TIDMLSEG

RNS Number : 5980R

London Stock Exchange Group PLC

02 March 2023

London Stock Exchange Group plc

Preliminary results for the year ended 31 December 2022

Broad-based growth and strong execution

David Schwimmer, CEO said:

"LSEG has had a strong year, successfully integrating Refinitiv and significantly improving its performance, while also delivering strong results in our Capital Markets and Post Trade businesses. The resilience of our business model and the quality of our earnings, diversified by customer, geography, product and asset class, and over 70% subscription-based, are becoming increasingly clear.

"Our strategy is working. We are an increasingly important strategic partner to customers across the financial markets value chain, and that is translating into growth. We continue to invest in new products and services, and have completed four highly complementary acquisitions to further strengthen our offer. In addition to our existing share buyback, we are today announcing plans to seek shareholder approval for a buyback directed towards the Blackstone/Thomson Reuters consortium's stake, which will benefit all shareholders.

"We are shifting from integration to transformation. Our strategic partnership with Microsoft, as well as the investments we are making in our market-leading infrastructure and venues, will create an even stronger platform for long-term sustainable growth."

 
 Reported                            2022    2021   Variance   Pro-Forma Constant 
                                     GBPm    GBPm          %    Currency Variance 
                                                                       (excluding 
                                                                 deferred revenue 
                                                                      adjustment) 
                                                                             %(1) 
                                   ------  ------ 
 Total Income (excl. recoveries)    7,428   6,211      19.6%                 5.7% 
 Recoveries(2)                        315     324     (2.8%)                 2.3% 
---------------------------------  ------  ------  --------- 
 Total Income (incl. recoveries)    7,743   6,535      18.5%                 5.5% 
---------------------------------  ------  ------  --------- 
 
 Reported 
 Operating Profit                   1,417   1,065      33.1% 
 Profit Before Tax                  1,241     894      38.8% 
 Basic Earnings per Share           141.8    85.8      65.3% 
 Dividends per Share                107.0    95.0      12.6% 
---------------------------------  ------  ------  --------- 
 
 Adjusted 
 EBITDA                             3,550   2,969      19.6%                 6.0% 
 EBITDA Margin                      47.8%   47.8% 
 Operating Profit                   2,728   2,282      19.5%                 4.6% 
 Adjusted Earnings per Share        317.8   272.4      16.7% 
---------------------------------  ------  ------  --------- 
 

Financial highlights

(all growth rates are expressed on a pro-forma constant currency basis, excluding the impact of the deferred revenue adjustment(1) , unless otherwise stated)

 
       Full-year Total Income (excl. recoveries) up 5.7%, and up 6.6% 
  --    excluding the impact of the Russia/Ukraine war(3) ; up 19.6% on 
        a reported basis 
       Broad-based growth: Data & Analytics +4.2% (+5.3% ex Russia/Ukraine), 
  --    Capital Markets +9.8%, Post Trade +7.5% 
       Accelerating subscription revenue: Annual Subscription Value (ASV) 
  --    up 6.2% (ex Russia/Ukraine) at December; 2022; further progress 
        expected in 2023 
       Good cost control: opex +3.4% excluding the impact of acquisitions 
  --    during the year 
       Improving profitability: Adjusted EBITDA growth 6.0%, margin flat 
  --    year-on-year, or up 110 basis points like-for-like(4) 
       Basic earnings per share growth +65.3% on a reported basis; AEPS 
  --    +16.7% to 317.8 pence 
       Continued strong cash generation: equity free cash flow (before 
  --    dividends) GBP1.7 billion 
 

Strategic progress and outlook

 
 --   Strong and consistent execution on Refinitiv integration: Trading 
       & Banking returned to growth; target 2022 runrate synergies delivered 
       for both revenue and costs; runrate revenue synergy target raised 
       from GBP225 million to GBP350-400 million by 2025 
 --   From integration to transformation: strategic partnership with Microsoft 
       for next generation of Workspace, innovative new solutions in modelling 
       and analytics, and data platform in the cloud 
 --   Active capital allocation towards growth: disposal of low-growth 
       BETA business; four acquisitions completed in higher-growth areas, 
       highly complementary to existing customer offering 
 --   Significant shareholder returns: GBP300 million of GBP750 million 
       buyback executed in 2022, balance to be completed by July 2023; 
       full-year dividend +12.6% to 107.0 pence 
 --   Seeking shareholder approval at the 2023 AGM for directed buyback 
       from the Blackstone/Thomson Reuters consortium; expected to be up 
       to GBP750 million by April 2024 
 --   New guidance for 2023: constant currency revenue growth +6-8%, Adjusted 
       EBITDA margin c.48%, business-as-usual capex c. GBP750 million (including 
       Microsoft) 
 

This release contains revenues, costs, earnings and key performance indicators (KPIs) for the twelve months ended 31 December 2022. FY 2022 is compared against FY 2021 on a statutory basis. Revenues and costs associated with the BETA divestment have been classed as discontinued and are excluded from all periods. Revenues and costs associated with the Borsa Italiana group divestment, which completed in 2021, are also excluded. Pro-forma constant currency variance assumes that the acquisition of Refinitiv took place on 1 January 2021 and is calculated on the basis of consistent FX rates applied across the current and prior year period. Organic growth is calculated on a constant currency basis, adjusting the results to remove disposals from the entirety of the current and prior year periods, and by including acquisitions from the date of acquisition with a comparable adjustment to the prior year. Within the financial information and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes.

(1) 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 has been re-evaluated upon acquisition by LSEG under purchase price accounting rules. This reduced 2021 revenue by GBP23 million, mainly in Data & Analytics, with a smaller impact in the FX business within Capital Markets. There is no material impact in 2022.

(2) Recoveries mainly relate to fees for third-party content, such as exchange data, that is distributed directly to customers.

(3) Growth rates excluding the Russia/Ukraine war impact have been calculated by excluding income in the region and from sanctioned customers and related business from both periods. This amounted to GBP80 million in 2021 and GBP18 million in Q1 2022, and nil beyond that.

(4) The like-for-like margin calculation is on a constant currency pro-forma basis, and adjusts for the impact of the Russia/Ukraine war, acquisitions completed in 2022 and non-cash FX-related balance sheet adjustments. Adjusted EBITDA margin is adjusted EBITDA divided by Total Income (excl. recoveries).

Contacts: London Stock Exchange Group plc

Media:

Lucie Holloway / Rhiannon Davies

+44 (0)20 7797 1222

newsroom@lseg.com

Investor relations:

Peregrine Riviere / Chris Turner

ir@lseg.com

Additional information can be found at www.lseg.com

Preliminary results investor and analyst presentation, webcast and conference call:

The Group will host a presentation and conference call on its Preliminary Results for analysts and institutional shareholders today at 10:00am (UK time) at its offices at 10 Paternoster Square, London EC4M 7LS. There will be a Q&A session at the end of the presentation for attendees and those dialling in to the conference call.

To access the conference call or webcast please register in advance using the following link and instructions below:

Conference call:

https://cossprereg.btci.com/prereg/key.process?key=P6U9PXVUM

Webcast: https://www.lsegissuerservices.com/spark/LondonStockExchangeGroup/events/b77d62b7-a278-4f2f-9d4a-dc30e834594a

Presentation slides can be viewed at http://www.lseg.com/investor-relations

The information in the preliminary announcement of the results for the year ended 31 December 2022, which was approved by the Board of Directors on 1 March 2023. This is unaudited and does not constitute statutory accounts as defined in Section 435 of the UK Companies Act 2006. The financial statements for the year ended 31 December 2021 were filed with the Registrar of Companies, and the audit report was unqualified and contained no statements in respect of Sections 498 (2) and 498 (3) of the UK Companies Act 2006. The financial statements for the year ended 31 December 2022 will be approved and filed with the Registrar of Companies in due course.

In accordance with the Listing Rules of the UK Listing Authority, these preliminary results have been agreed with the Company's auditors, Ernst &Young LLP, and the Directors have not been made aware of any likely modification to the auditor's report to be included in the Group's Annual Report and Accounts for the year ended 31 December 2022.

The preliminary results have been prepared on a basis consistent with the accounting policies set out in the Group's Annual Report and Accounts for the year ended 31 December 2022.

Overview and strategic progress

2022 performance in summary

LSEG performed strongly in 2022, growing consistently throughout the year despite macroeconomic and geopolitical volatility. We achieved our growth guidance and made good progress towards our medium-term guidance for our EBITDA margin. We have continued to execute very well on the integration of Refinitiv, not only on the achievement of synergies but also on developing a distinct culture for the combined business. The strategic partnership with Microsoft, announced in December 2022, represents another significant step forward in transforming our business and the experience for customers.

Total income excluding recoveries rose 5.7% to GBP7,428 million, with good growth across all our divisions. Adjusting for the negative impact of the Russia/Ukraine war, growth was 6.6%, at the upper end of our 5-7% medium-term growth guidance. On a reported basis, total income excluding recoveries was up 19.6%, with the good underlying performance boosted by the consolidation of a full year of the Refinitiv acquisition (compared to 11 months in 2021) and beneficial foreign exchange movements. Annual Subscription Value (ASV) growth within Data & Analytics was 6.2% (excl. impact of the Russia/Ukraine war) at December 2022, and demonstrated an accelerating trend through the year.

Adjusted EBITDA increased by 6.0%. EBITDA margin was flat year-on-year at 47.8%. The like-for-like EBITDA margin improvement, adjusting for the negative impacts of the Russia/Ukraine war, acquisitions completed in 2022 and non-cash FX-related balance sheet adjustments, was 110 basis points. Operating expenses before depreciation, amortisation and impairment grew by 4.1% on a constant currency basis, or by 3.4% excluding acquisitions completed in-year. Operating profit grew 33.1% on a reported basis to GBP1,417 million, helped by foreign exchange movements and the extra month from Refinitiv.

Financial performance is analysed in full in the Financial Review section starting on page 10 of this release.

Progress on our strategic priorities

LSEG is a leading global financial markets infrastructure and data provider. We are leaders in data and analytics; capital formation and trade execution; and clearing and risk management. We are also increasingly differentiated, both through our presence across the financial markets value chain and our scale and capabilities across multiple asset classes, including equities, fixed income, foreign exchange and related derivatives.

Our businesses enjoy strong growth drivers, including the increasing application of new technologies to data for decision-making, the electronification of financial markets, the growing digitisation of broader financial services, the growth of cross-border trading and customer need for greater capital efficiency.

Our strategy to maximise these opportunities is to be globally essential, multi-asset class and seamlessly connected. To deliver this strategy, we remain focused on three strategic priorities: 1) integrating our world-class businesses; 2) driving growth; and 3) building an efficient and scalable platform, particularly in Data & Analytics. Our progress against these priorities, as well as an update on Workspace, is described below.

Workspace progress

We continue to make steady progress with the roll-out of Workspace across different user groups. At the year-end, we were more than halfway through, and expect to be substantially complete by the end of 2024. All other variants are now in full production apart from Trading, which is in beta testing, and we have worked in close partnership with new groups of customers as we move towards launch.

At the same time, the pace of product development has been rapid, with over 200 new features delivered during 2022. For the core platform, these included infrastructure and reliability improvements, enhanced search capabilities, real-time analytics in Excel and streamlined access to training and support. There were significant additional enhancements within specific variants, too. For example, in Research and Portfolio Management we added a wide range of new functionality, including Sentimine data for transcripts, sustainable investing analytics, StarMine model upgrades and our Custom Index sandbox.

Customer feedback is positive. Customers rate Workspace well ahead of Eikon, the predecessor platform, for overall product satisfaction, and notably higher for key product enablers including resilience, workflow integration and ease of use. Trading & Banking customers are the most satisfied category.

For 2023 our priorities are to focus on migrating a lower number of high-usage, premium clients mainly in Trading and Research & Portfolio Management. Further Workspace upgrades will include the integration of some functionality from TORA, the multi-asset class order and execution management business acquired in 2022.

Integrating our world class businesses

2022 has been a year of strong progress with the integration of Refinitiv from both a revenue and cost perspective. We are achieving revenue synergies through a combination of cross-selling, the enhancement of existing services through the integration of data and analytics and the development of new products. At the end of 2022, we had delivered GBP68 million of recurring revenue synergies, above our previous expectations of GBP40-60 million. The main contributors to this have been the strong demand for data, particularly fixed income-related, from FTSE Russell customers, and the creation of new FTSE Russell indices drawing on the depth of Refinitiv's data.

We have now raised our revenue synergy guidance from a GBP225 million runrate by 2025 to GBP350-400 million. The main drivers of this additional opportunity are the two areas outlined above, the increasing integration of Refinitiv's FX platforms into ForexClear and other parts of the business, and growth from the automation of content distribution to serve smaller clients more efficiently. We now expect to incur total one-off costs of GBP550-600 million between 2021 and 2025 to achieve these revenue synergies, representing a very attractive return on investment.

On the cost side, the main areas of synergy are overlapping roles and organisational structure, real estate and vendor rationalisation. By the end of 2022, we had delivered recurring savings of GBP297 million, ahead of our GBP250 million target. We continue to expect total cost synergies of at least GBP400 million runrate by the end of 2025, which we raised last year from our original acquisition expectation of GBP350 million. We expect nearly all of the runrate cost synergies to have been achieved by the end of 2023, demonstrating the effectiveness of our integration programme. The cost to achieve these synergies is in line with our initial plans.

Just as importantly, we are integrating two groups of people and developing a new, unified culture, with a much stronger focus on performance and technology excellence, supported by data. We have set much clearer expectations and more stretching goals throughout the business, and this is already helping to deliver improved results, particularly in Data & Analytics, as described below.

The next steps in our sales transformation programme include increasing the level of dedicated resource to our top 250 customers (which represent the majority of Group revenue); evolving our "solution selling" platform through learning and development, deeper technology partnership with customers and greater consulting capability; and leveraging technology and a standardised approach to service smaller customers effectively.

We are also taking a much more rigorous and data-driven approach to customer response times, network resilience and other factors contributing to overall performance. Within Technology, we have made significant progress in bringing engineering expertise in-house. In 2022 alone, we moved from 70% external population to 60%, and our aim is to have the clear majority of our technology resource insourced. This is not only creating an LSEG culture of engineering excellence but also increasing our pace of product delivery and efficiency.

Driving growth

Data & Analytics

Revenue growth in Data & Analytics has accelerated through the year, from 5.1% in Q1 (adjusting for the impact of the Russia/Ukraine war) to 6.0% in Q4. This improving trend has been achieved through a combination of significantly-improved customer retention as a result of better execution, strong demand for our products and growing integration benefits.

We have improved execution on a number of fronts. We have restructured our sales incentives and set more stretching targets. We have developed significantly improved customer insights on usage, profitability and pricing, and as a result we are managing our renewal pipeline more rigorously and increasing the focus on cross-selling. This is aided by our increased importance as a trusted supplier to major financial institutions, where we are now engaged in a more strategic dialogue and working in partnership to develop solutions that are more customer-centred.

Within Enterprise Data, we are seeing strong demand for cloud solutions such as Real-Time Optimised and Tick History, where we have invested significantly to develop a valuable product, and the migration to a cloud environment is significantly improving customer access and stimulating growth. In Investment Solutions, FTSE Russell product launches are up 33% year-on-year, in response to substantial customer demand.

Revenue synergy highlights within Data & Analytics include ongoing very strong cross-sell of Fixed Income data into FTSE Russell clients, and Fixed Income Analytics, which achieved a second successive year of double-digit growth after a decade of low single-digit growth.

We also completed three acquisitions during the year. TORA brings multi-asset class order and execution management capabilities and we are integrating some of this functionality into Workspace to meet growing client demand. MayStreet provides low-latency (high speed) real-time data feeds, consolidating our presence across the latency spectrum in a high-growth area. GDC is a global provider of identity verification data and builds strategic capability within Customer & Third Party Risk Solutions.

Capital Markets

In Capital Markets, our growth opportunities lie in the structural trends in our markets; our ability to link our platforms and integrate data to provide enhanced services; and expansion into new geographies and asset classes such as private markets.

Within Tradeweb, the continued electronification of fixed income markets has been an ongoing tailwind, but the business is also growing share in credit trading and expanding into new geographies. In addition, its focus on ETFs in the equities space has contributed strongly to performance in 2022 and represents a significant additional runway for long-term growth.

During the year we announced plans to link Tradeweb and FXall, our market-leading FX trading platform, to enable customers trading local currency Emerging Market bonds to place their bond and currency trades simultaneously, streamlining their workflow and reducing risk. The longer-term opportunity to simplify workflow across multiple transaction types is significant.

Post Trade

We are leveraging our expertise in interest rate derivative clearing, the strength of our customer relationships and the power of Refinitiv's multi-asset class venues to drive the next stage of growth in Post Trade. Two examples of this are in foreign exchange and in the development of Post Trade Solutions.

In foreign exchange, regulation is increasing the capital and administrative burden on bilateral derivative transactions, which is driving a shift to central clearing over time. Through building seamless, direct connectivity between our foreign exchange trading and clearing platforms, combined with our global footprint, we are well positioned to build momentum in FX forwards and options clearing.

In partnership with our members and clients we are developing Post Trade Solutions, to help financial market participants optimise their financial resources and reduce operational complexity and processing costs, particularly in uncleared positions. Post Trade Solutions will enable customers to route trades in the most efficient way, depending on their existing exposures, based on a single, centralised data source. In 2022 we completed one acquisition (Quantile) and announced another (Acadia) which significantly advance our solutions strategy. Quantile provides compression and optimisation services to reduce risk and capital requirements, and Acadia is a provider of automated uncleared margin processing and integrated risk and optimisation services.

Building an efficient and scalable platform

We are implementing a comprehensive investment programme in our technology and infrastructure to serve our customers better while also improving product profitability and overall margin over time. Our software defined network, which replaces a number of complex and costly legacy networks, will deliver better agility, higher capacity and increased resilience. Progress during 2022 has been ahead of plan, with over 2,400 server migrations, and we will complete the programme in 2024.

Our programmes to transform two of our leading franchises - FTSE Russell and FX Matching - are progressing well. The re-platforming of FTSE Russell will enable greater product flexibility. The migration of FX Matching to our own proven technology, and other enhancements, will improve latency (speed) by a factor of 10, and we expect the first new functionality to be launched by the end of 2023.

In December, LSEG and Microsoft announced a new long-term strategic partnership to architect our data infrastructure using the Microsoft Cloud, and to jointly develop new products and services in the data and analytics space. The deal significantly advances our strategy of building an efficient and scalable platform for Data & Analytics to deliver next generation services for customers through improved workflow and greater flexibility, and we expect it to increase our revenue growth meaningfully over time. Microsoft has also purchased a 4.2% stake in LSEG. The major workstreams are described below.

Data platform in the cloud

Working with Microsoft Azure, we will accelerate our cloud migration strategy, creating cloud-based data architecture that consolidates our datasets onto one, flexible infrastructure. Our customers will be able to access data faster when and wherever they need it - enabling resilience and adaptability as capital markets continue to evolve.

LSEG Workspace with Teams and Microsoft 365

Together LSEG and Microsoft will transform Workspace, creating an all-in-one data, analytics, workflow and collaboration solution. Through a single, simple-to-use interface, it will enable users to collaborate with other LSEG customers inside and outside of their organisations, using Teams, Excel and Powerpoint natively with LSEG data and analytics.

New cloud analytics and modelling services

Microsoft and LSEG will use Azure Machine Learning and our advanced analytics and modelling capabilities to co-develop a new suite of solutions. Businesses that rely on analytics and models will be able to scale quickly without the need for complicated processes and systems.

Cloud infrastructure built on Microsoft Azure

We have entered into a 10-year commercial agreement to migrate our data platform and other key technology infrastructure into the Microsoft Cloud. This will be the foundation for many product development programmes and enable us to build and run scalable applications to achieve faster speed to market and greater customer reach.

Capital allocation

Our goal is to invest for growth using the cash flows we generate, building a platform for long-term capital appreciation while rewarding investors today through a progressive dividend, growing broadly in line with AEPS. We will do that within a leverage range of 1-2x net debt to adjusted EBITDA, which offers a degree of flexibility while maintaining a sufficiently conservative structure even at the top of the range.

LSEG generated GBP3.3 billion in operating cash flow in 2022, and a further GBP1.1 billion from the disposal of non-core businesses and other property. Our leverage reduced from 1.9x at the start of the year to 1.8x by year-end. We deployed our capital as follows:

Business-as-usual capex - GBP750 million

Business-as-usual capex, on a constant currency accrued basis, was GBP750 million. We continued to focus on programmes to address growth, efficiency and resilience. Our investments in Tradeweb and Workspace product development are expected to drive continued revenue growth. The upgrades to our own infrastructure as we roll out our software-defined network, giving higher capacity and increased resilience, will benefit costs from 2023 onwards. Finally the development of our data platform, including cloud migration and the associated transformation of how we import new content, should underpin both future revenue growth and cost efficiency.

In addition to this capex, we also incurred GBP184 million of capex mainly related to delivering the synergies relating to the Refinitiv acquisition, which was in line with our plans. Total capex on a cash basis was GBP966 million.

M&A - GBP786 million

Our M&A strategy is twofold: businesses providing services which are complementary to our existing offer and can be scaled across our footprint and customer base; and technology-based businesses which, while often small in revenue terms, can enhance existing services at lower cost and higher speed than organic investment.

We completed four acquisitions in 2022. Of these, GDC, Quantile and TORA are established businesses which can benefit from our much greater scale and deeper customer relationships. MayStreet allows us to significantly enhance the breadth of our low latency data offering much more quickly and cost effectively than if we were to develop this in-house.

Dividend - GBP567 million

The proposed final dividend for 2022 is 75.3 pence - giving a total for the year of 107.0 pence, up 12.6% on 2021. This is consistent with our dividend policy and reflects a payout ratio of 34% of AEPS. Our dividend per share has grown at a compound annual rate of 17.4% over the last 20 years.

Share buyback - GBP300 million

We remain very focused on capital discipline and will, from time to time, return excess capital to shareholders to the extent that we stay within our leverage range. On the back of the disposal of BETA, a non-core business in the Wealth segment, we announced a GBP750 million share buyback, which was 40% complete by the end of the year. Looking ahead, we are seeking shareholder approval at the 2023 AGM for a directed share buyback, which will enable us to buy shares directly from entities owned by certain investment funds affiliated with Blackstone, an affiliate of Canada Pension Plan Investment Board, an affiliate of GIC Special Investments Pte. Ltd, and by Thomson Reuters, the former Refinitiv shareholders. We expect to deploy up to GBP750 million in directed buybacks by April 2024.

Outlook and guidance for 2023

The year has started well. The broader macroeconomic and geopolitical outlook remains uncertain, but while some of our customers' businesses are under pressure, other areas are showing strong growth. More importantly, the broader, structural growth drivers that we are aligned to are well established and our customer relationships are increasing in strategic value.

We expect total income growth on a constant currency basis of 6-8%. This includes a contribution from acquisitions completed in 2022 of approximately 1%. We expect further progress in ASV growth in Data & Analytics in 2023 reflecting a greater annual price increase than last year, and continued improvements in sales and retention.

We expect to achieve an Adjusted EBITDA margin of around 48% after Microsoft-related costs. We remain on track to achieve our 2023 exit EBITDA margin target of at least 50%, as adjusted for acquisitions, disposals, Microsoft investments and the foreign exchange movements of the last two years.

Business-as-usual capex for 2023 is planned to be around GBP750 million, which is consistent with previous guidance of GBP650-700 million after adjusting for foreign exchange movements, acquisitions and Microsoft-related investments.

The 2023 EBITDA margin and capex guidance is based on exchange rates of GBP 1: USD 1.21 and GBP 1: EUR 1.14, and excludes announced acquisitions that are pending completion.

We anticipate completing the current GBP750 million share buyback by July 2023, and we will seek shareholder approval for buybacks directed at the Blackstone/Thomson Reuters consortium at the AGM in April 2023. This is expected to amount to up to GBP750 million in the twelve months between the 2023 and 2024 AGMs, starting in H2 2023.

Financial Review

Note: Unless otherwise stated, variances refer to growth rates on a pro-forma(6) constant currency basis, excluding the impact of a deferred revenue accounting adjustment(3)

 
 Reported                            2022   2021(1)   Variance   Pro-Forma Constant 
                                      (1)      GBPm          %    Currency Variance 
                                     GBPm                                (excluding 
                                                                   deferred revenue 
                                                                        adjustment) 
                                                                                  % 
                                   ------  -------- 
 Data & Analytics                   4,944     4,103      20.5%                 4.2% 
 Capital Markets                    1,459     1,171      24.6%                 9.8% 
 Post Trade                           991       906       9.4%                 7.5% 
 Other                                 34        31       9.7%               (7.2%) 
---------------------------------  ------  --------  --------- 
 Total Income (excl. recoveries)    7,428     6,211      19.6%                 5.7% 
 Recoveries(2)                        315       324     (2.8%)                 2.3% 
---------------------------------  ------  --------  --------- 
 Total Income (incl. recoveries)    7,743     6,535      18.5%                 5.5% 
---------------------------------  ------  --------  --------- 
 
 Reported 
 Operating Profit                   1,417     1,065      33.1% 
 Profit Before Tax                  1,241       894      38.8% 
 Basic Earnings per Share(4)        141.8      85.8      65.3% 
 Dividends per Share(4)             107.0      95.0      12.6% 
---------------------------------  ------  --------  --------- 
 
 Adjusted (3) 
 EBITDA                             3,550     2,969      19.6%                 6.0% 
 EBITDA Margin                      47.8%     47.8% 
 Operating Profit                   2,728     2,282      19.5%                 4.6% 
 Adjusted Earnings per Share(4)     317.8     272.4      16.7% 
---------------------------------  ------  --------  --------- 
 

(1) The comparator FY 2021 figures are statutory results, incorporating Refinitiv from acquisition at the end of January 2021. Revenues and costs associated with the BETA divestment have been classified as discontinued and are excluded from all periods. Revenues and costs associated with the Borsa Italiana group divestment, which completed in 2021, are also excluded.

(2) Recoveries mainly relate to fees for third-party content, such as exchange data, that is distributed directly to customers.

(3) The Group reports adjusted operating expenses before depreciation, amortisation and impairment, adjusted earnings before interest, tax, depreciation, amortisation and impairment (EBITDA), adjusted depreciation, amortisation and impairment, adjusted operating profit and adjusted basic earnings per share (EPS). These measures are not measures of performance under IFRS and should be considered in addition to, and not as a substitute for, IFRS measures of financial performance and liquidity. Adjusted performance measures provide supplemental data relevant to an understanding of the Group's financial performance and exclude non-underlying items of income and expense that are material by their size and/or nature. Non-underlying items include: amortisation and impairment of goodwill and other purchased intangible assets, incremental amortisation and impairment of the fair value adjustments of intangible assets recognised as a result of acquisitions, tax on non-underlying items and other income or expenses not considered to drive the operating results of the Group (including transaction, integration and separation costs related to acquisitions and disposals of businesses), as well as restructuring costs.

(4) Weighted average number of shares used to calculate basic earnings per share and adjusted basic earnings per share from continuing operations is 557 million (2021: 538 million).

(5) Growth rates excluding the Russia/Ukraine war impact have been calculated by excluding income in the region and from sanctioned customers and related business from both periods. This amounted to GBP80 million in 2021 and GBP18 million in Q1 2022, and nil beyond that.

(6) Pro-forma growth assumes that the acquisition of Refinitiv took place on 1 January 2021 for the prior year comparator.

Total Income excluding recoveries grew by 5.7% to GBP7,428 million including a 0.3% contribution to growth from acquisitions during the year, or by 19.6% on a reported basis, helped by an extra month's contribution from Refinitiv (11 months included in 2021) as well as favourable foreign exchange movements. Excluding the impact of the Russia/Ukraine war, growth was 6.6%(5) . Total Income including recoveries grew by 5.5% to GBP7,743 million, or by 18.5% on a reported basis. This was driven by good growth across all three divisions.

Adjusted operating expenses before depreciation, amortisation and impairment grew by 4.1% to GBP3,140 million. Excluding acquisitions and disposals, cost growth was 3.4%, reflecting continued strong delivery of Refinitiv-related synergies. Our main costs relate to our people, with staff costs of GBP1,896 million (2021: GBP1,666 million). IT costs amounted to GBP567 million (2021: GBP447 million) with professional fees of GBP420 million (2021: GBP327 million).

Adjusted EBITDA increased by 6.0% to GBP3,550 million. EBITDA margin was flat year-on-year at 47.8%. The like-for-like EBITDA margin improvement, adjusting for the negative impacts of the Russia/Ukraine war, acquisitions completed in 2022 and non-cash FX-related balance sheet adjustments, was 110 basis points. Within EBITDA, income from Equity Investments was GBP12 million in 2022, down from GBP22 million in 2021.

Reported depreciation, amortisation and impairment of GBP1,900 million (2021: GBP1,570 million) includes GBP1,078 million (2021: GBP883 million) related to the amortisation of purchased intangible assets (mainly Refinitiv) as well as other non-underlying charges. Excluding these, adjusted depreciation, amortisation and impairment grew by 19.7% to GBP822 million on a reported basis and by 10.7% on a pro-forma constant currency basis, driven by our continued investment in technology and new services and the capex associated with achieving the Refinitiv synergies.

Reported Operating Profit rose 33.1%, from GBP1,065 million to GBP1,417 million, helped by an extra month's contribution from Refinitiv as well as favourable foreign exchange movements. Adjusted Operating Profit grew by 19.5% to GBP2,728 million. On a pro-forma constant currency basis, it grew 4.6%, with the strong income growth and good cost control highlighted above partially offset by higher depreciation and amortisation.

Reconciliation of Adjusted Operating Profit to Reported Operating Profit

 
                                                2022    2021 
                                                GBPm    GBPm 
                                            --------  ------ 
 Adjusted Operating Profit                     2,728   2,282 
 Transaction costs                              (85)   (109) 
 Integration, separation & restructuring 
  costs                                        (304)   (225) 
 Profit on disposal & remeasurement 
  gains                                          156       - 
 Amortisation and impairment of purchased 
  intangible assets                          (1,044)   (851) 
 Depreciation & impairment of other 
  assets                                        (34)    (32) 
 Operating Profit                              1,417   1,065 
------------------------------------------  --------  ------ 
 

Transaction costs of GBP85 million mainly relate to fees and other charges incurred from acquisition activity during the year, as well as awards and incentive plans linked to the Refinitiv acquisition. Integration, separation and restructuring costs have mostly been incurred in relation to the integration of Refinitiv and are in line with previous guidance. Profit on disposal and remeasurement gains of GBP156 million include the gain arising on the disposal of a freehold property in the UK. Amortisation and impairment of purchased intangible assets of GBP1,044 million mainly arise from the Refinitiv acquisition.

Net Finance Expense / Tax / Non-Controlling Interest

Adjusted Net Finance Expenses were GBP160 million (2021: GBP166 million), and were GBP176 million (2021: GBP171 million) on a reported basis.

Reported Profit Before Tax increased by 38.8%, from GBP894 million to GBP1,241 million. Adjusted Profit Before Tax increased by 21.4% in the year to GBP2,568 million (2021: GBP2,116 million). The Group incurred a tax charge in the year of GBP262 million (2021: GBP302 million). The effective tax rate was 21.1% (2021: 33.8%). The decrease in rate is mainly due to the absence of the prior year UK deferred tax remeasurement charge. The underlying effective tax rate was 21.0% (2021: 20.4%). The higher rate reflects the tax impact of the geographical mix of pre-tax earnings.

Adjusted profits attributable to non-controlling interests, mainly in Tradeweb and LCH, totalled GBP258 million for the year ended 2022, an increase of 17.8% from 2021.

Earnings per share

Basic earnings per share from continuing operations was 141.8 pence (2021: 85.8 pence).

Adjusted earnings per share (AEPS) from continuing operations was 317.8 pence (2021: 272.4 pence). The 16.7% increase in AEPS year-on-year was driven by the growth in profitability and favourable foreign exchange movements.

Dividend

The Board is proposing a final dividend of 75.3 pence per share, which together with the interim dividend of 31.7 pence per share paid to shareholders in September 2022, results in a 12.6% increase in the total dividend to 107.0 pence per share. The final dividend of 75.3 pence per share will be paid on 24 May 2023 to all shareholders on the share register at the record date of 21 April 2023.

Data & Analytics

 
 Continuing operations                    2022      2021   Variance   Pro-Forma Constant 
                                          GBPm      GBPm          %    Currency Variance 
                                                                              (excluding 
                                                                        deferred revenue 
                                                                             adjustment) 
                                                                                       % 
                                      --------  --------  --------- 
 Trading & Banking Solutions             1,612     1,369      17.8%                 0.2% 
    Trading                              1,275     1,086      17.4%               (0.1%) 
    Banking                                337       283      19.1%                 1.4% 
 Enterprise Data Solutions               1,307     1,058      23.5%                 6.1% 
    Real-Time Data                         838       676      24.0%                 6.0% 
    PRS                                    469       382      22.8%                 6.5% 
 Investment Solutions                    1,325     1,119      18.4%                 6.2% 
    Benchmark Rates, Indices 
     & Analytics                           607       512      18.6%                 9.4% 
    Index - Asset-Based                    280       253      10.7%                 0.7% 
    Data & Workflow                        438       354      23.7%                 5.5% 
 Wealth Solutions                          275       227      21.1%                 3.0% 
 Customer & Third-Party Risk 
  Solutions                                425       330      28.8%                 9.5% 
------------------------------------  --------  -------- 
 Total Revenue (excl. recoveries)        4,944     4,103      20.5%                 4.2% 
 Recoveries                                315       324     (2.8%)                 2.3% 
------------------------------------  --------  -------- 
 Total Revenue (incl. recoveries)        5,259     4,427      18.8%                 4.1% 
 Cost of sales                           (879)     (709)      24.0%                 5.4% 
------------------------------------  --------  -------- 
 Gross Profit                            4,380     3,718      17.8%                 3.8% 
 Adjusted operating expenses 
  before depreciation, amortisation 
  and impairment                       (2,142)   (1,857)      15.3%                 3.2% 
------------------------------------  --------  -------- 
 Adjusted EBITDA                         2,238     1,861      20.3%                 4.6% 
 Depreciation, amortisation 
  and impairment                         (607)     (481)      26.2%                15.9% 
------------------------------------  --------  -------- 
 Adjusted operating profit               1,631     1,380      18.2%                 0.7% 
------------------------------------  --------  -------- 
 
 Adjusted EBITDA Margin                  45.3%     45.4% 
------------------------------------  --------  -------- 
 

Data & Analytics provides high value data, analytics, indices, workflow solutions and data management capabilities. The division is split into five areas to address the different needs of our customers.

Total revenue excluding recoveries grew by 4.2% to GBP4,944 million, primarily driven by strong performances in Enterprise Data and Investment Solutions and including a 0.4% contribution from acquisitions during the year. Excluding the impact of the Russia / Ukraine conflict, revenue growth was 5.3%. Organic Annual Subscription Value growth ("ASV") at December 2022 was 6.2% excluding Russia / Ukraine, reflecting continuous improvement throughout the year as we work more closely with our customers to improve retention and develop relevant new services.

Trading & Banking Solutions revenue increased by 0.2% to GBP1,612 million, returning to growth in the second half despite the negative impact of the lost Russia / Ukraine revenue. Excluding this, full-year revenue growth was 2.3%. This performance was primarily driven by a significant improvement in product retention, particularly within the Trading business. During the year we acquired TORA, enhancing our ability to meet customer need for multi-asset class order and execution management capabilities, which added 0.8% to growth.

Enterprise Data Solutions revenue grew by 6.1% to GBP1,307 million reflecting the continued investment and expansion of our content and capabilities, and strong customer demand for data, underpinned by the continuing trend towards data-driven analytics to support and monitor investment decisions. The acquisition of MayStreet, which deepens our ability to help customers with their low-latency (higher speed) real-time data needs, further added to growth.

Investment Solutions revenue increased by 6.2% to GBP1,325 million, driven by strong subscription revenue growth, with Benchmark Rates, Indices & Analytics up 9.4%. Our multi-asset class capabilities are becoming an important differentiator with customers. We are also accelerating delivery of new FTSE Russell products with 33% more product launches in 2022 compared to the prior year, reflecting strong demand for custom indices. Our share of ETF asset inflow was strong, although offset by the underlying decline in many markets during the year.

Wealth Solutions contributed GBP275 million of revenue in 2022, with the Digital Solutions business the main driver of the 3.0% YoY growth. These numbers exclude the non-core BETA business, which we sold during the year.

Customer & Third-Party Risk Solutions revenue grew by 9.5% to GBP425 million. YoY growth of 18% in the World-Check screening business was partially offset by lower due diligence revenue. During the year we acquired GDC, which provides identity verification data, expanding our capabilities in high growth digital identity and fraud solutions.

Cost of sales of GBP879 million reflects the cost of purchased content and royalties, including news, specialist data and exchange data, which are required for the Data & Analytics products. Growth at 5.4% was slightly ahead of revenue growth.

Adjusted operating expenses before depreciation, amortisation and impairment increased to GBP2,142 million as careful management of staff costs and ongoing delivery of synergies related to the Refinitiv acquisition kept YoY cost growth to 3.2%.

Adjusted EBITDA was up 4.6% to GBP2,238 million, and the Adjusted EBITDA margin decreased 10 basis points to 45.3%.

Non-Financial KPIs

 
                                      2022    2021    Variance 
                                                             % 
                                    ------  ------ 
 
 Annual Subscription Value Growth 
  (%) (1)                             4.8%    4.6% 
 Annual Subscription Value Growth 
  excl U/R impact (%) (1,2)           6.2% 
 Subscription revenue growth (%) 
  (1,3)                               4.6% 
 Subscription revenue growth excl 
  U/R impact (%) (1,2,3)              5.7% 
 Index - ETF AUM ($bn)               1,009   1,138     (11.3%) 
 Index - ESG Passive AUM ($bn) 
  (4)                                  296     167       77.3% 
----------------------------------  ------  ------  ---------- 
 

(1) Organic, constant currency variance

(2) Growth rates excluding the Russia/Ukraine war impact exclude income in the region and from sanctioned customers and related business from both periods

(3) 12-month rolling constant currency variance excluding the impact of the deferred revenue accounting adjustment. Due to a change in methodology, prior year comparator is unavailable

(4) ESG Passive AUM is at 30 June 2022 and prior period comparator is at 30 June 2021. The metric is updated bi-annually

Capital Markets

 
 Continuing operations                  2022    2021   Variance   Pro-Forma Constant 
                                        GBPm    GBPm          %    Currency Variance 
                                                                          (excluding 
                                                                    deferred revenue 
                                                                         adjustment) 
                                                                                   % 
                                      ------  ------ 
 Equities                                248     241       2.9%                 3.2% 
 FX                                      258     204      26.5%                 4.2% 
 Fixed Income, Derivatives 
  & Other                                953     726      31.3%                13.4% 
------------------------------------  ------  ------ 
 Total Revenue                         1,459   1,171      24.6%                 9.8% 
 Cost of sales                          (34)    (27)      25.9%                 9.1% 
------------------------------------  ------  ------ 
 Gross Profit                          1,425   1,144      24.6%                 9.8% 
 Adjusted operating expenses 
  before depreciation, amortisation 
  and impairment                       (665)   (536)      24.1%                 9.4% 
------------------------------------  ------  ------  --------- 
 Adjusted EBITDA                         760     608      25.0%                10.2% 
 Depreciation, amortisation 
  and impairment                       (103)   (110)     (6.4%)              (15.3%) 
------------------------------------  ------  ------ 
 Adjusted operating profit               657     498      31.9%                15.8% 
------------------------------------  ------  ------  --------- 
 
 Adjusted EBITDA Margin                52.1%   51.9% 
                                      ------ 
 

Capital Markets provides businesses with access to capital through issuance, and offers secondary market trading for equities, fixed income, interest rate derivatives, foreign exchange (FX) and other asset classes.

Total revenue grew by 9.8% to GBP1,459 million with the increase primarily driven by Fixed Income, Derivatives & Other.

Equities revenue, which encompasses both our Primary & Secondary Equity Markets, increased by 3.2% to GBP248 million. Primary Markets growth was driven by annual listing fees alongside the revenue deferral benefit from 2021's record admission performance. Secondary Markets was broadly in line with the prior year as competitive pricing pressures adversely affected revenue yield, whilst overall volumes remained relatively flat.

FX revenue grew by 4.2% to GBP258 million driven by strong performance in Fxall, our dealer-to-client platform, alongside consistent outperformance in FX Spot Matching volumes as a result of implementation of commercial incentives. FX Matching performance returned to growth in H2 after a long period of decline.

Fixed Income, Derivatives & Other revenue increased by 13.4% to GBP953 million. Tradeweb, a global operator of electronic marketplaces for rates, credit, equities and money markets, achieved another year of strong growth, driven by the ongoing electronification of markets, continued share gains in most product lines and further progress in international markets. Market volatility contributed to higher average daily trading volumes and record activity across a number of core products.

Cost of sales increased by 9.1% to GBP34 million reflecting the cost of sales within the Tradeweb business which relate to data feeds.

Adjusted operating expenses before depreciation, amortisation and impairment increased by 9.4% to GBP665 million, again driven by the strong revenue growth at Tradeweb.

Adjusted EBITDA rose 10.2% to GBP760 million as a result of the strong topline growth at Tradeweb. The Adjusted EBITDA margin increased slightly to 52.1%.

Non-Financial KPIs

 
                                         2022      2021    Variance 
                                                                  % 
                                     --------  -------- 
 Equities 
 Primary Markets 
 New issues                                74       174     (57.5%) 
 Total money raised (GBPbn)              10.7      34.8     (69.3%) 
 
 Secondary Markets - Equities 
 UK Value Traded (GBPbn) - Average 
  Daily Value                             4.6       4.5        2.2% 
 SETS Yield (bps)                        0.66      0.73      (9.6%) 
 
 FX 
 Average daily total volume ($bn)         452       443        2.0% 
 
 Fixed income, Derivatives and 
  Other 
 Tradeweb Average Daily ($m) 
 Rates - Cash                         342,798   345,008      (0.6%) 
 Rates - Derivatives                  342,074   293,655       16.5% 
 
 Credit - Cash                         10,090     9,297        8.5% 
 Credit - Derivatives                  17,590    12,235       43.8% 
-----------------------------------  --------  --------  ---------- 
 

Post Trade

 
 Continuing operations                  2022    2021   Variance            Pro-Forma 
                                        GBPm    GBPm          %    Constant Currency 
                                                                          Variance % 
                                      ------  ------ 
 OTC Derivatives                         402     358      12.3%                10.0% 
 Securities & Reporting                  234     246     (4.9%)               (3.8%) 
 Non-Cash Collateral                     100      95       5.3%                 3.6% 
------------------------------------          ------ 
 Total Revenue                           736     699       5.3%                 4.2% 
 Net Treasury Income                     255     207      23.2%                18.8% 
------------------------------------  ------  ------ 
 Total Income                            991     906       9.4%                 7.5% 
 Cost of sales                         (150)   (123)      22.0%                22.9% 
------------------------------------  ------  ------ 
 Gross Profit                            841     783       7.4%                 5.1% 
 Adjusted operating expenses 
  before depreciation, amortisation 
  and impairment                       (324)   (329)     (1.5%)               (0.6%) 
------------------------------------  ------  ------ 
 Adjusted EBITDA                         517     454      13.9%                 9.0% 
 Depreciation, amortisation 
  and impairment                       (112)    (96)      16.7%                14.5% 
------------------------------------  ------  ------ 
 Adjusted operating profit               405     358      13.1%                 7.5% 
------------------------------------  ------  ------ 
 
 Adjusted EBITDA Margin                52.2%   50.1% 
                                      ------  ------ 
 

Post Trade provides clearing, risk management, capital optimisation and regulatory reporting solutions. T otal revenue grew by 4.2% to GBP736 million and total income, including Net Treasury Income, was GBP991 million, up 7.5% year-on-year.

Post Trade's clearing franchise, LCH, achieved record volumes in 2022 as Central Bank rate changes, political events and increasing inflation led to heightened market volatility. OTC Derivatives revenue increased by 10.0% to GBP402 million, driven by a strong performance in SwapClear client clearing.

Securities & Reporting revenue decreased by 3.8% to GBP234 million reflecting commercial policy adjustments in equities in response to increasing pricing pressures, partially offset by growth in RepoClear.

Non-Cash Collateral revenue increased by 3.6% to GBP100 million as high volumes continued and includes the full year impact of 2021 pricing changes.

Net Treasury Income (NTI) increased by 18.8% to GBP255 million as sustained market volatility drove record collateral balances.

Cost of sales increased by 22.9% to GBP150 million. This was driven mainly by accounting for revenue share arrangements relating to SwapClear and NTI, which both grew strongly during the year.

Adjusted operating expenses excluding depreciation, amortisation and impairment decreased by 0.6% to GBP324 million demonstrating good cost control. As a result, Adjusted EBITDA was up 9.0% to GBP517 million and the Adjusted EBITDA margin improved by 210 basis points to 52.2%.

Non-Financial KPIs

 
                                                           Variance 
                                          2022     2021           % 
                                       -------  ------- 
 
 OTC 
 SwapClear 
 IRS notional cleared ($trn)             1,091      921       18.5% 
 SwapClear members                         124      123        0.8% 
 Client trades ('000)                    2,684    2,180       23.1% 
 Client average 10-year notional 
  equivalent ($trn)                        3.7      4.2     (11.9%) 
 
 ForexClear 
 Notional value cleared ($bn)           24,659   21,670       13.8% 
 ForexClear members                         36       35        2.9% 
 
 CDSClear 
 Notional cleared (EURbn)                3,358    2,283       47.1% 
 CDSClear members                           25       25           - 
 
 Securities & Reporting 
 EquityClear trades (m)                  2,163    1,996        8.4% 
 Listed derivatives contracts (m)        262.6    285.8      (8.1%) 
 RepoClear - nominal value (EURtrn)      288.4    237.6       21.4% 
 
 Non-Cash Collateral 
 Average non-cash collateral (EURbn)     168.5    165.5        1.8% 
 
 Cash Collateral 
 Average cash collateral (EURbn)         140.8    107.2       31.3% 
-------------------------------------  -------  -------  ---------- 
 

Cash Flow

 
 Cash Flow                          2022       2021 
                                    GBPm       GBPm 
                                  ------ 
 Operating Cash Flow               3,282      3,090 
--------------------------------  ------  --------- 
 Net interest & royalties 
  paid                             (231)      (208) 
 Other dividends, net               (70)       (73) 
 Net taxes paid                    (351)      (390) 
 Capex & other investments         (966)      (632) 
 Equity Free Cash Flow             1,664      1,787 
                                  ------ 
 Lease payments                    (150)      (118) 
 Disposal proceeds                 1,056      3,592 
 Acquisitions                      (768)        762 
 Investments                       (227)       (28) 
 Dividends to LSEG shareholders    (567)      (426) 
 Borrowings                            -      6,944 
 Repayments                        (209)   (11,614) 
 Share buybacks                    (383)       (55) 
 Other                              (56)         96 
 Net Cash Flow                       360        940 
                                  ------ 
 

The Group's business continued to be strongly cash generative during the year, with operating cash flow of GBP3,282 million (2021: GBP3,090 million). Cash outflows for purchases of property, plant and equipment and intangibles amounted to GBP966 million (2021: GBP632 million), which includes our business-as-usual investment programmes as well as investments related to the Refinitiv integration.

Equity free cash flow was GBP1, 664 million (2021: GBP1,787 million). During the year the Group received disposal proceeds of GBP1,056 million, principally in relation to the sale of the BETA business , and deployed GBP768 million on acquisitions , net of GBP18 million cash acquired. Dividends paid during the year were GBP 567 million, reflecting the continued strong growth in dividends per share . GBP383 million was spent on share buybacks, of which GBP300 million related to the LSEG share buyback programme announced in August 2022, with the balance relating to Tradeweb's buyback programme and fees.

Cash generation, after organic and inorganic investments and other normal course payment obligations, was positive, contributing to cash and cash equivalents growing from GBP2,665 million as at 31 December 2021 to GBP3,209 million as at 31 December 2022.

Balance Sheet / Leverage / Ratings

 
 Net Debt 
  Year ended 31 December                    2022      2021 
                                            GBPm      GBPm 
                                        -------- 
 
 Gross borrowings                          8,151     7,654 
 Cash and cash equivalents               (3,209)   (2,665) 
 Net derivative financial liabilities         48        25 
 Lease liabilities                           672       715 
--------------------------------------  --------  -------- 
 Net debt                                  5,662     5,729 
 Less lease liabilities                    (672)     (715) 
 Regulatory and operational amounts        1,236     1,294 
--------------------------------------  --------  -------- 
 Operating net debt                        6,226     6,308 
--------------------------------------  --------  -------- 
 

At 31 December 2022, the Group had operating net debt of GBP6,226 million after setting aside GBP1,236 million for regulatory and operational amounts. Leverage ([1]) fell to 1.8x at 31 December 2022 (2021: 1.9x). The Group is within its targeted leverage range of 1.0-2.0 times adjusted EBITDA before foreign exchange gains or losses.

Effective January 2021, the Group increased its committed revolving credit facilities to GBP2.5 billion. In 2022, the Group had access to a GBP1,425 million facility maturing in December 2024 and a GBP1,075 million facility maturing in December 2026. The second one-year extension option was exercised on the GBP1,075 million facility in December 2022, extending its maturity to December 2027.

With respect to the Group's long-term debt finance, no bonds were issued or repaid in 2022. The EUR150 million Euro term loan was repaid in full, and a partial repayment was made to the US Dollar term loan, reducing the outstanding balance to $1,560 million (2021: $1,660 million).

LSEG is rated A with a positive outlook by Standard & Poor's and A3 with a stable outlook by Moody's. The Standard & Poor's outlook was upgraded from stable to positive in November 2022. Standard & Poor's maintained its long-term rating of LCH Limited and LCH SA at AA- with a stable outlook through the period.

Foreign Exchange

As a result of the acquisition of Refinitiv, the majority of LSEG revenues and expenses are in US dollars followed by Sterling, Euro and other currencies. The longer-term targets associated with the acquisition of Refinitiv have been given on a constant currency basis.

(1) Leverage is calculated as operating net debt (i.e. net debt before lease liabilities and after excluding amounts set aside for regulatory and operational purposes) to pro-forma adjusted EBITDA before foreign exchange gains or losses.

 
                                USD   GBP   EUR   Other 
 2022 Total Income(1)           57%   18%   17%      8% 
                               ----  ----  ----  ------ 
 2022 Underlying Expenses(2)    50%   26%   11%     13% 
                               ----  ----  ----  ------ 
 
 2022 Total Income by 
  division                      USD   GBP   EUR   Other 
 Data & Analytics               65%   12%   12%     11% 
                               ----  ----  ----  ------ 
 Capital Markets                59%   21%   19%      1% 
                               ----  ----  ----  ------ 
 Post Trade                     20%   44%   34%      2% 
                               ----  ----  ----  ------ 
 Other                          44%   23%   27%      6% 
                               ----  ----  ----  ------ 
 
   1      Total income includes recoveries. 

2 Underlying expenses includes cost of sales, underlying operating expenses and underlying depreciation and amortisation.

Spot / Average Rates

 
              Average rate                  Average rate 
                12 months    Closing rate     12 months    Closing rate 
                  ended           at            ended           at 
                31-Dec-22      31-Dec-22      31-Dec-21      31-Dec-21 
 GBP : USD       1.237          1.203          1.376          1.350 
             -------------  -------------  -------------  ------------- 
 GBP : EUR       1.173          1.127          1.163          1.192 
             -------------  -------------  -------------  ------------- 
 

Appendix:

Pro-forma(1) P&L

 
 Continuing operations                     2022   2021(1)    Reported 
                                           GBPm      GBPm    Variance 
                                                                    % 
                                       -------- 
 Data & Analytics                         4,944     4,398       12.4% 
 Capital Markets                          1,459     1,249       16.8% 
 Post Trade                                 991       906        9.4% 
 Other                                       34        34 
-------------------------------------  --------  --------  ---------- 
 Total Income (excl. recoveries)          7,428     6,587       12.8% 
 Recoveries                                 315       354     (11.0%) 
-------------------------------------  --------  --------  ---------- 
 Total Income (incl. recoveries)          7,743     6,941       11.6% 
 Cost of sales                          (1,064)     (920)       15.7% 
-------------------------------------  --------  --------  ---------- 
 Gross profit                             6,679     6,021       10.9% 
 Adjusted operating expenses 
  before depreciation, amortisation 
  and impairment                        (3,140)   (2,905)        8.1% 
 Income from equity investments              12        22     (45.5%) 
 Share of loss after tax 
  of associates                             (1)       (4)     (75.0%) 
-------------------------------------  -------- 
 Adjusted EBITDA                          3,550     3,134       13.3% 
 Adjusted EBITDA Margin                   47.8%     47.6% 
 Adjusted depreciation, amortisation 
  and impairment                          (822)     (737)       11.5% 
-------------------------------------            --------  ---------- 
 Adjusted operating profit                2,728     2,397       13.8% 
 Adjusted net finance expense             (160)     (206)     (22.3%) 
-------------------------------------            --------  ---------- 
 Adjusted profit before 
  tax                                     2,568     2,191       17.2% 
 Adjusted tax                             (540)     (451)       19.7% 
-------------------------------------  --------  --------  ---------- 
 Adjusted profit for the 
  year                                    2,028     1,740       16.6% 
 Adjusted profit attributable 
  to: 
 Equity holders                           1,770     1,512       17.1% 
 Non-controlling interest                   258       228       13.2% 
 Continuing adjusted basic 
  earnings per share (p)                  317.8     271.5       17.1% 
-------------------------------------  --------  --------  ---------- 
 

(1) Pro-forma 2021 assumes that the acquisition of Refinitiv took place on 1 January 2021

Consolidated income statement

 
Year ended 31 December                                 2022                                 2021 
                                                                                      (Re-presented)(1) 
                                        ----------  --------------  -------  ----------------------------------- 
                                        Underlying  Non-underlying    Total  Underlying  Non-underlying    Total 
                                 Notes        GBPm            GBPm     GBPm        GBPm            GBPm     GBPm 
Continuing operations 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Revenue                           2, 3       7,454               -    7,454       6,297               -    6,297 
Net treasury income 
 from CCP clearing 
 business                         2, 3         255               -      255         207               -      207 
Other income                      2, 3          34               -       34          31               -       31 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Total income                                 7,743               -    7,743       6,535               -    6,535 
Cost of sales                        2     (1,064)               -  (1,064)       (859)               -    (859) 
Gross profit                                 6,679               -    6,679       5,676               -    5,676 
Operating expenses 
 before depreciation, 
 amortisation and impairment      4, 6     (3,140)           (389)  (3,529)     (2,725)           (334)  (3,059) 
Profit on disposal 
 of property, plant 
 and equipment                       6           -             133      133           -               -        - 
Remeasurement gain             6, 11.1           -              23       23           -               -        - 
Income from equity 
 investments                                    12               -       12          22               -       22 
Share of loss after 
 tax of associates                             (1)               -      (1)         (4)               -      (4) 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Earnings before interest, 
 tax, depreciation, 
 amortisation and impairment                 3,550           (233)    3,317       2,969           (334)    2,635 
Depreciation, amortisation 
 and impairment                      6       (822)         (1,078)  (1,900)       (687)           (883)  (1,570) 
Operating profit/(loss)                      2,728         (1,311)    1,417       2,282         (1,217)    1,065 
Finance income                     7.1         111               -      111          46               -       46 
Finance costs                   6, 7.2       (271)            (16)    (287)       (212)             (5)    (217) 
                                        ----------  --------------  -------  ----------  --------------  ------- 
Net finance costs                            (160)            (16)    (176)       (166)             (5)    (171) 
Profit/(loss) before 
 tax                                         2,568         (1,327)    1,241       2,116         (1,222)      894 
Taxation                        6, 8.1       (540)             278    (262)       (432)             130    (302) 
Profit/(loss) from 
 continuing operations                       2,028         (1,049)      979       1,684         (1,092)      592 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
 
Discontinued operations 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Profit after tax from 
 discontinued operations          12.1          59             453      512         160           2,511    2,671 
Profit/(loss) for 
 the year                                    2,087           (596)    1,491       1,844           1,419    3,263 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
 
Profit/(loss) from 
 continuing operations 
 attributable to: 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Equity holders                               1,770           (980)      790       1,465         (1,004)      461 
Non-controlling interests                      258            (69)      189         219            (88)      131 
Profit/(loss) from 
 continuing operations                       2,028         (1,049)      979       1,684         (1,092)      592 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
 
Profit from discontinued 
 operations attributable 
 to: 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Equity holders                                  59             453      512         156           2,512    2,668 
Non-controlling interests                        -               -        -           4             (1)        3 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Profit after tax 
 from discontinued 
 operations                                     59             453      512         160           2,511    2,671 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Profit/(loss) for 
 the year                                    2,087           (596)    1,491       1,844           1,419    3,263 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
 
 
 
 
Year ended 31 December                                 2022                                 2021 
                                                                                      (Re-presented)(1) 
                                        ----------  --------------  -------  ----------------------------------- 
                                 Notes  Underlying  Non-underlying    Total  Underlying  Non-underlying    Total 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Earnings per share 
 attributable to equity 
 holders 
 
Continuing operations 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Basic earnings per 
 share                               9                               141.8p                                85.8p 
Diluted earnings per 
 share                               9                               141.1p                                85.2p 
Adjusted basic earnings 
 per share                           9      317.8p                               272.4p 
Adjusted diluted earnings 
 per share                           9      316.1p                               270.7p 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
 
Total operations 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Basic earnings per 
 share                               9                               233.8p                               581.7p 
Diluted earnings per 
 share                               9                               232.5p                               578.1p 
Adjusted basic earnings 
 per share                           9      328.4p                               301.4p 
Adjusted diluted earnings 
 per share                           9      326.6p                               299.5p 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
 
Dividend per share 
 in respect of the 
 financial year 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
Dividend per share 
 paid during the year               10                                31.7p                                25.0p 
Dividend per share 
 declared for the year              10                                75.3p                                70.0p 
-----------------------------  -------  ----------  --------------  -------  ----------  --------------  ------- 
 
1 The 2021 results have been re-presented to exclude the results of 
 the discontinued operations (see note 12) 
 
 
 

Consolidated statement of comprehensive income

 
Year ended 31 December                                      2022               2021 
                                                                  (Re-presented)(1) 
                                                    Notes   GBPm               GBPm 
Continuing operations 
--------------------------------------------------  -----  -----  ----------------- 
Profit from continuing operations                            979                592 
--------------------------------------------------  -----  -----  ----------------- 
 
Other comprehensive income 
Items that will not be subsequently reclassified 
 to the income statement 
Actuarial (losses)/gains on defined benefit 
 schemes                                                   (329)                101 
Gain on equity instruments designated as fair 
 value through other comprehensive income                     21                 59 
Income tax relating to these items                    8.1     83               (25) 
                                                           (225)                135 
--------------------------------------------------  -----  -----  ----------------- 
 
Items that may be subsequently reclassified to 
 the income statement 
Gains on cash flow hedges                                      -                 22 
Gains on cash flow hedges recycled to the 
 income statement                                            (3)                (2) 
Net (losses)/gains on net investment hedges                (113)                 87 
Debt instruments at fair value through other 
 comprehensive income: 
- Net (losses)/gains from changes in fair 
 value                                                      (15)                  2 
- Losses/(gains) recycled to the income statement              1                (4) 
Net exchange gains on translation of foreign 
 operations                                                2,653                 13 
Income tax relating to these items                    8.1      2                  1 
                                                           2,525                119 
--------------------------------------------------  -----  -----  ----------------- 
 
Other comprehensive income net of tax from 
 continuing operations                                     2,300                254 
--------------------------------------------------  -----  -----  ----------------- 
 
Total comprehensive income from continuing 
 operations                                                3,279                846 
--------------------------------------------------  -----  -----  ----------------- 
 
Discontinued operations 
--------------------------------------------------  -----  -----  ----------------- 
Total comprehensive income from discontinued 
 operations                                          12.1    512              2,566 
 
Total comprehensive income                                 3,791              3,412 
--------------------------------------------------  -----  -----  ----------------- 
 
Total comprehensive income from continuing 
 operations attributable to: 
--------------------------------------------------  -----  -----  ----------------- 
Equity holders                                             2,889                707 
Non-controlling interests                                    390                139 
--------------------------------------------------  -----  -----  ----------------- 
Total comprehensive income from continuing 
 operations                                                3,279                846 
--------------------------------------------------  -----  -----  ----------------- 
 
Total comprehensive income from discontinued 
 operations attributable to: 
--------------------------------------------------  -----  -----  ----------------- 
Equity holders                                               512              2,564 
Non-controlling interests                                      -                  2 
--------------------------------------------------  -----  -----  ----------------- 
Total comprehensive income from discontinued 
 operations                                                  512              2,566 
--------------------------------------------------  -----  -----  ----------------- 
Total comprehensive income                                 3,791              3,412 
--------------------------------------------------  -----  -----  ----------------- 
 
1 The 2021 results have been re-presented to exclude the results of 
 the discontinued operations (see note 12) 
 
 
 

Balance sheet

 
At 31 December                                              Group 
                                                       ---------------- 
                                                          2022     2021 
                                                Notes     GBPm     GBPm 
Assets 
Non-current assets 
Intangible assets                                  13   35,066   31,724 
Property, plant and equipment                              797      832 
Investments in associates                                   34       25 
Investments in financial assets                  15.1      394      351 
Derivative financial instruments                 15.1       12        2 
Other receivables                                          209      202 
Retirement benefit assets                                  231      568 
Deferred tax assets                                        622      508 
                                                        37,365   34,212 
---------------------------------------------  ------  -------  ------- 
Current assets 
Trade and other receivables                              1,364      967 
                                                       -------  ------- 
Clearing member financial assets                       687,727  665,031 
Clearing member cash and cash equivalents              104,707   83,795 
                                                       -------  ------- 
Clearing member assets                           15.1  792,434  748,826 
Investments in financial assets                  15.1      226        - 
Derivative financial instruments                 15.1       36       25 
Current tax receivable                                     522      398 
Cash and cash equivalents                                3,209    2,665 
Assets held for sale                                         -       16 
---------------------------------------------  ------  -------  ------- 
                                                       797,791  752,897 
---------------------------------------------  ------  -------  ------- 
Total assets                                           835,156  787,109 
---------------------------------------------  ------  -------  ------- 
Liabilities 
Current liabilities 
Trade and other payables                                 2,143    1,782 
Contract liabilities                                       257      245 
                                                14.1, 
Borrowings                                       15.2    1,295        - 
Clearing member financial liabilities            15.2  792,594  748,644 
Derivative financial instruments                 15.2        9        7 
Current tax payable                                        142       73 
Provisions                                                  29       16 
---------------------------------------------  ------  -------  ------- 
                                                       796,469  750,767 
---------------------------------------------  ------  -------  ------- 
Non-current liabilities 
                                                14.1, 
Borrowings                                       15.2    6,856    7,654 
Other payables                                           1,182    1,059 
Contract liabilities                                        89      101 
Derivative financial instruments                 15.2       87       45 
Retirement benefit obligations                              64       85 
Deferred tax liabilities                                 2,200    1,835 
Provisions                                                  58       44 
                                                        10,536   10,823 
---------------------------------------------  ------  -------  ------- 
Total liabilities                                      807,005  761,590 
---------------------------------------------  ------  -------  ------- 
Net assets                                              28,151   25,519 
---------------------------------------------  ------  -------  ------- 
 
                                                            Group 
                                                       ---------------- 
                                                          2022     2021 
                                                Notes     GBPm     GBPm 
---------------------------------------------  ------  -------  ------- 
Equity 
Capital and reserves attributable to the Company's 
 equity holders 
Ordinary share capital                             16       39       39 
Share premium                                      16      978      978 
Retained earnings                                        3,840    3,816 
Other reserves                                     16   21,139   18,807 
Total shareholders' funds                               25,996   23,640 
Non-controlling interests                                2,155    1,879 
---------------------------------------------  ------  -------  ------- 
Total equity                                            28,151   25,519 
---------------------------------------------  ------  -------  ------- 
 

Cash flow statements

 
Year ended 31 December                                               Group 
                                                           -------------------------- 
                                                              2022               2021 
                                                                    (Re-presented)(1) 
                                                    Notes     GBPm               GBPm 
--------------------------------------------------  -----  -------  ----------------- 
Operating activities 
Profit from continuing operations                              979                592 
Adjustments to reconcile profit to net cash 
 flow: 
- Taxation                                            8.1      262                302 
- Net finance costs                                     7      176                171 
- Amortisation and impairment of intangible 
 assets                                                      1,603              1,289 
- Depreciation and impairment of property, 
 plant and equipment                                           290                281 
- Profit on disposal of property, plant 
 and equipment                                          6    (133)                  - 
- Share based payments                                         158                141 
- Foreign exchange losses                                       38                112 
- Dividend income                                             (12)               (22) 
- Other movements                                              121                 84 
Working capital changes and movements in 
 other assets and liabilities: 
- (Increase)/decrease in receivables, contract 
 and other assets                                            (407)                747 
- Decrease in payables, contract and other 
 liabilities                                                 (119)              (347) 
- Decrease/(increase) in clearing member 
 financial assets                                              709           (72,668) 
- (Decrease)/increase in clearing member 
 financial liabilities                                       (383)             72,408 
--------------------------------------------------  -----  -------  ----------------- 
Cash generated from/(used in) operations                     3,282              3,090 
Interest received                                               29                 14 
Interest paid                                                (171)              (152) 
Net taxes paid                                               (351)              (390) 
Royalties paid                                                (89)               (70) 
--------------------------------------------------  -----  -------  ----------------- 
Net cash flows from continuing operations(2)                 2,700              2,492 
Net cash flows from discontinued operations          12.3       37                110 
--------------------------------------------------  -----  -------  ----------------- 
Net cash flows from operating activities                     2,737              2,602 
--------------------------------------------------  -----  -------  ----------------- 
Investing activities 
Purchase of intangible assets                          13    (773)              (542) 
Purchase of property, plant and equipment                    (193)               (90) 
Proceeds from disposal of property, plant 
 and equipment                                                 153                  - 
Acquisition of subsidiaries, net of cash 
 acquired                                            11.2    (768)                762 
Proceeds from sale of disposal group, net 
 of cash disposed                                    12.2      903              3,592 
Investments in financial assets                              (227)               (28) 
Dividends received                                              12                 22 
Net cash flows from continuing operations                    (893)              3,716 
Net cash flows from discontinued operations          12.3     (16)               (32) 
--------------------------------------------------  -----  -------  ----------------- 
Net cash flows from investing activities                     (909)              3,684 
--------------------------------------------------  -----  -------  ----------------- 
Financing activities 
Payment of principal portion of lease liabilities            (150)              (118) 
Proceeds from borrowings                                         -              6,944 
Repayment of borrowings                                      (209)           (11,614) 
Dividends paid to equity holders of the 
 parent                                                10    (567)              (426) 
Dividends paid to non-controlling interests                   (82)               (95) 
Repurchase of shares by Parent Company                 16    (303)                  - 
Repurchase of shares by subsidiary (Tradeweb)                 (80)               (55) 
Other financing activities                                    (77)                 24 
Net cash flows from continuing operations                  (1,468)            (5,340) 
Net cash flows from discontinued operations          12.3        -                (6) 
--------------------------------------------------  -----  -------  ----------------- 
Net cash flows from financing activities                   (1,468)            (5,346) 
--------------------------------------------------  -----  -------  ----------------- 
 
Increase in cash and cash equivalents                          360                940 
Foreign exchange translation                                   184               (60) 
Cash and cash equivalents at 1 January                       2,665              1,785 
Cash and cash equivalents at 31 December                     3,209              2,665 
--------------------------------------------------  -----  -------  ----------------- 
 
 
 
1 The 2021 results have been re-presented to exclude the results of 
 the discontinued operations (see note 12). 
2 The Group's net cash inflow from continuing operating activities 
 of GBP2,700 million (2021: GBP2,492 million) includes GBP226 million 
 (2021: GBP202 million) of expenses related to non-underlying items. 
 
 
 

Statements of changes in equity

 
Group 
-----------------------  -----  --------  --------  ---------  ------------  -------------  -----------------  ------- 
Year ended 31 
 December 
                                              Attributable to equity holders 
                                ---------------------------------------------------------- 
                                                                                     Total 
                                Ordinary                                      attributable 
                                   share     Share   Retained         Other      to equity    Non-controlling    Total 
                                 capital   premium   earnings   reserves(1)        holders          interests   equity 
                                                                                            (Re-presented)(2) 
                         Notes      GBPm      GBPm       GBPm          GBPm           GBPm               GBPm     GBPm 
-----------------------  -----  --------  --------  ---------  ------------  -------------  -----------------  ------- 
1 January 2021                        24       971        911         1,805          3,711                414    4,125 
Total comprehensive 
 income for the 
 year                                  -         -      3,250            21          3,271                141    3,412 
Issue of shares             16         -         7          -             -              7                  -        7 
Issue of shares 
 for acquisition 
 of subsidiaries 
 (with non-controlling 
 interest)                            15         -       (25)        16,981         16,971              1,442   18,413 
Dividends                   10         -         -      (426)             -          (426)               (97)    (523) 
Share-based payments                   -         -         76             -             76                 67      143 
Tax benefit on 
 share-based payments 
 in excess of expense 
 recognised                8.1         -         -         30             -             30                  -       30 
Disposal of business      12.2         -         -          -             -              -               (65)     (65) 
Tradeweb share 
 buyback(3)                            -         -          -             -              -               (55)     (55) 
Shares withheld 
 from employee 
 options exercised 
 (Tradeweb)(4)                         -         -          -             -              -               (52)     (52) 
Tax benefit on 
 investment in 
 partnerships              8.1         -         -          -             -              -                 25       25 
Adjustments to 
 non-controlling 
 interest                              -         -          -             -              -                 59       59 
31 December 2021                      39       978      3,816        18,807         23,640              1,879   25,519 
Total comprehensive 
 income for the 
 year                                  -         -      1,069         2,332          3,401                390    3,791 
Share buyback 
 by Parent Company          16         -         -      (503)             -          (503)                  -    (503) 
Dividends                   10         -         -      (567)             -          (567)               (80)    (647) 
Share-based payments                   -         -         99             -             99                 63      162 
Tax expense on 
 share-based payments 
 less than expense 
 recognised                8.1         -         -       (78)             -           (78)                  -     (78) 
Purchase of 
 non-controlling 
 interests                             -         -          4             -              4               (19)     (15) 
Tradeweb share 
 buyback(3)                            -         -          -             -              -               (80)     (80) 
Shares withheld 
 from employee 
 options exercised 
 (Tradeweb)(4)                         -         -          -             -              -               (82)     (82) 
Tax benefit on 
 investment in 
 partnerships              8.1         -         -          -             -              -                100      100 
Adjustments to 
 non-controlling 
 interest                              -         -          -             -              -               (16)     (16) 
31 December 2022                      39       978      3,840        21,139         25,996              2,155   28,151 
-----------------------  -----  --------  --------  ---------  ------------  -------------  -----------------  ------- 
 
1 Movements in other reserves are detailed in note 16 
2 The disaggregated movements in non-controlling interests for the 
 year ended 31 December 2021 have been re-presented to be consistent 
 with 2022 
3 On 4 February 2021, Tradeweb Markets Inc., a subsidiary of the Group, 
 announced a share repurchase programme, primarily to offset annual 
 dilution from stock-based compensation plans. Its share repurchase 
 programme authorises the purchase of up to US$150 million common stock 
 until 31 December 2023. 
4 Tradeweb Markets Inc. is required to net-settle options exercised 
 by employees by reducing the shares to be issued by the number of shares 
 with a fair market value on the date of exercise equal to taxes payable 
 by employees in respect of the number of options exercised. 
 
 

Notes to the financial statements

Reporting entity

These financial statements have been prepared for London Stock Exchange Group plc (the Company) and its subsidiaries (the Group). The Group is a diversified global financial markets infrastructure and data business. 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.

During 2022, the Group acquired the businesses listed below. The results of these businesses have been consolidated since the date of acquisition (see note 11).

 
 Acquired business                    Acquisition date   Segment 
-----------------------------------  -----------------  ----------------- 
 Global Data Consortium, Inc. (GDC)   31 May 2022        Data & Analytics 
-----------------------------------  -----------------  ----------------- 
 MayStreet Inc. (MayStreet)           31 May 2022        Data & Analytics 
-----------------------------------  -----------------  ----------------- 
 Tora Holdings, Inc. (TORA)           9 August 2022      Data & Analytics 
-----------------------------------  -----------------  ----------------- 
 Quantile Group Limited (Quantile)    30 November 2022   Post Trade 
-----------------------------------  -----------------  ----------------- 
 

On 1 July 2022, the Group disposed of the BETA, Maxit and Digital Investor businesses (collectively BETA) (see note 12). On 21 March 2022 , the disposal of BETA was assessed to be highly probable and the business was treated as a disposal group from that date. BETA is also deemed to be a discontinued operation as it represented a separate major line of business of the Group. Its profits, losses and cash flows have therefore been separated from the Group's continuing operations and are shown as discontinued operations. The comparative period has been re-presented accordingly.

1. A ccounting policies

This section describes the Group's significant policies and critical accounting judgements and estimates that relate to the financial statements and notes as a whole. We have also detailed below the new accounting pronouncements that we will adopt in future years and how we have assessed the impact of climate change on our financial statements.

1.1 Compliance with International Financial Reporting Standards (IFRS)

The Group's consolidated and the Company's financial statements are prepared in accordance with UK-adopted international accounting standards and endorsed by the UK Endorsement Board.

1.2 Basis of preparation

The financial statements are prepared on a historical cost basis except for derivative financial instruments, debt and equity financial assets and contingent consideration which are measured at fair value.

Going concern

The financial statements have been prepared on a going concern basis. 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 12 months from the date when these financial statements are authorised for issue. Accordingly, the going concern basis has been adopted in the preparation of these financial statements.

Presentation of income statement

The Group uses a columnar format for the presentation of its consolidated income statement to separately identify results before non-underlying items ("adjusted"). This is consistent with the way that financial performance is measured by management and reported to the Executive Committee and Board (see note 2).

The "adjusted" measures reported by the Group include:

   --     Adjusted operating expenses before depreciation, amortisation and impairment 
   --     Adjusted EBITDA 
   --     Adjusted depreciation, amortisation and impairment 
   --     Adjusted operating profit 
   --     Adjusted earnings per share (EPS) 

These measures are not measures of performance under IFRS and should be considered in addition to, and not as a substitute for, IFRS measures of financial performance and liquidity. Adjusted performance measures provide supplemental data relevant to an understanding of the Group's financial performance and exclude non-underlying items of income and expense that are material by their size and/or nature.

The "profit before non-underlying items" measure is used to calculate adjusted EPS. Profit before non-underlying items is reconciled to profit before taxation on the face of the income statement. Non-underlying items are disclosed in note 6.

Non-underlying items include:

   --     Amortisation and impairment of goodwill and other purchased intangible assets 

-- Incremental amortisation and impairment of the fair value adjustments of intangible assets recognised as a result of acquisitions

-- Other income or expenses not considered to drive the operating results of the Group (including transaction, integration and separation costs related to acquisitions and disposals of businesses), as well as restructuring costs

   --     Tax on non-underlying items 

1.3 Foreign currencies

Functional and presentation currency

The consolidated financial statements are presented in sterling, which is also the functional currency of London Stock Exchange Group plc, the Parent Company. The Group determines the functional currency for each of its subsidiary entities and items included in the financial statements of each entity are measured using that functional currency.

Transactions and balances in foreign currencies

Transactions in foreign currencies are initially recorded and translated into the functional currency of the relevant Group entity at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the respective functional currency of the entity at the exchange rate prevailing at the reporting date.

Foreign exchange gains and losses resulting from the settlement of such foreign currency transactions or from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement within operating expenses.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated at the exchange rate at the date of the initial transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined. The foreign exchange gain or loss on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. This means foreign exchange gains and losses on non-monetary assets and liabilities held at fair value through profit or loss are recognised in the income statement (within operating expenses), and foreign exchange gains and losses on non-monetary assets classified as at fair value through other comprehensive income are recognised in other comprehensive income.

Translation of non-sterling entities on consolidation

The results and financial position of all Group entities that have a non-sterling functional currency are translated into sterling on consolidation into the Group's results as follows:

-- assets and liabilities (including goodwill, purchased intangible assets and fair value adjustments(1) ) are translated at the reporting date exchange rates

-- income and expenses and other comprehensive income are translated at the average exchange rate for the year. Where this average is not a reasonable approximation of the rate prevailing on the date of a material transaction, these items are translated at the rate on the date of the transaction

   --     all resulting exchange differences are recognised in other comprehensive income 

On consolidation, exchange differences arising from the translation of net investments in foreign operations, borrowings and other currency instruments designated as hedging instruments are recognised in other comprehensive income. On disposal of a foreign currency operation, the cumulative exchange differences previously recognised in other comprehensive income relating to that operation are reclassified to the income statement as part of the profit or loss on disposal.

1 Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the reporting date exchange rate

1.4 New and amended standards and interpretations

Standards, interpretations and amendments to published standards effective for the year ended 31 December 2022

During the year, the following amendments to standards became effective. These have not had a material impact on the Group's financial statements:

   --     Amendments to IFRS 3 Business Combinations: reference to the Conceptual Framework 
   --     Amendments to IAS 16 Property, Plant and Equipment: proceeds before intended use 

-- Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets: onerous contracts - cost of fulfilling a contract

   --     Annual Improvements to IFRS 2018-2020 

Standards, interpretations and amendments to published standards which are not yet effective

New and amended standards that have been issued, but are not yet effective, up to the date of the Group's financial statements are disclosed below. We intend to adopt these, if applicable, when they become effective. We are currently assessing their impact, but this is not expected to be material to the Group's financial statements:

 
 International accounting standards and interpretations                                                Effective date 
-------------------------------------------------------------------------------------------------  ------------------ 
 IFRS 17 Insurance Contracts, including amendments to IFRS 17 (and initial application of IFRS         1 January 2023 
  17 and IFRS 9 Financial Instruments - comparative information) 
 Amendments to IAS 1 and IFRS Practice Statement 2: disclosure of accounting policies                  1 January 2023 
 Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: definition       1 January 2023 
  of accounting estimate 
 Amendments to IAS 12 Income Taxes: deferred tax related to assets and liabilities arising             1 January 2023 
  from a single transaction 
 Amendments to IFRS 16: lease liability in a sale and leaseback                                     1 January 2024(1) 
 Amendments to IAS 1 Presentation of Financial Statements: non-current liabilities with covenants   1 January 2024(1) 
  and classification of liabilities as current or non-current 
 Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates             Deferred(1) 
  and Joint Ventures: sale or contribution of assets between an investor and its associate or 
  joint venture 
-------------------------------------------------------------------------------------------------  ------------------ 
 

1 Not yet endorsed by UK Endorsement Board

1.5 Significant accounting estimates, assumptions and judgements

Estimates, assumptions and judgements are regularly reviewed based on historical experience, current circumstances and expectations of future events.

Significant accounting estimates and assumptions are those that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Significant judgements are those made by management in applying the Group's significant accounting policies that have a material impact on the amounts presented in the financial statements. Significant judgement may be exercised in management's accounting estimates and assumptions.

Estimates, assumptions and judgements are described in the relevant notes to the financial statements.

 
 Note                             Significant estimates and assumptions   Significant judgement 
-----  ------------------------  --------------------------------------  ---------------------- 
 6      Non-underlying items                                                                  P 
-----  ------------------------  --------------------------------------  ---------------------- 
 8.2    Uncertain tax positions                                       P                       P 
=====  ========================  ======================================  ====================== 
 11     Business combinations                                         P 
-----  ------------------------  --------------------------------------  ---------------------- 
 13     Intangible assets                                             P 
=====  ========================  ======================================  ====================== 
 

Management has discussed significant accounting estimates, assumptions and judgements with the Audit Committee.

1.6 Climate change

We have reviewed the potential impact of climate change on the Group's financial results and position. The areas that are deemed to be most relevant to climate change are set out below. Based on an assessment in each area, we have concluded that climate change is not expected to have a material impact on the Group's financial position, estimates or judgements. The directors monitor this on an on-going basis.

 
 --   Going concern and viability - The Group has committed to a 
       long-term ambition to achieve net zero by 2040 and set targets 
       to reduce selected carbon emissions by 50% by 2030. There is 
       no other direct impact on the viability period of the Group. 
       There is no climate-related scenario that is deemed to have 
       a probable likelihood of occurring which could also impact the 
       Group's going concern assessment. 
 --   Impairment of goodwill and intangible assets - Forecasted cash 
       flows are not expected to be impacted by climate change over 
       the period for which forecasts have been prepared, due to the 
       nature of the Group's revenue streams. The impact on costs mainly 
       relates to reducing our carbon footprint by encouraging responsible 
       employee travel. 
 --   Useful lives of assets - The Group's assets consist mainly 
       of property and IT equipment. Given the type of IT equipment 
       owned by the Group, there is no expected impact of climate change 
       on the future useful lives of these assets. The useful lives 
       of our property could be impacted by climate change in the form 
       of physical obsolescence of assets or because of a natural disaster 
       (such as flooding), however any such impact on the carrying 
       value of related assets is not deemed material. 
 --   Deferred tax assets - Deferred tax asset recoverability can 
       be affected by climate if there is an expectation that it will 
       impact on the future taxable profits that are expected to be 
       generated. The revenue of the Group is of such a nature that 
       it is not expected to be impacted by climate change over the 
       period for which forecasts are prepared. There is a potential 
       reduction in costs as we reduce our carbon footprint and encourage 
       responsible employee travel. 
 --   Pension scheme asset valuation and defined benefit liability 
       - Changes in interest rates, as a result of climate change, 
       could impact the future valuation of defined benefit liabilities 
       and pension asset valuations. While these are considered in 
       the valuation, there was no discernible impact from climate 
       change on the current year's valuation. 
 --   Trade and other receivables - The Group has a diverse client 
       base that operates in various industries. The Group's expected 
       credit loss provision considers the credit risk of its client 
       base, which could be impacted by the assessment of climate change 
       in a particular market or industry. Given that receivables are 
       mainly due within one year, the impact of climate change on 
       the short term is unlikely to be material. 
 

2. Segment information

The Group reports three main operating segments:

   --    Data & Analytics includes the core Refinitiv business and the FTSE Russell businesses 
   --    Capital Markets includes the London Stock Exchange, Tradeweb, FXall and Turquoise 
   --    Post Trade includes the Group's CCPs (LCH) and other post trade services 

During the year, some revenue items were reallocated between business lines to better reflect our operating model. The comparative results have been re-presented to reflect this. At a divisional level, the impact on the 2021 results previously reported is:

   --     GBP6 million of revenue from Capital Markets to Data & Analytics 
   --     GBP7 million of revenue from Post Trade to Data & Analytics 
 
Results by operating segment for the year ended 31 December 2022 are 
 as follows: 
                                                     Data   Capital    Post 
                                              & Analytics   Markets   Trade  Other    Group 
Continuing operations                 Notes          GBPm      GBPm    GBPm   GBPm     GBPm 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
Revenue from external customers(1)        3         5,259     1,459     736      -    7,454 
Net treasury income from 
 CCP clearing business                    3             -         -     255      -      255 
Other income                              3             -         -       -     34       34 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
Total income                                        5,259     1,459     991     34    7,743 
Cost of sales                                       (879)      (34)   (150)    (1)  (1,064) 
Gross profit                                        4,380     1,425     841     33    6,679 
Adjusted operating expenses 
 before depreciation, amortisation 
 and impairment                           4       (2,142)     (665)   (324)    (9)  (3,140) 
Income from equity investments                          -         -       -     12       12 
Share of loss after tax of 
 associates                                             -         -       -    (1)      (1) 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
Adjusted EBITDA                                     2,238       760     517     35    3,550 
Underlying depreciation, 
 amortisation and impairment                        (607)     (103)   (112)      -    (822) 
Adjusted operating profit 
 (before non-underlying items)                      1,631       657     405     35    2,728 
Non-underlying depreciation, 
 amortisation and impairment              6                                         (1,078) 
Other non-underlying items 
 excluding net finance expense            6                                           (233) 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
Operating profit                                                                      1,417 
Net finance costs (including 
 non-underlying items)                    7                                           (176) 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
Profit before tax from continuing 
 operations                                                                           1,241 
Profit before tax from discontinued 
 operations                              12                                             692 
Profit before tax                                                                     1,933 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
 

1 Data & Analytics revenue includes recoveries of GBP315 million. Post Trade revenue includes net settlement and similar expenses recovered through the CCP clearing businesses of GBP12 million which comprises gross settlement income of GBP47 million less gross settlement expenses of GBP35 million.

 
Re-presented results by operating segment for the year ended 31 December 
 2021 are as follows: 
                                                     Data   Capital    Post 
                                              & Analytics   Markets   Trade  Other    Group 
Continuing operations                 Notes          GBPm      GBPm    GBPm   GBPm     GBPm 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
Revenue from external customers(1)        3         4,427     1,171     699      -    6,297 
Net treasury income from 
 CCP clearing business                    3             -         -     207      -      207 
Other income                              3             -         -       -     31       31 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
Total income                                        4,427     1,171     906     31    6,535 
Cost of sales                                       (709)      (27)   (123)      -    (859) 
Gross profit                                        3,718     1,144     783     31    5,676 
Adjusted operating expenses 
 before depreciation, amortisation 
 and impairment                           4       (1,857)     (536)   (329)    (3)  (2,725) 
Income from equity investments                          -         -       -     22       22 
Share of loss after tax of 
 associates                                             -         -       -    (4)      (4) 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
Adjusted EBITDA                                     1,861       608     454     46    2,969 
Underlying depreciation, 
 amortisation and impairment                        (481)     (110)    (96)      -    (687) 
Adjusted operating profit 
 (before non-underlying items)                      1,380       498     358     46    2,282 
Non-underlying depreciation, 
 amortisation and impairment              6                                           (883) 
Other non-underlying items 
 excluding net finance expense            6                                           (334) 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
Operating profit                                                                      1,065 
Net finance costs (including 
 non-underlying items)                    7                                           (171) 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
Profit before tax from continuing 
 operations                                                                             894 
Profit before tax from discontinued 
 operations                              12                                           2,702 
Profit before tax                                                                     3,596 
------------------------------------  -----  ------------  --------  ------  -----  ------- 
 
 

1 Data & Analytics revenue includes recoveries of GBP324 million. Post Trade revenue includes net settlement and similar expenses recovered through the CCP clearing businesses of GBP12 million which comprises gross settlement income of GBP46 million less gross settlement expense of GBP34 million.

3. Total income

 
The Group's revenue from contracts with customers disaggregated by 
 segment, major product and service line, and timing of revenue recognition 
 for the year ended 31 December 2022 is shown below: 
                                                  Data   Capital    Post 
                                           & Analytics   Markets   Trade  Other  Group 
Continuing operations                             GBPm      GBPm    GBPm   GBPm   GBPm 
----------------------------------------  ------------  --------  ------  -----  ----- 
Revenue from external customers 
Major product and service lines 
Trading & banking solutions                      1,612         -       -      -  1,612 
Enterprise data solutions                        1,307         -       -      -  1,307 
Investment solutions                             1,325         -       -      -  1,325 
Wealth solutions                                   275         -       -      -    275 
Customer & third-party risk solutions              425         -       -      -    425 
Recoveries                                         315         -       -      -    315 
Equities                                             -       248       -      -    248 
FX                                                   -       258       -      -    258 
Fixed income, derivatives and 
 other                                               -       953       -      -    953 
OTC derivatives                                      -         -     402      -    402 
Securities & reporting                               -         -     234      -    234 
Non-cash collateral                                  -         -     100      -    100 
Total revenue                                    5,259     1,459     736      -  7,454 
Net treasury income                                  -         -     255      -    255 
Other income                                         -         -       -     34     34 
----------------------------------------  ------------  --------  ------  -----  ----- 
Total income                                     5,259     1,459     991     34  7,743 
----------------------------------------  ------------  --------  ------  -----  ----- 
Timing of revenue recognition 
Services satisfied at a point 
 in time                                           173     1,015     721      -  1,909 
Services satisfied over time                     5,086       444      15      -  5,545 
----------------------------------------  ------------  --------  ------  -----  ----- 
Total revenue                                    5,259     1,459     736      -  7,454 
----------------------------------------  ------------  --------  ------  -----  ----- 
 
 
 
The Group's re-presented revenue from contracts with customers disaggregated 
 by segment, major product and service line, and timing of revenue recognition 
 for the year ended 31 December 2021 is shown below: 
                                                    Data    Capital    Post 
                                             & Analytics    Markets   Trade  Other  Group 
Continuing operations                               GBPm       GBPm    GBPm   GBPm   GBPm 
-----------------------------------------  -------------  ---------  ------  -----  ----- 
Revenue from external customers 
Major product and service lines 
Trading & banking solutions                        1,369          -       -      -  1,369 
Enterprise data solutions                          1,058          -       -      -  1,058 
Investment solutions                               1,119          -       -      -  1,119 
Wealth solutions                                     227          -       -      -    227 
Customer & third-party risk solutions                330          -       -      -    330 
Recoveries                                           324          -       -      -    324 
Equities                                               -        241       -      -    241 
FX                                                     -        204       -      -    204 
Fixed income, derivatives and other                    -        726       -      -    726 
OTC derivatives                                        -          -     358      -    358 
Securities & reporting                                 -          -     246      -    246 
Non-cash collateral                                    -          -      95      -     95 
Total revenue                                      4,427      1,171     699      -  6,297 
Net treasury income                                    -          -     207      -    207 
Other income                                           -          -       -     31     31 
-----------------------------------------  -------------  ---------  ------  -----  ----- 
Total income                                       4,427      1,171     906     31  6,535 
-----------------------------------------  -------------  ---------  ------  -----  ----- 
Timing of revenue recognition 
Services satisfied at a point in 
 time                                                154        790     670      -  1,614 
Services satisfied over time                       4,273        381      29      -  4,683 
-----------------------------------------  -------------  ---------  ------  -----  ----- 
Total revenue                                      4,427      1,171     699      -  6,297 
-----------------------------------------  -------------  ---------  ------  -----  ----- 
 

4. Operating expenses before depreciation, amortisation and impairment

 
                                                             2022            2021 
                                                                   (Re-presented) 
Continuing operations                                Notes   GBPm            GBPm 
---------------------------------------------------  -----  -----  -------------- 
Staff costs                                              5  1,896           1,666 
IT costs                                                      567             447 
Professional fees                                             420             327 
Short-term lease costs                                         13              43 
Other costs                                                   243             252 
Foreign exchange losses/(gains)                                 1            (10) 
Underlying operating expenses before depreciation, 
 amortisation and impairment                                3,140           2,725 
Non-underlying operating expenses before 
 depreciation, amortisation and impairment               6    389             334 
---------------------------------------------------  -----  -----  -------------- 
Total operating expenses before depreciation, 
 amortisation and impairment                                3,529           3,059 
---------------------------------------------------  -----  -----  -------------- 
 

5. Staff costs

 
                                                 2022            2021 
                                                       (Re-presented) 
Continuing operations                            GBPm            GBPm 
----------------------------------------------  -----  -------------- 
Salaries and other benefits                     1,905           1,626 
Social security costs                             191             164 
Pension costs                                      81              81 
Share-based payment expense                       158             141 
----------------------------------------------  -----  -------------- 
Total payments made to employees                2,335           2,012 
Amounts capitalised as development costs        (281)           (190) 
Total staff costs from continuing operations    2,054           1,822 
----------------------------------------------  -----  -------------- 
 
Underlying staff costs                          1,896           1,666 
Non-underlying staff costs                        158             156 
----------------------------------------------  -----  -------------- 
Total staff costs from continuing operations    2,054           1,822 
----------------------------------------------  -----  -------------- 
 
 

6. Non-underlying items

Significant accounting judgements

The Group uses its judgement to classify items as non-underlying. They include:

-- 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 as a result of acquisitions

-- Incremental amortisation and impairment of any fair value adjustments of intangible assets recognised as a result of acquisitions

-- Other income or expenses not considered to drive the operating results of the Group (including transaction, integration and separation costs related to acquisitions and disposals of businesses), as well as restructuring costs

   --     Tax on non-underlying items 
 
                                                        2022            2021 
                                                              (Re-presented) 
Continuing operations                           Notes   GBPm            GBPm 
----------------------------------------------  -----  -----  -------------- 
Non-underlying operating expenses before 
 interest, tax, depreciation, amortisation 
 and impairment 
Transaction costs                                         85             109 
Integration and separation costs                         278             225 
Restructuring and other costs                             26               - 
                                                         389             334 
----------------------------------------------  -----  -----  -------------- 
Profit on disposal of property, plant and 
 equipment                                             (133)               - 
Remeasurement gain                               11.1   (23)               - 
----------------------------------------------  -----  -----  -------------- 
                                                       (156)               - 
----------------------------------------------  -----  -----  -------------- 
Non-underlying operating expenses before 
 interest, tax, depreciation, amortisation 
 and impairment                                          233             334 
----------------------------------------------  -----  -----  -------------- 
Non-underlying depreciation, amortisation 
 and impairment 
Amortisation and impairment of purchased 
 intangible assets                                 13  1,044             851 
Depreciation of property, plant and equipment             15              10 
Impairment of property, plant and equipment               12              22 
Impairment of other non-current assets                     7               - 
----------------------------------------------  -----  -----  -------------- 
                                                       1,078             883 
----------------------------------------------  -----  -----  -------------- 
 
Non-underlying items before interest and 
 tax                                                   1,311           1,217 
Non-underlying finance costs                      7.2     16               5 
----------------------------------------------  -----  -----  -------------- 
Non-underlying items before tax                        1,327           1,222 
Non-underlying tax                                     (278)           (130) 
Non-underlying items after tax                         1,049           1,092 
----------------------------------------------  -----  -----  -------------- 
 

The main non-underlying items are as follows:

Transaction costs

Transaction costs mainly relate to the following acquisitions:

-- Refinitiv - mainly fair value adjustment to the outstanding Tradeweb equity-settled awards (as if the acquisition date were the grant date) of GBP26 million (2021: GBP36 million) and post-acquisition Management Incentive Plan (MIP) share-based payment expense of GBP16 million (2021: GBP10 million)

   --     GDC, MayStreet, TORA and Quantile (see note 11.4) 

Integration and separation costs

Integration and separation costs relate to activities to:

-- Integrate acquired businesses with the Group and mainly consist of Refinitiv integration costs of GBP242 million (2021: GBP201 million)

-- Separate disposed businesses and mainly consists of BETA separation costs of GBP12 million (2021: GBP24 million to separate the Thomson Reuters Financial & Risk Business from Thomson Reuters and then restructure it)

Profit on disposal of property, plant and equipment

On 5 January 2022, the Group completed the sale of one of its freehold properties in the UK for a cash sum of GBP153 million realising a gain on disposal of GBP133 million.

Remeasurement gain

Prior to the acquisition of GDC on 31 May 2022, LSEG held an 11% equity interest in GDC. The acquisition date fair value of the previously held interest resulted in a remeasurement gain of GBP23 million.

Depreciation, amortisation and impairment

Amortisation of intangibles of GBP1,044 million (2021: GBP851 million) mainly relates to the amortisation of intangible assets recognised as a result of the acquisition of Refinitiv.

We have continued to review our property needs following the acquisition of Refinitiv. The decision to exit and sub-lease some of our property has resulted in GBP27 million of accelerated depreciation and impairment (2021: GBP32 million) to right-of-use property assets and some fixtures and fittings.

Taxation

We have recognised a GBP278 million (2021: GBP130 million) non-underlying tax benefit which mainly reflects the tax impact of the Group's non-underlying items computed based on the tax rates applicable to the respective territories.

7. Net finance costs

 
7.1 Finance income 
--------------------------------------------------------   -------------  ----- 
                                                                    2022   2021 
Continuing operations                                               GBPm   GBPm 
--------------------------------------------------------   -----  ------  ----- 
Bank deposit and other interest income                                29      3 
Lease interest income                                                  1      2 
Interest income on retirement benefit assets                          81     41 
---------------------------------------------------------  -----  ------  ----- 
Underlying finance income                                            111     46 
---------------------------------------------------------  -----  ------  ----- 
 
 
7.2 Finance costs 
--------------------------------------------------------   -----  ------  ----- 
                                                                    2022   2021 
Continuing operations                                       Note    GBPm   GBPm 
--------------------------------------------------------   -----  ------  ----- 
Interest payable on bank and other borrowings(1)                   (156)  (151) 
Amortisation of arrangement fees                                    (10)   (12) 
Lease interest expense                                              (15)   (12) 
Other finance expenses                                              (20)    (2) 
Interest cost on retirement benefit obligations                     (70)   (35) 
---------------------------------------------------------  -----  ------  ----- 
Underlying finance costs                                           (271)  (212) 
Non-underlying finance costs                                   6    (16)    (5) 
---------------------------------------------------------  -----  ------  ----- 
Total finance costs                                                (287)  (217) 
---------------------------------------------------------  -----  ------  ----- 
 
1 Interest payable on bank and other borrowings includes amounts where 
 the Group suffers negative interest on its cash deposits. It is net 
 of amortisation of the realised gain on interest rate derivatives held 
 in the hedging reserve. 
 

8. Taxation

 
8.1 Income tax 
Tax recognised in the income statement 
                                                  2022            2021 
                                                        (Re-presented) 
Continuing operations                             GBPm            GBPm 
-----------------------------------------------   ----  -------------- 
Current tax 
UK corporation tax for the year at 19% (2021: 
 19%)                                               67              49 
Overseas tax for the year                          125              79 
Adjustments in respect of previous years            81               2 
Total current tax                                  273             130 
------------------------------------------------  ----  -------------- 
Deferred tax 
Deferred tax (benefit)/expense for the year       (29)             214 
Adjustments in respect of previous years           (4)             (9) 
Deferred tax expense/(benefit) on amortisation 
 and impairment of intangible assets                22            (33) 
------------------------------------------------  ----  -------------- 
Total deferred tax                                (11)             172 
------------------------------------------------  ----  -------------- 
Total tax                                          262             302 
------------------------------------------------  ----  -------------- 
 
 
Factors affecting the tax charge for the 
 year 
The tax charge for the year differs from that derived from the standard 
 rate of corporation tax in the UK of 19% (2021: 19%) as explained below: 
                                                          2022             2021 
                                                                 (Re-presented) 
Continuing operations                                     GBPm             GBPm 
------------------------------------------------------   -----  --------------- 
Profit before tax from continuing operations             1,241              894 
-------------------------------------------------------  -----  --------------- 
 
Profit multiplied by standard rate of corporation 
 tax in the UK                                             236              170 
Overseas earnings taxed at higher rate                       4                8 
Adjustment arising from changes in tax rates               (3)              171 
Income not taxable                                        (53)             (36) 
Adjustments in respect of previous years                    77              (7) 
Deferred tax not recognised                                  1              (4) 
Total tax                                                  262              302 
-------------------------------------------------------  -----  --------------- 
 
Tax on items recognised in other comprehensive 
 income 
------------------------------------------------------   -----  --------------- 
                                                          2022             2021 
Continuing operations                                     GBPm             GBPm 
------------------------------------------------------   -----  --------------- 
Deferred tax benefit/(expense) on: 
- Actuarial losses/gains on retirement benefit 
 obligations                                                98             (25) 
- Gains/losses of financial assets (at fair 
 value through other comprehensive income)                (13)                1 
Total tax recognise in other comprehensive 
 income                                                     85             (24) 
-------------------------------------------------------  -----  --------------- 
 
Tax on items recognised in equity 
------------------------------------------------------   -----  --------------- 
                                                          2022             2021 
                                                          GBPm             GBPm 
------------------------------------------------------   -----  --------------- 
Current tax benefit on: 
- Share-based payments in excess of expense 
 recognised                                                 14               12 
-------------------------------------------------------  -----  --------------- 
Total current tax recognised in equity                      14               12 
-------------------------------------------------------  -----  --------------- 
 
Deferred tax benefit/(expense) on: 
- Share-based payments less than/in excess 
 of expense recognised                                    (92)               18 
- Investment in partnerships (recognised 
 in non-controlling interests)                             100               25 
-------------------------------------------------------  -----  --------------- 
Total deferred tax recognised in equity                      8               43 
-------------------------------------------------------  -----  --------------- 
Total tax recognised in equity                              22               55 
-------------------------------------------------------  -----  --------------- 
 

On 24 May 2021, the UK Finance Act 2021 was substantively enacted, increasing the corporate tax rate to 25% with effect from 1 April 2023.

Global Minimum Tax

To address concerns about uneven profit distribution and the tax contributions of large multinational corporations, various agreements have been reached at the global level, including an agreement by over 135 countries to introduce a global minimum tax rate of 15%. In December 2021, the Organisation for Economic Co-operation and Development (OECD) released a draft legislative framework, followed by detailed guidance in March 2022. This is expected to be used by individual jurisdictions that signed the agreement to amend their local tax laws. Enactment is currently expected to occur with effect from 1 January 2024. Once changes to the tax law in any jurisdiction are enacted or substantively enacted, the Group may be subject to the 15% minimum tax rate. We are closely monitoring these developments.

8.2 Uncertain tax positions(1)

Significant accounting judgements and estimates

Uncertain tax positions

The Group is subject to taxation in the many countries in which it operates. The tax legislation of these countries differs, is often complex and is subject to interpretation by management and government authorities. These matters of judgement sometimes give rise to the need to create provisions for tax payments that may arise in future years with respect to transactions already undertaken.

Provisions are made against individual exposures and take into account the specific circumstances of each case, including the strength of technical arguments, recent case law decisions or rulings on similar issues and relevant external advice. In accordance with IFRIC 23 Uncertainty over Income Tax Treatments , provisions are estimated based on one of two methods: the expected value method (the sum of the probability weighted amounts in a range of possible outcomes) or the single most likely amount method. The method chosen depends on which is expected to better predict the resolution of the uncertainty. Due to the uncertainty associated with tax audits it is possible that, at some future date, liabilities resulting from such audits or related litigation could vary significantly from our provisions. This would require the Group to make an adjustment in a subsequent period which could have a material impact on the Group's results.

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 concluded that the Finance Company Partial Exemption (FCPE) rules in the UK tax legislation partially represent illegal State Aid. The Group had financing arrangements that recognise the FCPE during this period.

In December 2019 and the beginning of 2021, HMRC issued determinations to the Group totalling GBP10.5 million which the Group paid.

The Group, several other UK PLCs and the UK Government submitted appeals to the EU General Court to annul the EU Commission's findings. On 8 June 2022, the EU General Court rejected the appeals. The Group has appealed this decision to the Court of Justice of the European Union (CJEU). It will be some time before the issues are conclusively determined by the CJEU. Until then, the UK Government is required to continue recovering amounts determined to be State Aid.

The Group's view is that no provision is required. Additionally, and in accordance with IFRIC 23 Uncertainty over Income Tax Treatments, the Group continues to recognise a receivable against the HMRC determinations paid to date of GBP10.5 million. The maximum potential exposure remains between nil and GBP65 million.

IRS Audit

The Group has been under audit in the USA by the Internal Revenue Service (IRS) in relation to the interest rate applied on certain cross border intercompany loans from the UK to the USA for the 2014-2021 period. During the year, the Group reached a settlement with the IRS on this matter for the 2014-2015 period. This resulted in additional tax of GBP1 million ($1 million) for this period and a GBP4 million ($5 million) increase in the uncertain tax liability resulting from the remeasurement of the open period.

HMRC audit of intellectual property valuation

HMRC is auditing the value of certain intellectual property purchased from Thomson Reuters as part of the formation of Refinitiv. Intellectual property valuation is complex and significantly affected by multiple inputs of assumptions. As the outcome is uncertain, especially given the inherent subjectivity of the topic, the Group has recorded an uncertain tax liability in accordance with the requirements of IFRS. Management believes that resolution of this matter will not have a material impact on the Group's financial position. Management and HMRC continue to actively discuss this topic.

Diverted Profits Tax to Thomson Reuters

HMRC continues to issue notices of assessment under the Diverted Profits Tax (DPT) regime to Thomson Reuters largely related to its Financial & Risk Business for years prior to the sale of the business to Refinitiv. As required by the notices and as directed by Thomson Reuters, the Group makes payments to HMRC which are immediately reimbursed by Thomson Reuters in accordance with an indemnity agreement. Thomson Reuters does not agree with the assessments and will continue to defend their position by contesting the assessments through all available administrative and judicial remedies.

Russian tax audit

The Group is under audit by the Russian Tax Authorities for the 2018-2020 period, which could result in additional taxes being paid locally. We do not agree with the Tax Authorities' view and will continue to defend our position through all available administrative and judicial remedies. We have recorded an uncertain tax liability in accordance with the requirements of IFRS. Management believes that resolution of this matter will not have a material impact on the Group's financial position.

1 Amounts presented exclude interest and penalties

9. Earnings per share

 
                                                        2022                                2021 
                                                                                        Re-presented 
                                         ----------------------------------  ---------------------------------- 
                                         Continuing  Discontinued     Total  Continuing  Discontinued     Total 
---------------------------------  ----  ----------  ------------  --------  ----------  ------------  -------- 
Basic earnings per 
 share                                       141.8p         91.9p    233.8p       85.8p        495.9p    581.7p 
Diluted earnings per 
 share                                       141.1p         91.4p    232.5p       85.2p        492.9p    578.1p 
Adjusted basic earnings 
 per share                                   317.8p         10.6p    328.4p      272.4p         29.0p    301.4p 
Adjusted diluted earnings 
 per share                                   316.1p         10.5p    326.6p      270.7p         28.8p    299.5p 
 
Profit and adjusted profit for the year attributable to the Company's 
 equity holders 
                                                        2022                                2021 
                                                                                        Re-presented 
                                         Continuing  Discontinued     Total  Continuing  Discontinued     Total 
                                   Note        GBPm          GBPm      GBPm        GBPm          GBPm      GBPm 
Profit for the financial 
 year attributable to 
 the Company's equity 
 holders                                        790           512     1,302         461         2,668     3,129 
Adjustments: 
- Total non-underlying 
 items net of tax                     6       1,049         (453)       596       1,092       (2,511)   (1,419) 
- Non-underlying items 
 attributable to non-controlling 
 interests                                     (69)             -      (69)        (88)           (1)      (89) 
Adjusted profit for 
 the year attributable 
 to the Company's equity 
 holders                                      1,770            59     1,829       1,465           156     1,621 
 
Weighted average number of shares 
                                                                       2022                                2021 
                                                                   millions                            Millions 
Weighted average number 
 of shares(1)                                                           557                                 538 
Effect of dilutive share 
 options and awards                                                       3                                   3 
Diluted weighted average 
 number of shares                                                       560                                 541 
 
1 The weighted average number of shares excludes those held in the 
 Employee Benefit Trust. 
 

10. Dividends

 
                                                                     2022  2021 
                                                                     GBPm  GBPm 
Final dividend for 31 December 2020 paid 26 May 2021: 
 51.7p per ordinary share                                               -   287 
Interim dividend for 31 December 2021 paid 21 September 
 2021: 25.0p per ordinary share                                         -   139 
Final dividend for 31 December 2021 paid 25 May 2022: 
 70.0p per ordinary share                                             390     - 
Interim dividend for 31 December 2022 paid 20 September 
 2022: 31.7p per ordinary share                                       177     - 
                                                                      567   426 
                                                                    ----- 
 
Dividends are only paid out of available distributable reserves of 
 the Company. 
 
The Board has proposed a final dividend in respect of the year ended 
 31 December 2022 of 75.3p per share, which amounts to an expected payment 
 of GBP417 million on 24 May 2023. This is not reflected in the financial 
 statements. 
 

11. Business combinations

During the year, the Group acquired the businesses listed below. The results of the businesses have been consolidated since the date of acquisition.

   --     Global Data Consortium, Inc. (GDC) 
   --     MayStreet Inc. (MayStreet) 
   --     Tora Holdings, Inc. (TORA) 
   --     Quantile Group Limited (Quantile) 

Significant accounting estimates and assumptions

Intangible assets acquired as part of a business combination

The fair value of acquired intangible assets (and therefore the resulting goodwill recognised on acquisition) is significantly affected by a number of factors. These include management's best estimates of future performance (i.e. forecast revenue, expected revenue attrition, forecast operating margin), any contributory assets changes and estimates of the return required to determine an appropriate discount rate (in order to calculate the net present value of the assets).

The purchase price allocations (PPAs) (shown in 11.2 below) have 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 circumstances 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.

11.1 Details of businesses acquired

 
                                                                                                Voting equity interest 
Acquired business         Description of business  Reason for acquisition   Acquisition date                  acquired 
                                                   GDC's services are used 
                                                    within LSEG's Customer 
                                                    & Third-Party Risk 
                                                    Solutions business 
                                                    within 
                                                    the Data & Analytics 
                                                    division, to provide 
                                                    global digital 
                                                    identity verification 
                                                    to customers. 
                          A global provider of      Adding GDC to the 
                           high-quality identity    Group's suite of 
                           verification data to     digital identity 
                           support clients with     solutions will enable 
                           Know                     the Group to continue 
Global Data Consortium,    Your Customer (KYC)      to expand capabilities 
 Inc. (GDC)                requirements.            in this segment.        31 May 2022                         89%(1) 
                                                   The acquisition 
                                                    enhances the Group's 
                                                    Enterprise Data 
                                                    Solutions business, 
                                                    within the Data & 
                                                    Analytics division, 
                                                    expanding our 
                                                    capabilities across 
                                                    the latency spectrum 
                          A market data solutions   through a global 
                           provider. MayStreet      low latency network of 
                           provides global low      over 300 cross asset, 
                           latency technology and   exchange and trading 
                           market                   venue feeds. This 
                           data to over 65          broadens 
                           industry participants,   and complements our 
                           including banks, asset   real-time feeds and 
MayStreet Inc.             managers and hedge       historical market data 
 (MayStreet)               funds.                   value proposition.      31 May 2022                           100% 
                                                   The transaction will 
                                                    further enhance the 
                                                    global footprint of 
                                                    the Group's Trading & 
                                                    Banking 
                          A cloud-based             Solutions business, 
                           technology provider      within the Data & 
                           that supports            Analytics division, 
                           customers trading        with TORA's 
                           multiple asset classes   established presence 
                           across                   in Asia and North 
                           global markets. TORA's   America and operations 
                           solutions include an     in Europe. Our 
                           order and execution      customers will benefit 
                           management system        from a differentiated 
                           (OEMS) and               trading solution that 
                           portfolio management     combines the 
                           system (PMS) for         multi-asset class 
                           customers trading        capabilities of TORA's 
                           equities, fixed          software with 
                           income, FX,              the Group's rich data 
Tora Holdings, Inc.        derivatives              and analytics 
 (TORA)                    and digital assets.      services.               9 August 2022                         100% 
                                                   Quantile's powerful 
                                                    optimisation engine 
                                                    provides advanced 
                                                    trade compression and 
                                                    risk rebalancing 
                                                    services to banks, 
                                                    hedge funds and other 
                                                    financial institutions 
                                                    trading OTC 
                                                    derivatives. Quantile 
                                                    will therefore 
                                                    complement our global 
                          A leading provider of     OTC Derivatives 
                           portfolio, margin and    clearing services, 
                           capital optimisation     which provide risk 
                           and compression          management and capital 
                           services                 efficiencies to 
                           for the global           customers. It will 
                           financial services       also allow the Group 
                           market. Quantile is      to expand its 
                           led by a team of         range of Post Trade 
                           industry experts with    risk management 
                           significant experience   solutions through 
                           in risk management,      trade compression as 
                           quantitative analysis    well as capital 
Quantile Group Limited     and trading              and margin 
 (Quantile)                technology.              optimisation services.  30 November 2022                      100% 
 

1 Prior to the acquisition LSEG held an 11% interest in GDC and on 31 May 2022 recognised a GBP23 million non-underlying remeasurement gain on this investment in associate (see note 6).

11.2 Consideration transferred, assets acquired and liabilities assumed, and resulting goodwill

 
Goodwill arising from the acquisitions has been recognised as follows: 
                                                  GDC     MayStreet          TORA  Quantile  Total 
                                   Note          GBPm          GBPm          GBPm      GBPm   GBPm 
                                   ----  ------------  ------------  ------------  --------  ----- 
Purchase consideration 
- Cash (including settlement 
 of share options)                                213           153           258       162    786 
- Fair value of previous 
 interest held                                     28             -             -         -     28 
- Deferred consideration                            -             -             -         5      5 
- Contingent consideration 
 payable(1)                                         -             -             -        38     38 
---------------------------------  ----  ------------  ------------  ------------  --------  ----- 
Total purchase consideration                      241           153           258       205    857 
---------------------------------  ----  ------------  ------------  ------------  --------  ----- 
Less: Fair value of identifiable 
 net assets acquired 
- Intangible assets: Customer 
 and supplier relationships(2)       13          (67)          (28)          (49)      (44)  (188) 
- Intangible assets: Software(2)     13          (28)          (39)          (47)      (35)  (149) 
- Intangible assets: Licences(2)     13             -             -           (3)         -    (3) 
- Other non-current assets                          -           (1)           (3)         -    (4) 
- Cash and cash equivalents                       (5)           (2)           (6)       (5)   (18) 
- Other current assets                            (4)           (3)           (7)       (9)   (23) 
- Total liabilities, excluding 
 deferred tax liabilities                           4            19             6         5     34 
- Deferred tax liabilities(3)                      12             9            24        18     63 
---------------------------------  ----  ------------  ------------  ------------  --------  ----- 
Fair value of identifiable 
 net assets acquired                             (88)          (45)          (85)      (70)  (288) 
---------------------------------  ----  ------------  ------------  ------------  --------  ----- 
Goodwill                             13           153           108           173       135    569 
---------------------------------  ----  ------------  ------------  ------------  --------  ----- 
Allocated to cash-generating                     Data          Data          Data      Post 
 unit                                     & Analytics   & Analytics   & Analytics     Trade 
 

1 The contingent consideration payable is linked to performance targets of Quantile. The contingent consideration is calculated with reference to qualifying revenue and relevant valuation multiples which determines the payment, discounted to a present value. A 1% change in the discount rate applied would not have a material effect on the valuation of the payable.

2 The fair values of the net assets acquired 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 of the fair value hierarchy). The following valuation methodologies were used to determine fair value:

   --        Customer relationships: multi-period excess earnings method (MEEM) (income approach) 
   --        Supplier relationships: replacement cost approach 
   --        Software: relief from royalty method (income approach) 
   --        Licences: replacement cost approach 

3 The deferred tax liability mainly comprises the tax effect of the intangible assets.

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. 

None of the goodwill recognised is expected to be deductible for income tax purposes.

 
11.3 Revenue and profit 
 contribution 
From the respective acquisition dates, the acquired businesses contributed 
 revenue and profit before tax as follows: 
 
                                                       2022 
                                          GDC  MayStreet     TORA   Quantile 
                                        Seven      Seven     Five 
                                       months     months   months  One month 
                                         GBPm       GBPm     GBPm       GBPm 
Revenue                                    12          8       12          1 
Adjusted EBITDA                             4          2        -          - 
Profit/(loss) before tax                    -        (3)      (8)          - 
 
 
If the acquisitions had all occurred on 1 January 2022, the acquired 
 businesses would have contributed additional revenue and adjusted EBITDA 
 as follows: 
                                                       2022 
                                LSEG      GDC  MayStreet     TORA   Quantile 
                                         Five       Five    Seven 
                                Year   months     months   months  11 months 
                               ended    ended      ended    ended      ended  Pro-forma 
                              31 Dec   31 May     31 May   31 Jul     30 Nov      Group 
Continuing                      GBPm     GBPm       GBPm     GBPm       GBPm       GBPm 
Revenue                        7,454        8          6       36         11      7,515 
Adjusted EBITDA                3,550        2       (11)       13          -      3,554 
 
 
11.4 Acquisition-related costs, including employment-linked management 
 incentive and earn-out arrangements 
Acquisition-related costs are recognised as non-underlying transaction 
 costs in the income statement (see note 6). The Group incurred acquisition-related 
 costs (on advisor and professional fees and management incentive and 
 retention costs) as follows: 
                                                          GDC    MayStreet   TORA    Quantile 
                                                         GBPm         GBPm   GBPm        GBPm 
Advisor and professional 
 fees                                                       3            5      3           8 
Employment-linked management 
 incentive and earn-out arrangements(1)                     -           22      3           - 
Acquisition-related costs                                   3           27      6           8 
 

1 As part of the MayStreet and TORA purchase agreements, employment-linked management retention incentives and earn-out arrangements have been agreed with the former founders and senior management. These arrangements are contingent on continuing employment, and will be:

-- recognised as post-combination compensation over the arrangement period within salaries and other benefits in the income statement

   --        classified as non-underlying transaction costs 

12. Disposal of businesses and discontinued operations

Disposal of BETA during the year ended 31 December 2022

On 21 March 2022, the disposal of BETA, Maxit and Digital Investor (collectively BETA) was assessed to be highly probable and it has been treated as a disposal group from that date. BETA provides back-office processing to the wealth management industry, including securities processing and tax reporting. BETA has also been treated as a discontinued operation as it represented a separate major line of business. Its results have been excluded from the continuing results of the Group for the year ended 31 December 2022. The results for the prior year have been re-presented to exclude the BETA results from the continuing operations of the Group.

On 1 July 2022, BETA was sold for total cash consideration of US$1.1 billion (GBP0.9 billion) to affiliates of Clearlake Capital Group, L.P. (Clearlake) and Motive Partners (Motive), realising a profit on disposal, after tax, of GBP0.5 billion. We announced that we have entered into a new long-term strategic partnership for data, content and tools with BETA and portfolio companies owned by Clearlake and Motive.

Disposal of the Borsa Italiana group during the year ended 31 December 2021

On 29 April 2021, the Group disposed of Borsa Italiana. It was presented as a discontinued operation and its results are excluded from the continuing operations of the Group for the year ended 31 December 2021. As part of the disposal agreement the Group continues to provide services to the Borsa Italiana group on an arm's length basis.

 
12.1 Profit and total comprehensive income 
 from discontinued operations 
Until the respective disposal dates, the profit and total comprehensive 
 income from discontinued operations are as follows: 
                                                           2022            2021 
                                                                 (Re-presented) 
                                                           GBPm            GBPm 
                                                          ----- 
Profit from discontinued operations 
BETA                                                        512              68 
Borsa Italiana group                                          -           2,603 
                                                    ----  ----- 
Profit from discontinued operations                         512           2,671 
                                                    ----  ----- 
Other comprehensive loss of discontinued 
 operations 
Borsa Italiana group                                          -           (105) 
                                                    ----  ----- 
Other comprehensive loss from discontinued 
 operations                                                   -           (105) 
                                                    ----  ----- 
Total comprehensive income from discontinued 
 operations                                                 512           2,566 
                                                    ---- 
 
 
Profit and total comprehensive income from 
 BETA 
                                                    ----  ----- 
                                                           2022            2021 
                                                    Note   GBPm            GBPm 
                                                    ----  ----- 
Total income                                                132             205 
Underlying cost of sales and operating expenses            (57)           (103) 
                                                    ----  ----- 
Adjusted profit before tax                                   75             102 
Non-underlying expenses                                     (1)             (9) 
                                                    ----  ----- 
Profit before tax                                            74              93 
Underlying tax                                             (16)            (27) 
Non-underlying tax                                            -               2 
                                                    ----  ----- 
Profit after tax of discontinued operation                   58              68 
Profit on disposal of discontinued operation, 
 after tax (non-underlying)                         12.2    454               - 
                                                    ----  ----- 
Profit (and total comprehensive income) 
 from discontinued operation                                512              68 
                                                    ---- 
 
Profit and total comprehensive income from 
 Borsa Italiana group 
                                                    ----  ----- 
                                                                           2021 
                                                    Note                   GBPm 
                                                    ---- 
Total income                                                                146 
Underlying cost of sales and operating expenses                            (52) 
                                                    ----  ----- 
Adjusted profit before tax                                                   94 
Non-underlying expenses                                                     (4) 
                                                    ----  ----- 
Profit before tax                                                            90 
Underlying tax                                                              (9) 
Non-underlying tax                                                            3 
                                                    ----  ----- 
Profit after tax of discontinued operation                                   84 
Profit on disposal of discontinued operation 
 (non-underlying)                                   12.2                  2,519 
                                                    ----  ----- 
Profit from discontinued operation                                        2,603 
                                                    ----  ----- 
Other comprehensive income 
Recycled from hedging reserve on disposal                                    17 
Net losses from debt instruments held at 
 FVOCI                                                                     (10) 
Foreign exchange losses on translation in 
 the period                                                                (53) 
Cumulative foreign exchange adjustments 
 recycled on disposal                                                      (62) 
Tax on items in other comprehensive income                                    3 
                                                    ----  ----- 
Other comprehensive loss from discontinued 
 operations                                                               (105) 
                                                    ----  ----- 
Total comprehensive income from discontinued 
 operations                                                               2,498 
                                                    ---- 
 
12.2 Profit on disposal of discontinued 
 operations, after tax 
                                                    ----  ----- 
                                                           2022            2021 
                                                                          Borsa 
                                                                       Italiana 
                                                           BETA           group 
                                                           GBPm            GBPm 
                                                          ----- 
Proceeds from disposal                                      903           3,876 
Carrying value of cash disposed                               -           (284) 
                                                    ---- 
Proceeds from disposal, net of cash disposed                903           3,592 
Carrying value of net assets disposed, excluding 
 cash                                                     (241)         (1,129) 
Non-controlling interests disposed                            -              65 
Transaction costs                                          (44)            (46) 
Other expenses                                                -             (8) 
                                                    ---- 
Profit on disposal of discontinued operations, 
 before tax and recycling of reserves                       618           2,474 
Recycling of cumulative foreign exchange 
 translation reserve                                          -              62 
Recycling of amounts held in hedging reserve                  -            (17) 
Income tax on gain                                        (164)               - 
                                                    ---- 
Profit on disposal of discontinued operations, 
 after tax                                                  454           2,519 
                                                    ---- 
 
12.3 Cash flows from discontinued operations 
                                                    ----  ----- 
                                                           2022            2021 
                                                           GBPm            GBPm 
                                                          ----- 
Operating activities 
BETA                                                         37              87 
Borsa Italiana group                                          -              23 
                                                    ---- 
Net cash flows from operating activities                     37             110 
                                                    ---- 
Investing activities 
BETA                                                       (16)            (30) 
Borsa Italiana group                                          -             (2) 
                                                    ---- 
Net cash flows from investing activities                   (16)            (32) 
                                                    ---- 
Financing activities 
Borsa Italiana group                                          -             (6) 
                                                    ---- 
Net cash flows from financing activities                      -             (6) 
                                                    ---- 
Foreign exchange translation (of cash and 
 cash equivalents)                                            -            (10) 
                                                    ---- 
Net increase in cash from discontinued 
 operations                                                  21              62 
                                                    ---- 
 

13. Intangible assets

Significant accounting estimates and assumptions

Intangible assets and goodwill form a significant part of the balance sheet and are key assets for the Group's businesses. See note 11 for the significant accounting estimates of intangible assets obtained through the purchase of subsidiaries.

Recoverable amounts of CGUs and intangible assets

The recoverable amounts of CGUs and intangible assets are based on value-in-use calculations. The value-in-use calculations use cash flow projections based on business plans prepared by management for the three-year period ending 31 December 2025. These use management's best estimate of future performance together with estimates of the return required by investors, which is used to determine an appropriate discount rate to derive the present value.

Estimated useful economic lives

Intangible assets are amortised over their estimated useful economic lives, being management's best estimate of the period over which value from the intangible assets is realised. In determining useful economic life, management considers a number of factors including: customer attrition rates; product upgrade cycles for software and technology assets; market participant perspectives of brands; and pace of change of regulation.

 
                                                        Purchased intangible assets 
                                                                                        Software, 
                                                Customer                                 licences 
                                            and supplier             Databases   and intellectual    Software 
                             Goodwill(1)   relationships  Brands   and content           property   and other    Total 
                      Notes         GBPm            GBPm    GBPm          GBPm               GBPm        GBPm     GBPm 
                             -----------  --------------  ------  ------------  -----------------  ----------  ------- 
Cost 
1 January 2021                     2,402           1,847     953             -                569       1,260    7,031 
Intangible assets 
 acquired on 
 acquisition 
 of subsidiaries                  16,520           7,455     983         2,398                199       1,608   29,163 
Additions                              -               -       -             -                  -         642      642 
Disposal of business 
 (re-presented)(1)               (1,371)           (692)     (1)             -               (66)       (181)  (2,311) 
Disposals and 
 write-off                             -               -       -             -                (1)        (59)     (60) 
Foreign exchange 
 translation                        (42)             111      21            36                  1        (38)       89 
31 December 2021 
 (re-presented)(1)                17,509           8,721   1,956         2,434                702       3,232   34,554 
Intangible assets 
 acquired on 
 acquisition 
 of subsidiaries       11.2          569             188       -             3                149           -      909 
Additions(2)                           -               -       -             -                  -         868      868 
Disposal of business     12            -               -    (51)             -                  -       (174)    (225) 
Disposals and 
 write-off                             -               -       -             -                  -        (70)     (70) 
Foreign exchange 
 translation                       1,781           1,016     208           297                 52         273    3,627 
31 December 
 2022                             19,859           9,925   2,113         2,734                903       4,129   39,663 
                             -----------  --------------  ------  ------------  -----------------  ----------  ------- 
 
Accumulated amortisation 
 and impairment 
1 January 2021                       546             868     265             -                345         683    2,707 
Amortisation 
 charge for the 
 year                                  -             491     130           220                 33         425    1,299 
Impairment                             -               -       -             -                  -          13       13 
Disposal of business 
 (re-presented)(1)                 (498)           (409)       -             -               (58)       (139)  (1,104) 
Disposals and 
 write-off                             -               -       -             -                (1)        (43)     (44) 
Foreign exchange 
 translation                        (25)               6       3             4                (4)        (25)     (41) 
31 December 2021 
 (re-presented)(1)                    23             956     398           224                315         914    2,830 
Amortisation 
 charge for the 
 year(3)                               -             590     150           232                 41         587    1,600 
Impairment(4)                          -               -       -             -                  -          11       11 
Disposal of business     12            -               -     (4)             -                  -        (31)     (35) 
Disposals and 
 write-off(5)                          -               -       -             -                  -        (70)     (70) 
Foreign exchange 
 translation                           7             104      40            34                 11          65      261 
31 December 
 2022                                 30           1,650     584           490                367       1,476    4,597 
                             -----------  --------------  ------  ------------  -----------------  ----------  ------- 
 
Net book values(6) 
31 December 
 2022                             19,829           8,275   1,529         2,244                536       2,653   35,066 
                             -----------  --------------  ------  ------------  -----------------  ----------  ------- 
31 December 2021                  17,486           7,765   1,558         2,210                387       2,318   31,724 
 
1 The prior year comparatives for cost and accumulated impairment of 
 goodwill have both been re-presented by a reduction of GBP444 million 
 to reflect the correct gross disposal of goodwill cost and accumulated 
 impairment related to Borsa Italiana group. There is no impact on the 
 net book value. 
2 During the year, consideration for additions comprised GBP787 million 
 (2021: GBP611 million) in cash, nil (2021: GBP2 million) of leased 
 assets and GBP81 million (2021: GBP29 million) in accruals. During 
 the year, the Group: 
 -- recognised additions of nil (2021: GBP2 million) as right-of-use 
 assets, with a right-of-use assets amortisation charge of nil (2021: 
 GBP6 million) 
 -- capitalised sales commissions paid to employees (contract costs) 
 of GBP40 million (2021: GBP46 million). 
3 Includes non-underlying amortisation of intangible assets of GBP1,044 
 million (2021: GBP851 million). Includes amortisation of GBP8 million 
 related to discontinued operations (2021: GBP25 million). 
4 Following a review of software assets in the year the Group recognised 
 an GBP11 million impairment charge (2021: GBP13 million) in relation 
 to assets with a recoverable amount less than the carrying value. 
 5 During the year the Group recognised disposals and write-offs of 
 assets which are no longer in use of GBP70 million with nil net book 
 value (2021: GBP60 million with GBP16 million net book value). 
 6 The GBP2,653 million (2021: GBP2,318 million) net book value of software 
 and other intangibles, includes GBP647 million (2021: GBP447 million) 
 of assets not yet brought into use. No amortisation has been charged 
 on these assets and instead they are tested for impairment annually. 
 At 31 December 2022, software and other net book value includes contract 
 costs of GBP75 million (2021: GBP71 million). 
 
 
 
 
Goodwill 
 
Carrying value of goodwill allocated to each of the Group's CGUs and 
 annual impairment test 
Goodwill is allocated to and monitored by management at the level of 
 the Group's four CGUs as set out below: 
                                                        Net book value 
                                                          of goodwill 
                                                           2022      2021 
                                                           GBPm      GBPm 
Data & Analytics(1)                                      14,414    12,771 
Capital Markets, excluding Tradeweb                           2         2 
Tradeweb(1)                                               5,152     4,594 
Post Trade(1)                                               261       119 
                                                         19,829    17,486 
 
 

1 Goodwill allocated to the Data & Analytics, Tradeweb and Post Trade CGUs include foreign exchange translation during the year of GBP1,209 million, GBP558 million and GBP7 million, respectively. The increase also reflects the acquisitions (see note 11).

Goodwill as at 31 December 2022 was tested for impairment. For each CGU, the estimated recoverable amount is higher than its carrying value (being the net book value as at 31 December 2022) and therefore no impairment was identified or recognised.

14. Borrowings and net debt

14.1 Borrowings

 
                                                          Group 
                                                        2022   2021 
                                                        GBPm   GBPm 
Non-current 
Bank borrowings - committed bank facilities and term 
 loans(1)                                                (5)  1,347 
Bonds                                                  6,860  6,306 
Trade finance loans                                        1      1 
Total non-current borrowings                           6,856  7,654 
 
Current 
Bank borrowings - term loan                            1,295      - 
Total current borrowings                               1,295      - 
 
Total borrowings                                       8,151  7,654 
 
 

1 Balances are shown net of capitalised arrangement fees. Where there are no amounts borrowed on a particular facility, this gives rise to a negative balance.

 
The Group has the following committed bank facilities, loans and unsecured 
 bonds: 
                                                                 Carrying value 
  Maturity                                           Facility/                       Interest 
      date                                                bond     2022     2021         rate 
                                                          GBPm     GBPm     GBPm            % 
Committed bank facilities 
Multi-currency revolving credit 
 facility                                  Dec 2024      1,425      (2)      (3)  see note(2) 
Multi-currency revolving credit 
 facility                                  Dec 2027      1,075      (3)      (3)  see note(2) 
Total committed bank facilities(1)                       2,500      (5)      (6) 
 
Committed term loans 
                                                                                    EURIBOR + 
EUR500 million term loan                   Dec 2023                   -      126        0.725 
$2,000 million term loan                   Dec 2023               1,295    1,227  see note(2) 
Total committed term loans                                        1,295    1,353 
 
Bonds 
$500 million bond, issued April 
 2021                                      Apr 2024        416      415      369        0.650 
EUR500 million bond, issued September 
 2017                                      Sep 2024        444      443      419        0.875 
EUR500 million bond, issued April 
 2021                                      Apr 2025        444      443      419            - 
$1,000 million bond, issued April 
 2021                                      Apr 2026        831      828      738        1.375 
EUR500 million bond, issued December 
 2018                                      Dec 2027        444      441      417        1.750 
EUR500 million bond, issued April 
 2021                                      Apr 2028        444      441      417        0.250 
$1,000 million bond, issued April 
 2021                                      Apr 2028        831      828      737        2.000 
EUR500 million bond, issued September 
 2017                                      Sep 2029        444      441      417        1.750 
GBP500 million bond, issued April 
 2021                                      Apr 2030        500      494      493        1.625 
$1,250 million bond, issued April 
 2021                                      Apr 2031      1,039    1,033      919        2.500 
EUR500 million bond, issued April 
 2021                                      Apr 2033        444      438      413        0.750 
$750 million bond, issued April 
 2021                                      Apr 2041        623      615      548        3.200 
Total bonds                                              6,904    6,860    6,306 
 
Trade finance loans                        Nov 2025                   1        1        7.274 
 
Total committed facilities, loans 
 and unsecured bonds                                              8,151    7,654 
 
1 Negative balances represent the value of unamortised arrangement 
 fees 
2 As part of the IBOR Reform, a Credit Adjustment Spread (CAS) has 
 been applied where US dollar and sterling LIBOR rates were replaced 
 with SOFR and SONIA rates respectively in the bank facilities. The 
 CAS is variable and depends on the tenor and currency of the borrowings 
 
 

Committed bank facilities : Multi-currency revolving credit facilities

In December 2020, the Group arranged a GBP1,075 million syndicated committed facility maturing in December 2025, which replaced a former GBP600 million facility. In December 2022, the second of two 1-year extension options was taken up (first option exercised in December 2021), extending the maturity to December 2027. The Group continues to have access to a GBP1,425 million Revolving Credit Facility, which became effective in January 2021 and matures in December 2024. The revolving credit facilities were drawn down during the year and fully repaid as at 31 December 2022.

Committed term loans

The term loans were fully drawn in January 2021. During the year the Euro term loan was fully repaid and the US Dollar term loan was partly repaid by US$100 million (2021: repayments of EUR350 million and US$340 million, respectively). The increase in the carrying value of the US Dollar term loan compared with last year reflects the impact of foreign exchange movements.

Commercial paper

During the year the Group maintained its Euro Commercial Paper Programme limit of GBP1 billion and entered into a US Commercial Paper Programme with a limit of $1 billion. There were no outstanding issuances at 31 December 2022 and 31 December 2021.

Other Group facilities

In accordance with the Committee on Payments and Market Infrastructures, the International Organisation of Securities Commissions and Principles for Financial Market Infrastructures, many central banks allow CCPs to apply for access to certain central bank facilities. LCH SA has a French banking licence and is able to access financing at the French Central Bank and at the European Central Bank to support its liquidity position. LCH Ltd is deemed to have sufficient fungible liquid assets to maintain an appropriate liquidity position and has direct access to central bank facilities to support its liquidity risk management in accordance with the requirements under European Market Infrastructure Regulation.

In addition, a number of Group entities have access to uncommitted operational, money market and overdraft facilities which support post trade activities and day-to-day liquidity requirements. These facilities were drawn down during the year and fully repaid as at 31 December 2022.

 
14.2 Net debt 
Net debt comprises cash and cash equivalents less lease liabilities 
 and interest-bearing loans and borrowings, adjusted for derivative 
 financial instruments. 
                                                                 Group 
                                                              2022       2021 
                                                    Note      GBPm       GBPm 
Current 
Cash and cash equivalents                                    3,209      2,665 
Bank borrowings                                     14.1   (1,295)          - 
Lease liabilities                                            (139)      (168) 
Derivative financial assets                                     36         25 
Derivative financial liabilities                               (9)        (7) 
Total due within one year                                    1,802      2,515 
Non-current 
Bank borrowings                                     14.1         5    (1,347) 
Bonds                                               14.1   (6,860)    (6,306) 
Trade finance loans                                 14.1       (1)        (1) 
Lease liabilities                                            (533)      (547) 
Derivative financial assets                                     12          2 
Derivative financial liabilities                              (87)       (45) 
Total due after one year                                   (7,464)    (8,244) 
Net debt                                                   (5,662)    (5,729) 
 
 

15. Financial assets and financial liabilities

 
15.1 Financial assets 
                                                                Group 
                                                 Amortised 
                                                      cost   FVOCI     FVPL    Total 
31 December 2022                                      GBPm    GBPm     GBPm     GBPm 
Clearing business financial assets(1) 
- Clearing member trading assets                     1,997       -  661,370  663,367 
- Other receivables from clearing members            5,945       -        -    5,945 
- Other financial assets(2)                              -  18,415        -   18,415 
- Clearing member cash and cash equivalents(2)     104,707       -        -  104,707 
Total clearing member assets                       112,649  18,415  661,370  792,434 
Trade and other receivables                          1,344       -       12    1,356 
Cash and cash equivalents                            3,209       -        -    3,209 
Investments in financial assets - debt 
 instruments                                             -     226        -      226 
Investments in financial assets - equity 
 instruments                                             -     394        -      394 
Derivative financial instruments                         -       -       48       48 
Total financial assets                             117,202  19,035  661,430  797,667 
 

1 At 31 December 2022, there are no provisions for expected credit losses in relation to any of the CCP businesses' financial assets held at amortised cost or FVOCI (2021: nil). The Group closely monitors its CCP investment portfolio and invests only in government debt and other collateralised instruments where the risk of loss is minimal. There was no increase in credit risk in the year and none of the assets are past due (2021: nil).

2 Clearing member cash and cash equivalents represents amounts received from the clearing members to cover initial and variation margins, and default fund contributions that are not invested in bonds. These amounts are deposited with banks, including central banks, or invested securely in short-term reverse repurchase contracts (reverse repos). Other financial assets represent the CCP investment in government bonds.

 
                                                             Group 
                                              Amortised 
                                                   cost   FVOCI     FVPL    Total 
31 December 2021                                   GBPm    GBPm     GBPm     GBPm 
Clearing business financial assets 
- Clearing member trading assets                  1,476       -  645,587  647,063 
- Other receivables from clearing members         4,184       -        -    4,184 
- Other financial assets                              -  13,784        -   13,784 
- Clearing member cash and cash equivalents      83,795       -        -   83,795 
Total clearing member assets                     89,455  13,784  645,587  748,826 
Trade and other receivables                       1,020       -        6    1,026 
Cash and cash equivalents                         2,665       -        -    2,665 
Investments in financial assets - equity 
 instruments                                          -     351        -      351 
Derivative financial instruments                      -       -       27       27 
Total financial assets                           93,140  14,135  645,620  752,895 
 
 
15.2 Financial liabilities 
                                         Group 
                              Amortised 
                                   cost     FVPL    Total 
31 December 2022                   GBPm     GBPm     GBPm 
Clearing business financial 
 liabilities 
- Clearing member trading 
 liabilities                      1,997  661,370  663,367 
- Other payables to 
 clearing members               129,227        -  129,227 
Total clearing member 
 financial liabilities          131,224  661,370  792,594 
Trade and other payables          3,211       38    3,249 
Borrowings                        8,151        -    8,151 
Derivative financial 
 instruments                          -       96       96 
Total financial liabilities     142,586  661,504  804,090 
 
                                         Group 
                              Amortised 
                                   cost     FVPL    Total 
31 December 2021                   GBPm     GBPm     GBPm 
Clearing business financial 
 liabilities 
- Clearing member trading 
 liabilities                      1,476  645,587  647,063 
- Other payables to 
 clearing members               101,581        -  101,581 
Total clearing member 
 financial liabilities          103,057  645,587  748,644 
Trade and other payables          2,727        -    2,727 
Borrowings                        7,654        -    7,654 
Derivative financial 
 instruments                          -       52       52 
Total financial liabilities     113,438  645,639  759,077 
 

16. Share capital, share premium and other reserves

 
Ordinary share capital issued and fully paid 
                                                                           Ordinary 
                                                                Number        share         Share 
                                                             of shares   capital(1)    premium(2)   Total 
                                                              millions         GBPm          GBPm    GBPm 
                                             -----------  ------------  -----------  ------------  ------ 
1 January 2021                                                     351           24           971     995 
Acquisition of subsidiaries                                        204           15             -      15 
Issue of shares to 
 the Employee Benefit 
 Trust(3)                                                            2            -             7       7 
31 December 2021                                                   557           39           978   1,017 
Issue of shares to 
 the Employee Benefit 
 Trust(3)                                                            1            -             -       - 
Share buyback(4)                                                   (4)            -             -       - 
31 December 2022                                                   554           39           978   1,017 
                                -----------  -----------  ------------  -----------  ------------  ------ 
 
1 Ordinary share capital consists of ordinary shares of 6 (79/86) pence 
2 Share premium is the amount subscribed for share capital in excess 
 of par value 
3 The Board approved the allotment and issue of 883,174 ordinary shares 
 at par to the EBT (2021: 1,368,896 ordinary shares at par and 177,894 
 at a weighted average price of GBP35.74) to settle employee share plans. 
 A share premium of nil (2021: GBP7 million) has been recognised in 
 the year in respect of these. 
4 At 31 December 2022, the Group held 3,797,344 (2021: nil) treasury 
 shares which were acquired as part its of its share buyback programme 
 
Share buyback programme 
In August 2022, the Company launched a GBP750 million share buyback 
 programme which will be phased over multiple tranches over a 12 month 
 period. During the year, the Company repurchased 3.8 million of its 
 own shares from the market for GBP300 million, which are being held 
 as treasury shares. Total costs directly attributable to the share 
 buyback programme was GBP3 million. The consideration paid and costs 
 incurred have been deducted from retained earnings. 
 
The Company entered into an irrevocable commitment with its corporate 
 brokers to repurchase shares as part of tranche two of the programme, 
 which in part covers the close period from 1 January 2023 up to the 
 announcement of the Group's full year results. At 31 December 2022, 
 the remaining obligation in relation to the share purchase was GBP200 
 million and is presented within trade and other payables. See note 
 18 for shares repurchased after the reporting date. 
 
Other reserves 
                                                                                          Foreign 
                                     Merger      Capital       Reverse                   exchange 
                                     relief   redemption   acquisition      Hedging   translation 
                                 reserve(1)   reserve(2)    reserve(3)   reserve(4)    reserve(5)   Total 
                                       GBPm         GBPm          GBPm         GBPm          GBPm    GBPm 
                                -----------  -----------  ------------  -----------  ------------  ------ 
1 January 2021                        1,305          514         (512)        (110)           608   1,805 
Acquisition of subsidiaries          16,981            -             -            -             -  16,981 
Amounts recycled on 
 disposal                                 -            -             -           17          (62)    (45) 
Foreign exchange differences 
 on translation of 
 foreign operations                       -            -             -            -          (41)    (41) 
Amount recycled to 
 income statement                         -            -             -          (2)             -     (2) 
Changes in fair value 
 recognised                               -            -             -          109             -     109 
                                -----------  -----------  ------------  -----------  ------------  ------ 
31 December 2021                     18,286          514         (512)           14           505  18,807 
Foreign exchange differences 
 on translation of 
 foreign operations                       -            -             -            -         2,448   2,448 
Amount recycled to 
 income statement                         -            -             -          (3)             -     (3) 
Changes in fair value 
 recognised                               -            -             -        (113)             -   (113) 
31 December 2022                     18,286          514         (512)        (102)         2,953  21,139 
                                -----------  -----------  ------------  -----------  ------------  ------ 
 

1 The merger relief reserve is a potentially distributable reserve arising as a result of shares issued to acquire subsidiaries. The Group applied merger relief, as required by section 612 of the Companies Act 2006, to the issue of shares by the Company to acquire Refinitiv. The Group acquired a 100% equity holding in Refinitiv and recognised the excess of the fair value above the nominal share capital issued in the merger relief reserve and retained earnings.

2 The capital redemption reserve was set up as a result of a court approved capital reduction scheme and is non-distributable.

3 The reverse acquisition reserve arose as a result of the acquisition of London Stock Exchange Plc in 2007. It is recognised on consolidation as a result of a capital reduction scheme and is non-distributable.

4 The hedging reserve represents the cumulative fair value adjustments recognised in respect of net investment and cash flow hedges entered into in accordance with hedge accounting principles. It is distributable under certain circumstances. Net gains and losses are recognised in other comprehensive income and balances remain in equity until both the hedging instrument and the underlying instrument are derecognised. Gains realised on cash flow hedges during the year are amortised through the income statement over the life of the underlying instrument. During the year GBP3 million (2021: GBP2 million) was recycled back through the income statement.

5 The foreign exchange translation reserve records the cumulative impact of foreign exchange rate movements on the translation of non-sterling subsidiary companies into sterling. It is distributable under certain circumstances. Net gains and losses on translation are recognised in other comprehensive income and amounts remain in equity until the subsidiary is derecognised.

17. Commitments and contingencies

The Group has the following contracts in place for future expenditure which are not provided for in the consolidated financial statements:

 
Contract                                Description                             Minimum commitment 
Agreement with Reuters News, entered    To receive news and editorial content   Minimum CPI adjusted payment, which 
into in 2018, for a 30-year term                                                was US$360 million for 2022 
10-year strategic partnership with      To architect LSEG's data                Minimum cloud-related spend of US$2.8 
Microsoft                               infrastructure using the Microsoft      billion over the term of the 
                                        Cloud, and to jointly develop           partnership 
                                        new products and services for data and 
                                        analytics 
 

In the normal course of business, the Group can receive 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 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 some 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 such current or future matters with any certainty, it currently believes the likelihood of any material liabilities to be low, and that these will not have a material adverse effect on its consolidated income, financial position or cash flows.

18. Events after the reporting period

Acadia acquisition

On 19 December 2022, LSEG announced it has agreed to acquire Acadia Soft, Inc. (Acadia) a leading provider of automated uncleared margin processing and integrated risk and optimisation services for the global derivatives community. Acadia provides risk management, margining and collateral services to global financial institutions for the uncleared derivatives markets. Acadia's risk and margining products span all OTC derivative asset classes and provide direct connectivity to over 2,000 market participants.

LSEG has held a minority stake in Acadia since 2018. Following completion, Acadia will be part of LSEG's Post Trade division.

The purchase price consideration is $700 million (subject to customary adjustments) and the acquisition is expected to close in H1 2023, subject to regulatory approvals.

Share buyback programme

Since the reporting date, the Company repurchased 2.2 million of its own shares from the market for GBP159 million which are being held as treasury shares.

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