group, receiving EUR4.4 billion (GBP3.9 billion) and applying the
funds to repay the remaining outstanding balances on the bridging
facility and revolving credit facilities. The bridging facility was
cancelled upon repayment.
12. Analysis of net debt
30 June 31 December
2021 2020
Unaudited
Note GBPm GBPm
--------- -----------
Due within one year
Cash and cash equivalents 2,748 1,785
Revolving credit facilities net
of deferred arrangement fees 7 (135)
Commercial paper (86) (170)
Bonds (300) (300)
Derivative financial assets 6 -
Derivative financial liabilities (30) (6)
2,345 1,174
Due after one year
Term loans net of deferred arrangement
fees (1,872) 1
Bonds (6,284) (1,347)
Derivative financial assets 3 -
Derivative financial liabilities (29) (11)
Total net debt (5,837) (183)
Reconciliation of net cash flow to movement in net debt
30 June 31 December
2021 2020
Unaudited
GBPm GBPm
Increase in cash in the period/year 1,020 237
Proceeds from the issue of bonds (5,043) -
Net repayment of commercial paper 77 101
Arrangement fees on borrowing facilities 42 -
Additional drawdowns from bank facilities (495) (4)
New loans for acquisition activities (9,807) -
Repayments made towards bank credit
facilities and borrowings 8,549 127
Trade finance loans received - - (1)
Repayment of borrowings assumed
on acquisition 10,486 -
Change in net debt resulting from
cash flows 4,829 460
Foreign exchange 15 (36)
Movement on derivative financial
assets and liabilities (33) 21
Borrowings assumed on acquisition
of Refinitiv 14 (10,462) -
Bond valuation adjustment 1 -
Amortisation of arrangement fees (4) 2
Net debt at the start of the period/year (183) (630)
Net debt at the end of the period/year (5,837) (183)
13. Net cash flow generated from continuing operations
Six months ended 30
June
2021 2020
Unaudited Unaudited
(Re-presented)
Notes GBPm GBPm
Profit before tax from continuing operations 510 262
Adjustments for depreciation, amortisation
and impairment of fixed assets:
Depreciation and amortisation 700 153
Impairment of purchased intangibles and goodwill 9 - 10
Impairment of property, plant and equipment 1 -
Adjustments for other non-cash items:
Loss on disposal of fixed assets 6 -
Share of loss of associates 3 2
Net finance expense 5 88 29
Royalties 31 -
Share scheme expense 64 23
Movement in pensions and provisions (2) (5)
Net foreign exchange differences 153 34
Dividends received from Investments in equity (11) -
Movements in working capital:
Decrease in trade and other receivables 451 15
Decrease in trade and other payables (613) (77)
Movements in other assets and liabilities
related to operations:
Increase in clearing business financial assets (79,777) (63,367)
Increase in clearing business financial liabilities 79,714 63,439
Movement in derivative assets and liabilities 8 (6)
Cash generated from operations 1,326 512
14. Business combinations
Acquisitions in the six months ended 30 June 2021
Refinitiv Acquisition
On 29 January 2021, the Group acquired Refinitiv Parent Limited
and its subsidiaries (Refinitiv), a company based in the Cayman
Islands and headquartered in London and New York. Refinitiv is a
leading global provider of market and financial data and
infrastructure, delivering data, insight and analytics tailored to
strategic workflows.
Refinitiv holds an approximate 52% economic interest in Tradeweb
Markets Inc. (Tradeweb) and its subsidiaries (the Tradeweb group).
Tradeweb Markets Inc. is a Delaware company and the holding company
of Tradeweb Markets LLC, which offers electronic marketplaces for
trading fixed income, derivatives, money market and equity
products. Tradeweb operates as a standalone, publicly listed
entity.
The acquisition of Refinitiv is a transformational transaction,
strategically and financially, and positions the Group for
long-term sustainable growth. Refinitiv brings highly complementary
capabilities in data, analytics and capital markets.
The combination of LSEG and Refinitiv will deliver significant
benefits for customers, and in particular to:
-- transform LSEG's position and create a global financial
markets infrastructure leader of the future;
-- strengthen LSEG's global footprint and accelerate its
successful growth strategy across multiple key financial centres
and jurisdictions, including in North America (the world's largest
financial market), Asia and fast-growing emerging markets;
-- significantly enhance LSEG's customer proposition in data and
analytics, utilising the combined business' intellectual property
to offer innovative new services;
-- complement LSEG's existing multi-asset class growth strategy
to create a global multi-asset class capital markets business with
the addition of high-growth foreign exchange and fixed income
venues; and
-- deepen and expand LSEG's and Refinitiv's shared core
principles of open access and customer partnership.
The purchase price allocation (PPA) has been prepared on a
provisional basis in accordance with IFRS 3 Business Combinations.
If new information obtained within one year of the acquisition
date, about facts and circumstance that existed at the acquisition
date, identifies adjustments to the amounts below or any additional
provisions arising from tax, legal claims or other operating
activities that existed at the date of acquisition, then the
accounting for the acquisition will be revised with any adjustments
recognised in the acquired balance sheet.
Details of the purchase consideration, non-controlling interest,
net assets acquired and goodwill are as follows:
Purchase consideration
Number of shares
(millions) $m GBPm
Ordinary shares issued
- to the sellers 198 22,703 16,570
- to the Management Incentive Plan (MIP) participants 6 547 399
204 23,250 16,969
Fair value of equity-settled share-based payment awards (attributable to
pre-acquisition services
rendered) 3 2
23,253 16,971
Under the terms of the Stock Purchase Agreement, LSEG (directly
and through certain wholly owned subsidiaries) acquired the entire
issued share capital of Refinitiv Parent Limited and, in exchange,
LSEG issued 204,225,968 shares (comprising 136,870,442 listed LSEG
ordinary shares and 67,355,526 unlisted LSEG limited-voting
ordinary shares). The limited-voting ordinary shares rank pari
passu with the LSEG ordinary shares. Based on LSEG's issued share
capital as at completion, the total shares amounted to an economic
interest in LSEG plc of approximately 37% but less than 30% of the
total voting rights in LSEG.
Of the total number of shares issued, 179,610,123 shares were
issued on 29 January 2021 and the remaining 24,615,845 shares were
issued on 1 March 2021.
Shares issued to the sellers
The fair value of 198,184,632 shares issued as part of the
consideration paid to the sellers, excluding the MIP participants,
of GBP16,570 million, was based on the opening share price on 29
January 2021 of GBP83.94 per share adjusted for the valuation
difference of deferred shares issued on 1 March 2021.
Shares issued to the MIP participants
Members of Refinitiv's senior management team participated in
the MIP set up by Refinitiv Holdings Limited (now York Parent
Limited). The MIP was designed to retain management, incentivise
performance and share growth in Refinitiv's value. Under the MIP,
management acquired shares in York Parent Limited.
To improve the retentive effect of the MIP, amendments were made
to the MIP in connection with the Refinitiv acquisition so that
certain of the shares did not vest on completion and will be
subject to forfeiture in certain leaver circumstances.
The fair value of 6,041,336 shares issued as part of the
consideration paid to the MIP participants of GBP399 million was
measured in accordance with IFRS 3 and IFRS 2 Share-based
Payment.
Identifiable assets acquired and liabilities assumed
The following table summarises the recognised provisional fair
value of the identifiable assets acquired and liabilities assumed
at the acquisition date:
Acquired value Acquired value
Notes $m GBPm
Property, plant, and equipment 1,038 758
Intangible assets 9 17,324 12,643
Investment in associates 12 9
Deferred tax assets 533 389
Investments in financial assets 30 22
Retirement benefit asset 522 381
Other non-current assets 313 228
Trade and other receivables 1,582 1,154
Current tax assets 68 50
Derivative financial assets 2 2
Cash and cash equivalents 1,276 931
Trade and other payables (1,391) (1,015)
Contract liabilities (839) (612)
Derivative financial liabilities (48) (35)
Current tax liabilities (157) (114)
Other current liabilities (14) (11)
Borrowings 13 (14,336) (10,462)
Deferred tax liabilities (1,862) (1,359)
Retirement benefit obligations (136) (99)
Provisions (42) (31)
Other non-current liabilities (1,141) (833)
Total identifiable net assets acquired 2,734 1,996
The identified purchased intangible assets, internally developed
software and other intangible assets are as follows:
$m GBPm Estimated useful lives
Customer contracts and relationships 10,216 7,456 13-20 years
Databases and content 3,286 2,398 5-12 years
Tradenames 1,347 983 5 -15 years
Licences 272 199 5-15 years
Software 2,134 1,557 3-13 years
Contract costs 61 44 3 years
Other 8 6 1 year
Intangible assets 17,324 12,643
The fair value of assets acquired and liabilities assumed was
determined based on assumptions that reasonable market participants
would use in the principal (or most advantageous) market for the
asset or liability. The following assumptions, the majority of
which include significant unobservable inputs (Level 3), and
valuation methodologies were used to determine fair value:
-- Customer contracts and relationships - The income approach:
multi-period excess earnings method (MEEM) was used. The value of
the intangible asset is estimated from the residual earnings after
fair returns on all other assets employed (including other
intangible assets) have been deducted from the business's after-tax
operating earnings - so called 'contributory asset charges'. The
MEEM approach comprises the following steps: (a) Forecasting
revenues attributable solely to existing assets (e.g. revenue
associated with existing customer contracts and relationships).
This will include estimating expected revenue attrition (e.g. of
customers) over time, as well as forecasting any revenue growth
(e.g. expected from existing customers); (b) Applying an
appropriate operating margin to forecast sales; (c) Applying an
appropriate tax charge to estimate post-tax cash flows; (d)
Applying post-tax contributory asset charges to reflect the return
required on other tangible and intangible assets that contribute to
the generation of the forecast cash flows; and (e) Discounting the
resulting net post-tax cash flows, using an appropriate discount
rate to arrive at the net present value.
-- Databases and content, tradenames and internally developed
computer software - The income approach: relief from royalty method
was used. The value of the asset is estimated from the value of
future saved royalty payments over the life of the asset by virtue
of owning the asset. In summary, the steps which the method
comprise are: (a) Forecasting the sales revenue that is derived
using the asset (e.g. trade name or technology); (b) Estimating an
arm's length royalty rate that would be paid for the use of each
asset; (c) Applying the assessed royalty rate to the projected
sales relating to each asset over the economic life; (d) Deducting
income tax from the net royalty stream; and (e) Selecting and
applying an appropriate discount rate to the after-tax royalty
stream.
-- Broker-dealer licences - The income approach: with or without
method was used. The fair value is estimated based on income
streams, such as cash flows or earnings, discounting to a present
value. These discounted cash flows are calculated both with the
asset and without the asset. The difference in the cash flows is
discounted to the present value to determine the value of the
asset.
-- Deferred revenue (contract liabilities) - The income
approach: top down approach was used. Costs for activities (sales
commissions) that have already been performed and a notional profit
on those activities that a market participant would expect in order
to take on the performance obligations are deducted from the market
price of the deferred revenue. The result is discounted to present
value.
-- Borrowings - The current book value of debt assumed has been
adjusted to its fair value. On acquisition of Refinitiv, the Group
refinanced the Refinitiv third-party debt, therefore the fair value
is the cost to settle the debt.
-- Retirement benefit asset and obligation - Substantially all
of Refinitiv's employees participate in defined benefit and defined
contribution employee future benefit plans. Significant plans are
measured in terms of IAS 19 Employee Benefits using the projected
unit credit method.
The retirement benefit asset and obligation. Substantially all
of Refinitiv's employees participate in defined benefit and defined
contribution employee future benefit plans. Significant plans are
measured in terms of IAS 19 Employee Benefits using the projected
unit credit method.
The fair value of the trade receivables amounts to GBP876
million (US$1,200 million). The gross amount of trade receivables
is GBP883 million (US$1,210 million) and it is expected that the
full contractual amounts can be collected.
The Group measured the acquired lease liabilities using the
present value of the remaining lease payments as if the leases were
new leases at the date of acquisition. The right-of-use assets were
measured at an amount equal to the lease liabilities, adjusted to
reflect favourable or unfavourable terms of the leases when
compared with market terms.
The deferred tax liability mainly comprises the tax effect of
the intangible assets.
Non-controlling interest
$m GBPm
Non-controlling interest based on the proportionate interest (48%) of net assets 1,729 1,261
Fair value of equity-settled share-based payment awards (attributable to pre-acquisition services
rendered) 335 244
Non-controlling interest 2,064 1,505
The Group elected to measure the non-controlling interest in
Tradeweb at the proportionate share of its interest in the
identifiable net assets.
The fair value of the outstanding equity-settled share-based
payment awards granted by Tradeweb was measured in accordance with
IFRS 3 and IFRS 2 as if the acquisition date were the grant date,
allocated to the non-controlling interest based on the portion of
the share awards attributable to pre-acquisition services.
Goodwill
Goodwill arising from the acquisition has been recognised as
follows:
$m GBPm
Purchase consideration 23,253 16,971
Less: Fair value of identifiable net assets acquired (2,734) (1,996)
Non-controlling interest 2,064 1,505
Goodwill 22,583 16,480
The goodwill is attributable to:
-- growth in the underlying business;
-- future data and technology not yet developed; and
-- expected synergies which will drive growth in the combined business.
Goodwill is provisionally allocated to the Refinitiv and
Tradeweb cash-generating units. Goodwill recognised of GBP1,150
million (US$1,575 million) is expected to be deductible for income
tax purposes.
Revenue and profit before tax
From the date of acquisition, Refinitiv contributed GBP2,091
million (US$2,903 million) of revenue, total income of GBP2,101
million (US$2,917 million), operating profit before non-underlying
items of GBP603 million (US$837 million) and GBP166 million (US$231
million) to profit before tax (from continuing operations of the
Group). If the acquisition had occurred on 1 January 2021,
estimated Group revenue for the period from continuing operations
would have been GBP3,412 million, with operating profit before
non-underlying items of GBP1,293 million. These amounts have been
calculated using the Group's accounting policies and based on
available information.
Acquisition related costs
The Group incurred acquisition related costs of GBP65 million on
advisor and professional fees and management retention costs. These
costs are recognised as non-underlying transaction costs in profit
or loss (note 4).
NFI Acquisition
On 25 June 2021, the Tradeweb group acquired all of the
outstanding equity interests of Execution Access, LLC, Kleos
Managed Services Holdings, LLC and Kleos Managed Services, L.P.
(collectively the NFI Acquisition). The all-cash purchase price of
US$190 million is net of cash acquired, net of deposits with
clearing organisations acquired and prior to working capital
adjustments. Preliminary working capital adjustments resulted in a
$1 million increase to the purchase price.
Execution Access, LLC is a limited liability company organised
in the state of Delaware and is a broker-dealer registered with the
U.S. Securities and Exchange Commission (SEC) and Financial
Industry Regulatory Authority (FINRA). The platform (formerly known
as eSpeed) acquired from Nasdaq is a fully executable central order
limit book (CLOB) for electronic trading in on-the-run (OTR) U.S.
government bonds.
The PPA has been prepared on a provisional basis in accordance
with IFRS 3. If new information obtained within one year of the
acquisition date, about facts and circumstance that existed at the
acquisition date, identifies adjustments to the amounts below or
any additional provisions that existed at the date of acquisition,
then the accounting for the acquisition will be revised. The
primary areas not yet finalised relate to, in particular, the
valuation of the identifiable intangible assets and software and
final working capital adjustments.
Goodwill arising from the acquisition has been recognised as
follows:
$m GBPm
Purchase consideration 243 175
Less: Fair value of identifiable net assets acquired (155) (111)
Customer relationships (99) (72)
Software development costs (1) (1)
Other non-current assets (1) (1)
Other current assets (22) (15)
Cash and cash equivalents (34) (24)
Current liabilities 2 2
Goodwill 88 64
The fair values were determined based on assumptions that
reasonable market participants would use in the principal (or most
advantageous) market and primarily included significant
unobservable inputs (Level 3). Customer relationships were valued
using the income approach, the same approach to value the Refinitiv
customer relationships.
The acquired software development costs will be amortised over a
useful life of one year and the customer relationships will be
amortised over a useful life of 13 years.
The goodwill recognised in connection with the NFI Acquisition
is primarily attributable to the acquisition of an assembled
workforce and expected synergies from the integration of the
operation of the NFI Acquisition into the Tradeweb group's
operations. All of the goodwill recognised in connection with the
NFI Acquisition is expected to be deductible for income tax
purposes.
The NFI Acquisition was not material to the Group's consolidated
financial statements and therefore pro-forma results of this
acquisition have not been presented.
Acquisition related costs
The Group incurred acquisition related costs of GBP3 million ($5
million) to affect the NFI Acquisition, which are recognised as
non-underlying transaction costs in profit or loss (note 4).
Acquisitions in the six months ended 30 June 2020
There were no acquisitions during this period.
15. Disposal of business and discontinued operations
On 13 January 2021, the disposal of the Borsa Italiana group was
judged to be highly probable and the group was treated as a
disposal group from that date until 29 April 2021, the date of
disposal. Borsa Italiana group is a discontinued operation as a
result of its size and geographical location and its results have
been excluded from the continuing results of the Group for the
period ended 30 June 2021. The results for June 2020 have been
re-presented to exclude the Borsa Italiana results from the
continuing operations of the Group.
Borsa Italiana group was sold for consideration of GBP3.9
billion (EUR4.4 billion), realising a profit on sale for the Group
of GBP2.5 billion.
The results for Borsa Italiana group included in the income and
cash flow statements as discontinued operations are as follows:
30 June 30 June
2021 2020
Discontinued operations Unaudited Unaudited
GBPm GBPm
Summary income statement for discontinued
operations
Total income 146 207
Underlying expenses (52) (89)
Adjusted profit before tax 94 118
Non-underlying expenses (4) (18)
Profit before tax 90 100
Tax (6) (30)
Profit on disposal (see below) 2,519 -
Profit from discontinued operations
for the period 2,603 70
Items recognised in other comprehensive
income (8) 82
Total comprehensive income from
discontinued operations 2,595 152
Summary cash flow statement for
discontinued operations
Cash consideration received on disposal 3,876 -
Cash disposed of (284) -
Net cash (outflow)/inflow from operating
activities (78) 62
Net cash outflow from investing
activities (2) (21)
Net cash outflow from financing
activities (4) (8)
Foreign exchange movement - 12
Net cash flow for the period 3,508 45
Profit on disposal
Cash consideration received 3,876 -
Net assets disposed (1,413) -
Non-controlling interests disposed 65 -
Recycling of cumulative FX reserve on consolidation 61 -
Recycling of amounts held in hedging reserve (17) -
Transaction expenses recognised (45) -
Other expenses recognised (8) -
Profit on disposal 2,519 -
As part of the disposal agreement the Group continues to provide
services to the Borsa Italiana group on an arms length basis. The
disposal agreement also contains standard clauses regarding claims
and warranties which may result in a possible obligation depending
on whether uncertain future events or claims occur. Based on the
facts currently known, it is not possible for the Group to predict
the outcome of uncertain future claims. In addition, for certain
liability claims, the purchaser has six months from the closing
date to notify the Group of claim for payment.
16. Commitments and contingencies
The Group had no contracted capital commitments not provided for
in the interim condensed consolidated financial statements (31
December 2020: GBP18 million). The Group has a long term agreement
with Reuters News, to receive news and editorial content for a
minimum amount of US$325 million per year.
In the normal course of business, the Group receives legal
claims including, for example, in relation to commercial matters,
service and product quality or liability, employee matters and tax
audits. The Group is also involved in the course of its business in
legal proceedings and actions, engagement with regulatory
authorities and in dispute resolution processes. These are reviewed
on a regular basis and, where possible, an estimate is made of the
potential financial impact on the group. In appropriate cases a
provision is recognised based on advice, best estimates and
management judgement. Where it is too early to determine the likely
outcome of these matters, no provision is made. Whilst the Group
cannot predict the outcome of any current or future such matters
with any certainty, it currently believes the likelihood of any
material liabilities to be low, and that such liabilities, if any,
will not have a material adverse effect on its consolidated income,
financial position or cash flows.
17. Events after the reporting period
On 4 August 2021, LSEG acquired Quorate Technology Limited, a
specialist provider of automatic speech processing solutions.
Quorate was founded in 2012 as a spin-out from the Centre for
Speech Technology Research at The University of Edinburgh. This
acquisition will enable LSEG to own and develop automatic speech
processing capabilities in order to better serve our customers and
their evolving needs.
Principal Risks
The management of risk is fundamental to the Group's day-to-day
operations and the successful execution of its Strategic Plan.
LSEG's Enterprise-wide Risk Management Framework (ERMF) is
designed to allow management and the Board to identify, assess and
manage LSEG's risks and to ensure better decision taking in the
execution of its strategy. It also enables the Board and executive
management to maintain and attest to the effectiveness of the
systems of internal control and to manage principal risks as set
out in the UK Corporate Governance Code. Additional details can be
found in our risk management oversight supplement. Please visit:
www.lseg.com/about-london-stock-exchange-group/risk-management-oversight
The Group does not consider the landscape of principal risks and
uncertainties set out on pages 24-39 of its Annual Report for the
year ended 31 December 2020 to have changed materially. The Group's
acquisition of Refinitiv has, however, changed the nature of some
risks due to, for example, an increased Geographical footprint;
these changes are referenced below, as applicable. A summary of the
principal risks and uncertainties which may affect the Group in the
second half of the financial year include the following:
Business Risks
As a diversified markets infrastructure business and data and
analytics service provider, the Group operates in a broad range of
equity, fixed income and derivative markets, servicing customers
who increasingly seek global products and innovative solutions. If
the broader economy underperforms, or there is lower activity in
our markets, it may lead to lower revenue across Group
businesses.
The Covid-19 pandemic continues to be a risk to the global
economy and, although vaccines show promise in controlling the
virus, new virus strains and the significant challenges faced by
developing and frontier economies, mean that the risk to the global
economy persists. In the short-term, unprecedented fiscal and
monetary policy measures and central bank support frameworks
continue to underpin global economies and financial markets.
However, withdrawal of economic and monetary stimulus, mixed
economic data and the threat of inflation continue to drive
uncertainty.
In addition, the Group is exposed to a broader geo-political
landscape that continues to evolve and impact financial market
sentiment, which could have an adverse impact on the Group's
businesses, operations, financial condition and cash flows.
Although LCH Ltd has been granted recognition as a Tier 2 third
country CCP by ESMA until 30 June 2022, the future relationship
between the UK and the EU remains in flux, with no broad agreement
reached on equivalence for Financial Services. There is a risk that
degradation of the EU and UK relationship could impact the
permanent equivalence authorisation process, which could lead to
greater resource requirements or non-approval.
More broadly, uncertainty relating to foreign policies of
governments, such as those of the US, China and Russia, remain, and
whilst the Group has a well-diversified set of revenue streams and
geographic footprint, any changes in the geo-political landscape
could have an adverse impact on the Group's financial
performance.
Business Transformation Risks
The success of the enlarged Group depends on its ability to
integrate the businesses of LSEG and Refinitiv and to deliver
synergies within the combined organisation. There is a risk that
the benefits or expected performance of the enlarged Group might
not be achieved in line with expectations, or at all, and that the
costs to achieve the synergies and benefits may be higher than
anticipated. A failure to align the businesses of the Group
successfully may lead to an adverse impact to the Group's financial
performance, operational resilience, reputation, and/ or strategy.
This risk could be exacerbated by the remote working arrangements
in place for the majority of the Group's global workforce, key
third-party service providers, customers and members.
The Group faces significant competition in each of its main
business areas, including Data & Analytics, Capital Markets and
Post Trade. The market segments for the Group's data, information,
software, services and products are highly competitive and are
subject to rapid technological changes and evolving customer
demands and needs.
The Group must continue to consider its agreement with Borsa
Italiana Group to provide elements of its pre-disposal shared
infrastructure throughout the agreed transition period. Failure to
comply with contractual agreements could result in financial or
reputational damage to the Group.
Operational Resilience
The Group operates critical financial markets infrastructure
within its businesses, such as trading venues and CCPs. The
operational resilience of these, and other Group products, is key
to ensure adequate function of financial markets as well as
providing a high quality customer experience. The Group's
operational resilience lies in its ability to prevent, adapt to,
respond to and recover from operational disruptions, and its
ability to minimise the impact of adverse events on our customers,
employees and critical infrastructure. Robust threat detection,
incident and crisis management and Business Continuity is central
to resilience and execution of the Group's strategy. The Group's
operational resilience can be challenged by a variety of adverse
events, including (but not limited to) acts of terrorism,
geopolitical instability, natural disasters, pandemics and
cyber-attacks .
Since the start of the Covid-19 pandemic, the Group has
coordinated its response across all entities, business and
geographies, ensuring continuity of operations and services, and
consistent provision of support to all colleagues. Remote working
has put additional pressure on technology resources and colleagues
as they continue to learn, and adapt to new working practices. The
Group has put in place processes and controls to facilitate a safe
return to the office for colleagues and will continue to adapt
local policies in response to changes in conditions or official
guidance. The safety and security of all Group colleagues remains
the highest priority concerning all return to office decisions
.
Information Security and Cyber Risk
Across the financial services industry, cyber-attacks have
become more frequent and have grown in both complexity and
sophistication. The inherent risk continues to evolve as emerging
technologies, such as cloud computing and artificial intelligence,
change the cyber risk landscape. The Group continues to invest
heavily in technology infrastructure to ensure that our systems
remain secure and fully operational. A breach of cyber security,
or, more broadly, an operational disruption could result in a
significant adverse reputational or financial impact to the
Group.
Technology Risk
The Group is highly dependent on the development and operation
of its sophisticated technology and advanced information systems as
well as those of its key third-party service and outsourcing
providers. Since the start of the Covid-19 pandemic, the Group has
relied on greater use of remote working capabilities and has
experienced changing customer demands. Additionally, the Group's
technology portfolio includes a number of systems that have reached
end of life, contributing to the increased complexity of the
Group's technology strategy. Technology failures, including those
that impact remote access and cloud computing services, could
result in significant operational and financial impacts to our
customers or employees, and the orderly running of our markets,
data services and CCPs.
The Group is exposed to potentially disruptive technologies that
could impact its ability to compete in both the markets in which it
currently operates and those in which it plans to enter. The
increased use of artificial intelligence (AI) in digital
transformation strategies brings with it associated risks such as
inherent bias in the analysis of historical data and behaviour
patterns which feed AI algorithms; this could give rise to
automated decisions which are not aligned with current regulations,
societal expectations or organisational values. There is also a
risk that AI advancement could result in a changing regulatory
environment to which the Group would have to adapt.
Third Party Risk (incl. Outsourcing)
The Group and its entities engage third-party service providers,
which may include outsourcing functions to other Group entities or
external service providers, including Cloud Service Providers
(CSPs). The Group has increasingly engaged CSPs to host critical
services and data. An over-reliance on a CSP could exacerbate
certain third-party risks such as those relating to data governance
and services which are provided by a small concentration of
providers. Failure to manage the risks associated with the
selection, management and oversight of critical third-party
suppliers could impact the Group's operational resilience and
excellence, ability to remain compliant with relevant regulations
and ability to deliver its strategic objectives, which could result
in an adverse financial and reputational impact to the Group.
Employees and talent
The Group aims to build and nurture a culture where
inclusiveness is a constant practice, not an initiative, where
there is a deep sense of pride, connection and belonging that
transcends any role, language or country. The Group's ability to
attract and retain key talent is critical to achieving its
strategic objectives. There is a risk that this ability could be
diminished as a result of actual or perceived issues relating to
culture, employer brand, performance & reward framework,
wellbeing strategy, diversity and inclusion, career development, as
well as external factors such as the prevailing market conditions
and changes in the regulatory landscape. Failure to adequately
manage this risk could result in a loss of key talent or the
inability to recruit an appropriate workforce.
Additionally, there is a risk that some current and prospective
employees experience uncertainty about their future roles within
the post-acquisition Group, which could result in attrition of, or
difficulty to recruit, key talent. Additionally, the Covid-19
pandemic and associated health and remote working/capacity
implications could have a continued impact on employee welfare, and
amplify the impact to wellbeing or the concerns of our
employees.
Compliance Risks
The Group is exposed to the risk that one or more of the Group's
businesses may fail to comply with the laws and regulatory
requirements to which it is, or becomes, subject. The Group has a
diverse geographic footprint and is exposed to risks associated
with the management of changes to local, and regional regulatory
requirements; such regulations include imposition of sanctions
within a jurisdiction, MiFID II/ MiFIR, Benchmark Regulation, CCP
specific regulations, and information and cyber security related
standards.
Regulations have the potential to mandate change to the Group's
businesses, products, participation in markets, strategy, revenue
and costs. Regulatory change also increases the risk of new market
entrants or that an advantage is created for existing market
participants. If one or more risks relating to the Group's legal or
regulatory compliance were to materialise , the business in
question (or the Group itself) could be subject to censures, fines
and other regulatory or legal proceedings.
There is an emerging risk of increasing legislative and
regulatory focus on cyber security, operational resilience, data
protection and data localisation in many of the Group's key
regulatory jurisdictions which could result in conflicting or
duplicative regulatory requirements. Such regulatory requirements
could adversely impact our operations, risk management, reporting
and compliance models.
Credit Risk
CCPs and other parts of the Group are exposed to credit risk as
a result of placing money with investment counterparties on both a
secured and an unsecured basis. Losses could occur as a result of
the default of either the investment counterparty or of the issuer
of bonds bought outright or received as collateral in Group CCPs.
The Group's credit risk also relates to its customers and
counterparties being unable to meet their obligations to the Group
either in part or in full.
In addition, the Group CCPs are exposed to credit risk as a
result of their clearing activities. The default of a Group CCP
clearing member that could not be managed within the resources of
that member, could adversely affect the CCP's reputation and, in
extreme circumstances, could lead to a call on the Group CCPs' own
capital ('skin-in-the-game'). Additionally, LCH SA has an
interoperability margin arrangement with a non-Group CCP
(CC&G). The interoperability arrangement requires collateral to
be exchanged in proportion to the value of the underlying
transactions and exposes the CCP to financial, operational,
regulatory and reputational risks as a result of incidents or
issues, or in the event of a default of the non-Group CCP under
this arrangement.
Market Risk
By the nature of its operations, the Group is exposed to both
foreign exchange and interest rate risks through its borrowing
activities (including those undertaken to support M&A
objectives), treasury investments and CCP activities. In addition,
the acquisition of Refinitiv has introduced both a broader FX
revenue profile and introduced new operating currencies to the
Group. Adverse movements in foreign exchange rates and interest
rates markets, specifically those in the principal countries to
which the Group has a financial exposure, could increase the
Group's exposure to these risks.
The Group's acquisition of Refinitiv has led to an increased
liquidity requirement. In a non-CCP setting, the Group's liquidity
risk is supported by committed bank facilities, long-dated debt and
strong annuity-like income generation, and remains stable. These
facts were noted in a H1 2021 credit rating agency assessment of
the Group's liquidity. The Group's headroom planning prudency,
including stress testing, will be maintained.
Group CCPs are exposed to market and liquidity through their
clearing and investment activities. Market risk mainly arises in
the event of a member default where the CCP may need to hold and
liquidate assets previously held by the defaulted member. The CCP's
market risk exposure could increase as a result of unfavourable
market conditions at the time of the members' default.
In addition, the Group CCPs collect clearing members' margin and
default funds contributions in cash, central banks and/or in highly
liquid securities. To maintain sufficient ongoing liquidity and
immediate access to funds, the Group's CCPs deposit the cash
received in highly liquid and secure investments. The Group's CCPs
also hold a small proportion of their investments in unsecured bank
and money market deposits subject to the limitations imposed by
EMIR. The successful operation of these investment activities is
contingent on general market conditions and there is a risk that
such investments could incur market losses.
Capital Risks
The Group's regulated entities are exposed to both capital
adequacy risk whereby, if a regulated entity in the Group fails to
ensure that sufficient capital resources are maintained to meet
regulatory requirements, it could result in a loss of regulatory
approvals and/or imposition of financial sanctions. Further, both
regulated and unregulated entities are exposed to the risk that
they do not maintain adequate or have continued access to high
quality, debt or equity capital and that capital investment returns
are below expectation. Materialisation of either of these risks in
a Group entity could negatively impact the Group's financial
performance and stakeholder confidence, strategy, ability to
maintain operational excellence and resilience and to remain
competitive.
Model Risk
The Group's model risks can arise from errors during the
development, implementation, use, or decisions based on outputs, of
models. The Group utilizes a suite of models which, in some cases,
make use of emerging technology (such as Artificial Intelligence)
across all three of its business divisions, examples of models
include; CCP margin models, Eikon Analytics' derivatives pricing,
Yield Book's prepayment, Capital Markets surveillance, FTSE
Russell's ESG and Risk's climate quantification and capital models.
Materialisation of model risks could adversely impact both the
reputation and the financial condition of the Group.
Data Management
The Group is exposed to data management risk through its
entities that obtain, collect, create, own, license, transform, and
distribute data. The Group is accountable for the compliant and
proper protection and use of its data. Failure to govern the
Group's data effectively could result in those data being unfit for
purpose.
There is also a risk of improper data management and/or use, by
either the Group, or its customers and stakeholders.
Materialisation of this risk could result in inadequate or
misleading data being used to inform strategic or operational
decisions of either the Group or its clients and could adversely
affect the Group's reputation, regulatory compliance or financial
performance. These risks are particularly apparent due to the
increase in global data localisation restrictions, and obligations
relating to both personal and non-personal data.
Climate Risk
International organisations, governments and regulators are
focused on integrating climate risks and opportunities into
investment decision making, to enable and facilitate a transition
to a low carbon economy. This is an area of emerging and
wide-ranging policy making, impacting financial market participants
and corporates.
The increased focus from regulators, investors and other
stakeholders, has generated a requirement for enhanced
climate-related risk oversight. Climate-related risks include both
Transition risks (e.g. Regulation and Litigation risks) and
Physical Risks (e.g. Global warming).
The Group has developed models to assess Physical Risks for
Operations and Transition Risks for one of the Group's business
units, with the former covering the impact of climate events on our
operations, the resultant foregone revenue, the business disruption
and repair costs for uninsurable buildings and equipment and rising
insurance costs.
There is an increasing focus on the impact of climate change to
credit risks which could result in an increased regulatory
compliance burden. Overall, we do not believe this will give rise
to significantly increased risks in the short term. The Group will
continue to monitor and development its approach for management of
climate risk.
Reputational Risk
Several of the Group's businesses are iconic and trusted
international brands. The strong reputation of the Group's
businesses and their brand names are valuable for the Group and its
businesses, credibility with regulators and attractiveness to
customers. There is a risk that the Group could be adversely
impacted by actions such as miscommunication on social media,
misrepresentation to internal or external stakeholders,
interruption of services, or regulatory censure. Materialisation of
these events could adversely impact the Group's business, financial
condition and operating results.
The Group has a portfolio of assets, including brands, products
and services that are both protected and unprotected by
intellectual property rights. There is a risk that controls around
protected assets may be inadequate to deter misuse or
misappropriation of the Group's Intellectual Property (IP) assets
or to allow the Group to enforce its intellectual property rights.
In the case of assets that are not subject to protection, there is
a risk that competitors of the Group may independently develop and
patent, or otherwise protect, products, services or processes, that
are the same or similar to those of the Group. Additionally,
third-parties may assert intellectual property rights claims
against the Group, with or without merit, which could have an
adverse effect on the Group's business and cash flows, financial
condition, results of operations and reputation. Materialisation of
any of the risks to both protected and unprotected assets could
impact the Group's financial position, reputation, regulatory
compliance, strategy and ability remain competitive.
The Group receives content and data through licensing
arrangements with content providers. If third-parties were to
discontinue provision of products or services to the Group, or were
to fail to provide content that is consistent with the relevant
agreement, the Group could experience significant disruption to its
business resulting in an adverse impact to the Group's reputation,
strategic objectives, operational resilience and excellence, and
financial performance and may be subject to litigation by its
customers, increased regulatory scrutiny or regulatory fines.
The emerging risks to which the Group is exposed are detailed on
page 39 of the 2021 Annual Report.
Directors
The Directors of London Stock Exchange Group plc at 30 June 2021
were as follows:
Don Robert
David Schwimmer
Anna Manz
Jacques Aigrain
Dominic Blakemore
Martin Brand
Erin Brown
Professor Kathleen DeRose
Tsega Gebreyes
Cressida Hogg CBE
Stephen O'Connor
Dr Val Rahmani
Douglas M. Steenland
Ashok Vaswani
Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge, the
interim condensed consolidated financial statements have been
prepared in accordance with IAS 34 as adopted by the European Union
and that the interim report herein includes a fair review of the
information required by the Financial Conduct Authority's
Disclosure and Transparency Rules 4.2.7 and 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months of the financial year and their impact on the
interim condensed consolidated financial statements, and a
description of the principal risks and uncertainties for the
remaining six months of the financial year; and
-- material related party transactions in the first six months
of the current financial year and any material changes in the
related party transactions described in the last annual report.
By order of the Board
David Schwimmer
Group CEO
Anna Manz
Group CFO
6 August 2021
Independent review report to London Stock Exchange Group plc
Conclusion
We have been engaged by London Stock Exchange Group plc (the
"Company") and its subsidiaries (together the "Group") to review
the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2021, which
comprises the Condensed Consolidated Income Statement, the
Condensed Consolidated Statement of Comprehensive Income, the
Condensed Consolidated Balance Sheet, the Condensed Consolidated
Cash Flow Statement, the Condensed Consolidated Statement of
Changes in Equity and related explanatory notes 1 to 17. We have
read the other information contained in the half yearly financial
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2021 is not prepared, in all material respects, in accordance
with UK adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland) "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
Group will be prepared in accordance with UK adopted IFRSs. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial
Reporting".
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
6 August 2021
FINANCIAL CALENDAR
Ex-dividend date for interim dividend 19 August 2021
Interim dividend record date 20 August 2021
Interim dividend payment date 21 September
2021
Q3 Trading Statement (revenues only) 22 October 2021
Financial year end 31 December 2021
Preliminary results March 2022
Annual General Meeting April/May 2022
The financial calendar is updated on a regular basis throughout
the year.
P lease refer to our website
http://www.lseg.com/investor-relations and click on the shareholder
services section for up-to-date details.
INVESTOR RELATIONS CONTACTS
Investor Relations
Independent auditors
London Stock Exchange Group plc
10 Paternoster Square Ernst & Young LLP
London EC4M 7LS 1 More London Place
London
For enquiries relating to shareholdings SE1 2AF
in London Stock Exchange Group plc:
Shareholder helpline: +44 (0)20 T +44 (0)20 7951 2000
7797 3322
email: ir@lseg.com
Visit the investor relations section
of our website for up-to-date information
including the latest share price,
announcements, financial reports
and details of analysts and consensus
forecasts
http://www.lseg.com/investor-relations
Registered office Principal legal adviser
London Stock Exchange Group plc Freshfields Bruckhaus Deringer
10 Paternoster Square LLP
London EC4M 7LS 65 Fleet Street
London
Registered company number EC4Y 1HT
London Stock Exchange Group plc:
5369106 T +44 (0)20 7936 4000
Corporate brokers
Registrar information
Citi
Equiniti 33 Canada Square
Aspect House Canary Wharf London
Spencer Road E14 5LB
Lancing Telephone: +44 (0)20 7500 5000
West Sussex www.citigroup.com
BN99 6DA
T +44 (0)371 384 2233 or +44 (0)121 Morgan Stanley
415 7065 25 Cabot Square
Lines open 8.30 to 17.30, Monday Canary Wharf
to Friday. London E14 4QA
www.shareview.co.uk Telephone +44 (0)20 7425 8000
www.morganstanley.com
Goldman Sachs
Plumtree Court
25 Shoe Lane
London EC4A 4AU
Telephone +44 (0)20 7774 1000
www.goldmansachs.com
AIM, London Stock Exchange, London Stock Exchange Group, LSE,
the London Stock Exchange Coat of Arms Device, FTSE
Russell, SEDOL, SETS and UnaVista, are registered trade marks of
London Stock Exchange plc. Main Market and the Green Economy Mark
are un-registered trade mark of London Stock Exchange plc.
Beyond Ratings is a registered trade mark of Beyond Ratings.
CDSClear is a registered trade mark of LCH S.A..
CurveGlobal is a registered trade mark of Curve Global
Limited
FTSE is a registered trade mark of the London Stock Exchange
Group companies and is used by FTSE International Limited under
licence.
GIACT is a registered trade mark of Giact Systems, LLC.
LCH, SwapClear, SwapAgent, EquityClear, ForexClear and RepoClear
are registered trade marks of LCH Limited.
LSEG and the LSEG Coat of Arms is a trade mark of London Stock
Exchange Group plc.
MillenniumIT is a registered trade mark of Millennium
Information Technologies Limited.
Refinitiv, the Refinitiv logo, Refinitiv Workspace, Lipper,
World-Check, REDI, FXALL, Eikon, Red Flag Group, Scivantage and
Datastream are registered trademarks of Financial & Risk
Organisation Limited and Refinitiv US Organization LLC, as
applicable.
Tradeweb is a registered trade mark of TRADEWEB MARKETS LLC
Turquoise is a registered trade mark of Turquoise Global
Holdings Limited.
The Yield Book, WGBI and the Funnel Logo are registered trade
marks of The Yield Book, Inc.
Other logos, organisations and company names referred to may be
the trade marks of their respective owners.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
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