01 London Stock Exchange Group plc
Annual Report 2022
LONDON STOCK EXCHANGE GROUP PLC
ANNUAL REPORT 2022
Partnering with
our customers
at every stage of
the trade lifecycle.
London Stock Exchange Group plc
Annual Report 2022
02
2022 FINANCIAL HIGHLIGHTS
Total income excluding recoveries
1
£7.4bn
2021: £6.6bn
2
Growth in total income excluding recoveries
3,4
+5.7%
2021: +6.1%
Adjusted earnings per share
317.8p
2021: 272.4p
2022 DIVISIONAL HIGHLIGHTS
Data & Analytics – Annual Subscription Value (excl. Ukraine/Russia)
4
+6.2%
2021: +4.6%
Capital Markets – FX average daily trading volume
$452bn
2021: $443bn
Post Trade – Interest rate swap notional cleared
$1,091trn
2021: $921trn
1 Recoveries relate to fees for third-party content, such as exchange data, that is distributed
directly to customers.
2 Pro-forma.
3 Pro-forma, constant currency. 2021 growth is as reported.
4 Growth rate includes the impact of lost revenue in 2022 as a result of the
Russia/Ukraine conflict
London Stock Exchange Group plc
10 Paternoster Square
London EC4M 7LS
Telephone: +44 (0)20 7797 1000
Registered in England and Wales
No. 5369106
WHO WE ARE
OUR PURPOSE
Driving financial stability,
empowering economies and
enabling customers to create
sustainable growth.
01 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Strategic Report
Sign-off for the Strategic Report is provided in the
Directors’ Report on page 142.
At a glance 02
Chair’s statement 04
Chief Executive Officer’s statement 06
A compelling investment story 10
Key performance indicators 12
Data & Analytics 16
Capital Markets 22
Post Trade 24
Market trends and our response 26
Our purpose and strategy 30
Our business model 36
Chief Financial Officer review 40
Financial review 42
Enabling sustainable growth 50
Our culture: building one LSEG 60
Board engagement with stakeholders 64
Compliance with Section 172(1) 70
Principal risks and uncertainties 74
Financial viability statement 85
Governance
Corporate governance introduction 88
Board of Directors 90
Corporate governance report 94
Complying with the provisions of the Code 101
Report of the Nomination Committee 102
Report of the Audit Committee 105
Report of the Risk Committee 111
Directors’ Remuneration Report 113
Directors’ Report 142
Statement of Directors’ responsibilities 147
Financial Statements
Independent Auditor’s Report 150
Consolidated income statement 161
Consolidated statement of comprehensive income 162
Balance sheets 163
Cash flow statements 164
Statements of changes in equity 165
Notes to financial statements 166
Shareholder Information
Glossary 246
Investor Relations 250
SEAMLESSLY CONNECTED:
CREATING POWERFULLY INNOVATIVE SOLUTIONS
See page 33
MULTI-ASSET CLASS:
THE BREADTH OF OUR COVERAGE DRIVES VALUE
See page 32
Contents
Further information on London Stock Exchange Group
can be found at: www.lseg.com
GLOBALLY ESSENTIAL:
SUPPORTING CRITICAL WORKFLOWS WORLDWIDE
See page 31
OUR CUSTOMERS
We are dedicated partners to our
customers across the entire trade
lifecycle, with an open model
and commitment to excellence.
Customers we serve
45,000+
Countries where we operate
190
Customers out of the top 100
global banks by total assets
99%
Customers out of the top 100
global asset managers by
total assets
75%
Customers out of the
50 largest corporates
by market capitalisation
48
OUR PEOPLE
Our 24,000+ strong workforce
are based in 65 countries. The
breadth of our offering requires
our people to have a diverse
range of specialisms, from capital
markets to data, technology,
clearing, risk and beyond.
GLOBAL FOOTPRINT
OUR BUSINESS
We are leaders in data and analytics; capital formation
and trade execution; and clearing and risk management.
Our businesses are discussed in depth in our divisional
deep dives on pages 16-25.
London Stock Exchange Group plc
Annual Report 2022
02
LSEG at a glance
SUSTAINABLE OFFERING
LSEG is dedicated to enabling
sustainable economic growth.
Given our central role in capital
markets, our global footprint and
presence throughout the trade
lifecycle, we are uniquely
positioned to play a leading
role in this respect.
LSEG has a valuable combination
of capabilities and assets that
position us as a key partner
for customers to navigate
sustainability trends and related
reporting requirements. From
sustainable finance investment
data and analytical tools to
green fundraising on our
voluntary carbon market, we
are embedding these services
throughout our business.
2
1
3
1 Americas 40%
2 APAC 15%
3 EMEA 45%
Revenue by geography
1
1 Total income including recoveries
1 Americas 12%
2 EMEA 32%
3 APAC 56%
Employees by geography
2
1
3
STRATEGIC REPORT
Divisions Data & Analytics
High-value data, analytics, indices,
workflow solutions and data
management capabilities.
Capital Markets
Venues/platforms for access to
capital through issuance and
secondary market trading for
equities, fixed income, and
foreign exchange (FX).
Post Trade
Clearing, risk management,
capital optimisation and
regulatory reporting solutions.
Financial highlights
(excluding recoveries)
Revenue
£4,944m
Data & Analytics 67%
Revenue
£1,459m
Capital Markets 20%
Income
£991m
Post Trade 13%
Growth
1
+4.2%, and +5.3%
when excluding the impacts of
the Ukraine/Russia conflict
+9.8% +7.5%
(including NTI)
Customer profile A broad range of financial market participants, including banks, buy-side and sell-side trading desks,
hedge funds, asset owners and managers, corporates, brokers, academics and issuers.
Market positions — #1 real-time data business.
— A leading global index
and benchmark provider
(FTSE Russell).
— Leading provider for Know
Your Customer screening
though World-Check.
— Leading dealer-to-client
FX platform (FXall) and
leading global interbank
FX venue (Matching).
— Leading fixed income,
derivatives and ETF electronic
trading platform (Tradeweb).
— Leading global clearing house
with >90% global share of
cleared interest rate swap
notional outstanding.
1 Pro-forma growth assumes that the acquisition of Refinitiv took place on 1 January 2021 for the prior year comparator. Growth is on a constant
currency basis, excluding the impact of the deferred revenue accounting adjustment. Revenues and costs associated with the BETA divestment
have been classified as discontinued and are excluded from all periods.
THE TRADE LIFECYCLE
We are an integral
partner for our customers
across every stage of the
trade lifecycle, in multiple
asset classes.
03 London Stock Exchange Group plc
Annual Report 2022
LSEG at a glance continued
For more detail on
our business model –
refer to pages 36-39.
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London Stock Exchange Group plc
Annual Report 2022
Overview
LSEG has continued to perform
strongly, despite an uncertain
macroeconomic environment,
and is well positioned for further
growth. Total income excluding
recoveries was £7.4 billion, up
5.7%
1
on a constant currency
basis, and adjusted earnings
per share rose by 16.7%. Cash
generation remained strong in
2022. We have continued to
actively deploy capital for select
organic and inorganic investments
and began a 12-month, £750
million share buyback programme.
This has been funded, in large
part, from the proceeds of the
divestment of the BETA business,
which completed on 1 July 2022.
The Board is proposing a final
dividend of 75.3 pence per
share, representing a total
dividend of 107 pence per share,
a 12.6% increase.
We continue to execute
successfully on our multi-year
integration of the Refinitiv
business, which is proving
transformational for the Group.
We are committed to partnering
with our customers globally to
create valuable solutions. This
will remain a fundamental pillar
of our multi-year business strategy
to accelerate our growth and
increase scalability. The Board
is pleased with the delivery
against the stated financial targets
announced at the time of the
transaction, including the increase
of our five-year cost synergy
target to at least £400 million
per annum.
In December we were delighted
to announce a new long-term
strategic partnership with
Microsoft for the development of
next-generation data and analytics
and cloud infrastructure solutions.
This partnership will deliver a
step-change in services for
customers across the financial
markets value chain. A strong
signal of Microsoft’s commitment
to the partnership can also be
seen in their decision to take
a 4.2% equity stake in LSEG.
On behalf of the Board, I’m
pleased to welcome Scott Guthrie,
Microsoft’s Executive Vice
President, Cloud and AI Group
as a Non-Executive Director.
Governance
Our Group is built on a strong
heritage and the Board seeks
to operate to high governance
and ethical standards. Further
detail is available in the Board’s
governance report from page 88.
In October, William Vereker joined
the Board as a Non-Executive
Director bringing a strong track
record in the financial services
sector, including a number
of senior executive roles
at global investment banks.
His international experience in
developing senior relationships,
managing risk and organisational
change will benefit the Group as
we look to further capitalise on
the trends shaping our industry.
Jacques Aigrain stepped down
from the Board in April having
served nine years as a Non-
Executive Director. LSEG has
come a long way since Jacques
joined and I would like to thank
him for the valuable role he has
played in the Group’s success
both as a director and as Chair
of the Remuneration Committee.
I am also pleased by his ongoing
association with the Group,
having joined the Tradeweb
board in July 2022.
I am also pleased to confirm that
LSEG continues to meet the
recommendations on gender
and ethnic diversity contained
in both the Hampton-Alexander
Review and the Parker Review.
The Board seeks to visit one
international office per year to
engage with colleagues and
understand regional business
issues. The lifting of Covid-19
restrictions earlier in the year
enabled the Board to travel to
New York in June to meet with
colleagues and customers, which
was wonderful after two years
of limited in-person interaction.
Following the conclusion of a
formal tender process for its
Group audit, LSEG announced
in June that Deloitte LLP would
be selected to act as its new
auditor and that LSEG’s current
auditor, EY, would resign as
auditor of the Group following
completion of the audit for the
year ending 31 December 2023.
Don Robert
Chair
We continue to successfully
execute on our multi-year
integration of the Refinitiv
business, whichis proving
transformational for the Group.
04
Chair’s statement
1 Pro-forma, constant currency growth, excluding the impact of the deferred revenue
accounting adjustment. 2022 growth includes the impact of lost revenue as a result of the
Ukraine/Russia conflict.
STRATEGIC REPORT
Sustainability
We are taking a leadership role in
our own approach to sustainability
and we have set science-based
carbon emission reduction targets.
Our ambition is to be net zero
by 2040 and we have so far
achieved a cumulative 62%
reduction in LSEG’s Scope 1,
Scope 2 (market-based) and
Scope 3 fuel and energy-related
GHG emissions since 2019. It is
important that we lead by example
and LSEG became the first global
exchange group to publish its own
Climate Transition Plan, which
received the backing of 99% of
our shareholders in April 2022.
We support the evolution and
adoption of best practice
guidance for Climate Transition
Plans and will review and refine
our Plan over time.
LSEG has the right combination
of capabilities and assets that
position us as a key partner to
help our customers navigate
trends across the financial markets
value chain. We are seeing
growing demand for sustainable
finance investment data and
analytical tools, and we are
embedding these services
throughout our business.
LSEG has a massive ESG data
set which covers over 600 metrics
for over 15,000 companies,
going back more than 20 years.
This content helps our customers
identify and target sustainable
investment opportunities which
meet their needs. They can
also access performance
benchmarking and attribution
analysis of their portfolios
through our climate-themed
equity and fixed income indices
and related analytics.
Summary
LSEG has delivered another year
of strong growth. We are seeing
the real benefits of our acquisition
of Refinitiv and we see significant
opportunities ahead for long-term
sustainable growth.
On behalf of the Board, I would
like to thank all colleagues
for their dedication and
professionalism throughout the
year. I look forward to working
with the Board and the Executive
Committee to execute against our
strategic objectives and to build
on our new strategic partnership
with Microsoft.
Don Robert
Chair
14 March 2023
First global exchange group to set its own Climate Transition Plan
No.1
Total dividend for 2022
107p
2021: 95.0p
Growth in total dividend
12.6%
2021: 27%
We are committed to
working in partnership with
our customers globally to
create valuablesolutions.
London Stock Exchange Group plc
Annual Report 2022
05
Chair’s statement continued
More details can be found
on pages 50-59 and in our
separate Sustainability Report
www.lseg.com/investor-relations/
sustainability
London Stock Exchange Group plc
Annual Report 2022
Chief Executive
Officer’s statement
Introduction
2022 has been another turbulent
year in the markets. Countries
around the world are facing
uncertainty in the macro
environment, such as increased
inflation, rising interest rates
and recession risks, as well as
geopolitical turmoil including
the war in Ukraine.
Like many global organisations,
LSEG has worked to address
these challenges over the past
year. However, with highly
diversified capabilities across
the trade lifecycle, resilience is
built into our business model.
Many of our product offerings sit
deep within customer workflows
and we provide the valuable data
and services needed to help them
navigate uncertainty. As a result,
LSEG is well positioned in the
current climate.
How did LSEG perform in 2022?
In 2022, we delivered a strong
financial performance with
continued revenue growth across
our businesses. For example,
Capital Markets saw a 9.8%
rise in revenue, primarily driven
by the continued strong
performance of Tradeweb.
In our Post Trade Division, record
volumes in interest rate swaps
and further growth in RepoClear
resulted in a 7.5% increase. And
in Data & Analytics, the work we
have taken to get closer to our
customers is driving significantly
better retention as a result of
improved execution, strong
demand for our products and
new sales. We have also seen
continued acceleration in our
Annual Subscription Value growth
– up from 4.6% at the end of 2021
to 6.2% at year end, excluding the
impact of lost revenue due to the
Ukraine/Russia conflict.
Over 70% of our revenues are
recurring, stable and growing.
The remaining c.30% exposed to
market activity tends to benefit
from volatility in the markets.
We also continue to be highly
cash generative with strong
credit ratings.
Simply put, our strategy is
working. We are delivering against
our three strategic objectives –
integrating our business;
driving growth; and building an
efficient and scalable platform.
We continue to deliver on or
exceed all our financial targets
and we are making excellent
progress in realising the benefits
of the Refinitiv integration.
We supply business critical
solutions globally, to customers
that include almost every top
global bank and the vast majority
of the world’s top asset managers.
We have strong leadership
positions in the products and
services we offer across the
financial markets value chain.
And we are making it easier for
our customers to work with us
across different parts of our
business. For example, we have
simplified our offering in Data &
Analytics, distilling more than
240 individual products down
into nine customer solutions
centred on core industry themes.
We also worked with customers
to develop a valuable, new
solution for important bank capital
rules, known as the Fundamental
Review of the Trading Book
(FRTB), which will be implemented
over the next two years. These
rules create challenges for banks
looking to manage their capital
efficiently. To oversimplify,
with better quality data on the
positions in their trading books,
banks will have to hold less
capital against these positions.
We are able to offer the most
comprehensive range of data
including from Tradeweb,
Yield Book and SwapClear
and it is a key differentiator
for our customers.
David Schwimmer
Chief Executive Officer
Many of our product
offerings sit deep within
customer workflows and
we provide the valuable data
and services needed to help
them navigate uncertainty. As a
result, LSEG is well-positioned
in the current climate.
06
07
STRATEGIC REPORT
Our strong cash generation
enables us to continue to
make significant but targeted
investments. In the medium to
long term, these investments
will deliver a more scalable and
efficient business and enhance
our customer offering. In 2022,
we completed the acquisitions of
GDC, MayStreet and TORA within
our D&A division and Quantile in
our Post Trade division. We also
announced the acquisition of
Acadia, subject to regulatory
approvals. By combining these
additional capabilities with
our connectivity into, and
relationships with, market
participants all over the world,
we will create substantial value
for our customers.
And we see plenty more
opportunity ahead.
Can you provide more detail
on your strategic partnership
with Microsoft?
Our new long-term strategic
partnership with Microsoft is
a win-win-win: a win for our
customers, a win for Microsoft
and a win for LSEG.
It is a transformative partnership
for LSEG and will significantly
accelerate our strategy to be the
leading global financial markets
infrastructure and data provider.
We’re bringing together LSEG’s
leading data sets, analytics and
global customer base with
Microsoft’s trusted cloud services
and global reach to transform
workflow and the user experience
for our customers across the
financial markets value chain.
As always, we will retain our open
approach, making it even easier
for users to access our data
and combine it with their own,
driving multiple possibilities for
new products and creating
meaningful revenue growth
opportunities for both LSEG
and Microsoft over time.
At a high level, our plans comprise
four main elements:
— The migration of our data
platform to Microsoft Azure,
allowing much greater flexibility,
usability and scalability than
we have today.
— An enhanced version of LSEG
Workspace with seamless
Teams communication and
Microsoft 365 interoperability,
including built-in compliance
features for the first time.
— The development of new
analytics tools, combining
the best of our data and
analytics with Microsoft AI
and collaboration tools.
— A 10-year cloud deal
underpinning all our
work together.
We’ve also agreed to explore the
development of digital market
infrastructure based on cloud
technology, with a goal to
transform how market participants
interact with capital markets.
What are the strategic
opportunities and challenges
in the data economy?
As digital technology becomes
more integral to all sectors of the
economy, data is becoming
increasingly important as the
foundation of digital trade.
OECD research estimates that
rapidly growing cross-border
data transfers already contribute
$2.8 trillion to the global economy,
and further estimates show that
global data flows are expected
to grow to $11 trillion by 2025 –
greater than the value of the
world’s total trade in goods.
LSEG is at the heart of this
global paradigm shift towards
a data economy. There is growing
demand for data to inform
decision-making and fuel
innovation. This will also
support efforts to address issues
such as climate change and
financial crime.
Growth in total income excluding recoveries
1
5.7%
2021: 6.1%
1 Pro-forma, constant currency growth, excluding the impact of the deferred revenue
accounting adjustment. 2022 growth includes the impact of lost revenue as a result
of the Ukraine/Russia conflict.
Growth in adjusted earnings per share
16.7%
2021: 71.9%
For more information on our purpose
and strategy and business model,
see pages 30 to 36.
Our new long-term
strategic partnership with
Microsoft is a win-win-win:
a win for our customers,
a win for Microsoft and
a win for LSEG.
London Stock Exchange Group plc
Annual Report 2022
Chief Executive Officer’s statement continued
08
Unlocking the value of data flows
in the digital economy can drive
sustainable growth, empower
businesses and communities,
and facilitate solutions to
society’s greatest challenges.
While the data ecosystem that
underpins the digital economy is
inherently global, a fragmentation
in policy – whether that’s data
localisation requirements, national
data centre mandates, or
restrictions on the flow of data –
will slow down growth. It also risks
undermining both business and
broader society being able
to harness the benefits of
international data transfers.
Policymakers have an essential
role in unlocking this potential
and we are working with other
companies and governments to
advocate for better agreement
around the free flow of data.
We encourage governments and
regulators to contribute to this
agenda: pursuing digital economic
cooperation and promoting
international data transfers as a
strategic priority. Agreements
with provisions to ensure the
free flow of trusted data and to
assure standards for personal
data protection will demonstrate
the benefits of an open, global
digital economy and encourage
other jurisdictions to adopt a
similar way forward.
What are your priorities
for 2023?
My focus is to ensure LSEG
continues to deliver against our
strategic objectives, reinforcing
our position as a global markets
infrastructure and data provider.
Following the acquisition of
Refinitiv, we are shifting from a
period of integration to one of
transformation. Moving into
2023, we will start to see
meaningful benefits from the
investments we have been
making in the past two years.
This year we will continue to
build on the good progress we’ve
made rolling out Workspace,
giving customers a more flexible
and intuitive user experience.
We’ll also be launching our
replatformed FX venues,
providing our customers with
greater performance and
functionality, and supporting
product innovation. Furthermore,
the modernisation of our network
infrastructure will deliver a more
resilient experience for our
customers in 2023, as well as
further efficiencies for the Group.
2023 will also be an important
year in LSEG’s transformation as
we develop numerous capabilities
through our strategic partnership
with Microsoft. As ever, we will
continue to put our customers
first, and I look forward to
developing the new products
and services that will bring them
stronger capabilities and allow
them to succeed in a changing
and uncertain landscape.
Our people and culture are central
to our success. We have made
significant progress in embedding
an inclusive culture that values
a range of perspectives and
embraces diversity of every kind.
Over the year, we have also
supported colleagues facing
challenging circumstances, such
as in Ukraine and Sri Lanka and
our teams continue to show
remarkable resilience. On behalf
of the Executive Committee,
I would like to thank all our
people for their hard work and
commitment in delivering another
year of strong growth for LSEG.
David Schwimmer
Chief Executive Officer
14 March 2023
EXECUTIVE MANAGEMENT TEAM
Day-to-day management of the Group is led
by the CEO David Schwimmer, supported
by the Executive Committee.
The team meets regularly
to review a wide range of
business matters, including
financial performance, investment
and projects, corporate
culture, development and
implementation of strategy,
and setting and monitoring
of performance targets.
Profiles of the Executive team
are provided as at January 2023.
For further information on
David Schwimmer and
Anna Manz, who are also
members of the Board of
Directors, see our Board
of Directors overview
on pages 90 to 93.
Changes to the
Executive Committee
Andrea Remyn Stone
(Group Head, Data & Analytics)
left the Executive Committee
in June 2022.
Tim Jones (Chief People Officer)
left the Executive Committee
in January 2023 and was replaced
by Erica Bourne.
Chief Executive Officer’s statement continued
London Stock Exchange Group plc
Annual Report 2022
Top to bottom
David Schwimmer
Chief Executive Officer
Joined LSEG in 2018
Anna Manz
Chief Financial Officer
Joined LSEG in 2020
Balbir Bakhshi
Chief Risk Officer
Joined LSEG in 2021
Brings a deep commercial
understanding and knowledge of
risk management. Was previously
Group Head of Non-Financial Risk
Management at Deutsche Bank
and served on the Supervisory
Board of Deutsche Bank
Luxembourg S.A. as Chair
of its Risk Committee.
Top to bottom
Daniel Maguire
Group Head, Post Trade
& CEO, LCH Group
Joined LCH in 2008
Held a variety of senior roles
across LCH and LSEG,
with experience in risk and
default management,
product management
and regulatory strategy.
Anthony McCarthy
Chief Information Officer
Joined LSEG in 2017
Previously held various senior
positions at Deutsche Bank,
including Managing Director in
IT and Group CIO, and CIO for
Investment Banking Technology.
Murray Roos
Group Head, Capital Markets
Joined LSEG in 2020
Joined from Citigroup, where
he was Global Co-Head of
Equities and Securities Services.
Previously spent a decade at
Deutsche Bank, holding various
senior roles.
Top to bottom
Catherine Johnson
General Counsel
Joined LSEG in 1996
Manages an international team
of lawyers and compliance
professionals, advising the Board
and senior executives on key
legal and compliance issues and
strategic initiatives. She is also
Chair of FTSE International
Limited. Catherine qualified as a
lawyer at Herbert Smith in 1993.
Erica Bourne
Chief People Officer
Joined LSEG in January 2023
Leads the global People function,
responsible for attracting,
developing and retaining talent
for the Group’s global business.
Erica previously led the People
function at Burberry Group, prior
to which she held a number of
leadership and executive roles
across technology, consulting
and financial services.
Top to bottom
David Shalders
Chief Operating Officer
and Head of Integration
Joined LSEG in 2019
30 years’ experience in
integration, technology and
operations in the financial services
sector. Was previously Group
Operations and Technology
Director at Willis Towers Watson,
having led the integration
of Willis and Towers Watson,
and spent 19 years at RBS in a
number of senior operations
and technology roles.
Brigitte Trafford
Chief Corporate Affairs
and Marketing Officer
Joined LSEG in 2020
Leads the Group’s
communications, government
relations, regulatory strategy,
sustainability and marketing
functions. 25 years’ corporate
affairs experience at Virgin
Media, Lloyds Banking Group,
ICAP, Dow Jones and ITV plc.
Chief Executive Officer’s statement continued
STRATEGIC REPORT
09 London Stock Exchange Group plc
Annual Report 2022
A compelling
investment story
BUSINESS-CRITICAL SERVICES
WITH STRONG COMPETITIVE POSITIONS
DIFFERENTIATED CUSTOMER
PROPOSITION
EXPOSED TO MULTIPLE
GROWTH DRIVERS
Data & Analytics
— A global leader in indices, data and analytics.
— #1 in real-time financial data.
— Open approach that allows customers to combine our data
with their own.
— Extensively used in client processes and decision-making.
Capital Markets
— Tradeweb a leader in rates and credit trading, expanding into
new markets.
— LSE a leading global exchange for primary equity issuance and
secondary trading.
— FX venues facilitating $0.5 trillion of foreign exchange trades daily.
Post Trade
— A leading global clearing house, systemically critical infrastructure.
— 90% global share of cleared interest rate swap notional outstanding.
London Stock Exchange Group plc
Annual Report 2022
10
The impact of technology
The positive impact of technology on the value of data and the range
of use cases, through e.g. cloud services, AI and advanced analytics.
Evolving customer trends
Including indexation, quant strategies, algorithmic trading and intraday
risk management, and the growth in electronic and borderless trading.
New asset classes
Including ESG, digital assets and private markets.
Regulation
Increasing demand for clearing, balance sheet efficiency and
counterparty due diligence.
For more information, see “Market trends & our response”
on page 26.
A trusted, strategic partner
To global financial institutions, with scale in both data and financial
markets infrastructure.
Across the whole trade lifecycle
Combining data, analytics, trading and clearing across multiple
asset classes to develop new and innovative insights and services.
Open access model
We operate an open model of access to our products and services,
across data, trade execution and clearing, that deliver choice and
maximise value for our customers.
ATTRACTIVE ALL-WEATHER
ECONOMIC MODEL
STRONG LONG-TERM
FINANCIAL RECORD
ACTIVE CAPITAL ALLOCATION
SUPPORTING STRATEGIC EXECUTION
Strong cash generation
Growth investments and shareholder returns funded from strong
cash generation.
Organic capex investment
Focused on Refinitiv integration and the transformation of key platforms
in Investment Solutions and Capital Markets for future growth.
M&A strategy
Brings new services and capabilities to enhance the offer to
our customers.
Excess capital returned to shareholders
£750 million share buyback is ongoing.
For more information, see our CFO review on page 40.
STRATEGIC REPORT
11 London Stock Exchange Group plc
Annual Report 2022
A compelling investment story continued
Recurring revenues
Subscription-based revenues accounting for 73% of Group income.
Transactional revenues
Focused in areas of strong market growth (e.g. Tradeweb) or leading
market positions (e.g. LCH).
Diversification
Across products, customers and regions, with a scale presence in all
major asset classes and customers in 190 countries.
Significant revenue and cost synergies
From Refinitiv acquisition, further supporting strong margins and
cash generation.
Subscription-based revenues
73%
Over the last 20 years
AEPS CAGR
1
+14.6%
Dividend CAGR
1
+17.4%
Total shareholder return CAGR
1
+20.2%
1 Compound Annual Growth Rate.
2022 FINANCIAL KPIS
We are focused on delivering
consistently strong financial
performance and achieving
the targets we have set.
These core financial KPIs
demonstrate the value our
combined group is delivering
for both our customers and
shareholders and they show
that our strategy is working.
Total income
growth
1
Definition
Income growth, independent
of FX movements.
Why this is important for LSEG
Income growth is a key measure
of our success since we operate
in growing markets and aim to
hold or grow market share. We
guided to a 5-7% CAGR for total
income (excluding recoveries)
over the period 2020 to 2023.
In order to give the best indication
of underlying performance here,
we have removed the impact of
lost revenue in 2022 due to the
Ukraine/Russia conflict.
Analysis
On a constant currency basis,
we delivered total income
(excluding recoveries) growth
of 6.6%
1
in 2022.
We delivered strong income
growth in 2022. We’ve made
successful progress on the
integration of Refinitiv, improving
execution and performance. We
saw record volumes at SwapClear,
supported by market volatility and
we continue to position ourselves
in structurally growing markets to
benefit from trends such as the
electronification of fixed income
trading through Tradeweb.
Total income growth excl. U/R
1
+6.6%
2021: +6.1%
2022
2021
6.6%
6.1%
Link to strategic objectives
Total income growth aligns to our
Growth objective, to accelerate
growth within and across
divisions. In 2022, we exceeded
our target for this GSO.
Annualised
Subscription
Value growth
2
Definition
A point in time measure of
our recurring book of contracts
vs 12 months ago.
Why this is important for LSEG
As a group, >70% of our revenues
are now high quality subscription-
based revenues with a good
degree of visibility. Through
ASV, we can measure the
year-over-year growth of that
recurring book of business at any
given point in time. ASV should
act as a leading indicator for
subscription revenue growth and
has three key drivers: retention,
new sales and price increases.
Analysis
We’ve delivered consistent
acceleration in our ASV over the
past two years. Our year-end ASV
(excluding U/R) of 6.2% represents
a 320bps increase vs the ASV at
the end of Q1 2021. In that time
we have kept our annual price
increase consistent, so we’ve
driven the acceleration through
better retention and sales.
Increasingly, we are now a critical
strategic partner to our customers.
By establishing a clearer view of
their workflows, we have utilised
the breadth of our combined
offering to embed wider-reaching,
more tailored solutions that
enhance the benefit we can offer.
ASV growth excl. U/R
2
+6.2%
2021: +4.6%
2022
2021
6.2%
4.6%
Link to strategic objectives
ASV growth indicates the
progress we are making in
growing our subscription
revenues. This therefore aligns
to our Growth objective.
London Stock Exchange Group plc
Annual Report 2022
12
Key performance
indicators
1 Pro-forma constant currency growth, excluding recoveries and the impact of Ukraine/Russia
and the deferred revenue accounting adjustment.
2 Excluding the impact of the Ukraine/Russia conflict.
3 For more information on the criteria that constitute non-underlying items, see page 107.
These KPIs align to our Group Strategic
Objectives (GSOs) which help determine
Executive Director remuneration and
performance-related pay for all employees.
Further detail on the GSO performance
assessment can be found in our Directors’
Remuneration Report on pages 113 to 141.
Adjusted EBITDA
margin
Definition
Underlying
3
EBITDA as a
proportion of total income
(excluding recoveries).
Why this is important for LSEG
We’re focused on building a more
efficient, more scalable business
and increasing our EBITDA margin
is evidence of our progress.
We remain committed to our
target of delivering a 50%
underlying EBITDA margin on
an exit rate basis by the end of
2023. Including the impact of
M&A and the strategic partnership
with Microsoft, we expect to
report an EBITDA margin of
around 48% in 2023.
Analysis
Our adjusted EBITDA margin of
47.8% in 2022 is flat year-over-
year but represents underlying
expansion of 110bps. In 2022,
this was primarily offset by lost
revenue due to the Ukraine/
Russia conflict (-50bps) and
M&A (-30bps).
By modernising our technology
infrastructure, we are building a
more agile and efficient business
for the long term. We also showed
disciplined cost management in
2022 at a time of extraordinary
global inflation. We are optimising
processes and utilising our global
footprint to leverage talent in
lower-cost locations.
Adjusted EBITDA margin
47.8%
2021: 47.8%
2022
2021
47.8%
47.8%
Link to strategic objectives
Expansion of our EBITDA margin
aligns to both our Growth and
Efficiency objectives. In 2022,
we exceeded our target for both
of these GSOs.
Adjusted earnings
per share
Definition
Earnings per share,
adjusted to remove any
non-underlying items.
3
Why this is important for LSEG
A key financial metric that is
both central to our valuation
and a significant element of
employees’ performance-related
remuneration. Growth in our
AEPS reflects our degree of
success in driving a strong top line
performance, as well as managing
costs including tax and interest,
and capital allocation.
Analysis
Our adjusted earnings per share
is a key indicator of whether we
are adding value for shareholders
and we delivered 16.7% growth
in 2022. This growth in our AEPS
primarily reflects our success in
both accelerating income growth
and effectively managing our
expenses in the year.
Higher depreciation and
amortisation – arising from
investments to achieve synergies
and drive future growth – was
offset by lower net finance
expense, and there was a small
decrease in the ordinary shares
outstanding due to the ongoing
share buyback programme.
Adjusted earnings per share
317.8p
2021: 272.4p
2022
2021
317.8p
272.4p
Link to strategic objectives
Earnings per share growth
aligns to both our Growth and
Efficiency strategic objectives.
Runrate revenue
synergies
Definition
Annual incremental revenue
delivered as a result of synergies
from the Refinitiv integration.
Why this is important for LSEG
As a seamlessly connected
financial markets data and
infrastructure provider, we are
able to build highly innovative
solutions for our customers,
delivering incremental revenue for
the Group. Our delivery of these
synergies helps demonstrate the
value we’re creating from the
acquisition of Refinitiv. In March
2023, we raised our target from
£225 million to £350-400 million
of runrate revenue synergies by
the end of 2025. We now expect
to incur total costs of £550-600
million to achieve these synergies.
Analysis
By the end of 2022, we had
delivered runrate revenue
synergies of £68 million,
exceeding our target range
for the year of £40-60 million.
We are delivering our revenue
synergies in three categories.
We’re cross-selling Refinitiv
data products to new customer
segments, such as the underlying
pricing data behind FTSE Russell
indices. We’re enhancing existing
products, for example by giving
Workspace customers access to
Yield Book fixed income analytics.
And we’re building new products.
In 2022 we launched 70 new
synergy-related products.
Runrate revenue synergies
£68m
2021: £15m
2022
2021
£68m
£15m
Link to strategic objectives
Revenue synergies contribute to
income growth, so achievement
against this KPI aligns to our
Growth objective.
Runrate cost
synergies
Definition
Annual incremental cost savings
delivered as a result of synergies
from the Refinitiv integration.
Why this is important for LSEG
By successfully delivering against
our cost synergy programme,
we are able to demonstrate
that the integration of Refinitiv
has helped us build a more
streamlined and efficient LSEG.
In 2022, we increased our target
from £350 million to at least
£400 million of runrate cost
synergies by the end of 2025.
Analysis
We had delivered £297 million
of runrate cost synergies by the
end of 2022, exceeding our initial
target for the year of £220 million.
We are delivering these cost
savings by consolidating our
property footprint, closing data
centres, renegotiating agreements
with strategic suppliers and
deduplicating roles where
appropriate. As of the end of
2022, our property consolidation
and data centre decommissioning
programmes were >90% complete
and >85% complete respectively.
The cost to achieve these
synergies is in line with our
initial plan.
Runrate cost synergies
£297m
2021: £151m
2022
2021
£297m
£151m
Link to strategic objectives
Cost synergies help us to manage
our expenses, so achievement
against this KPI aligns to our
Efficiency objective.
13 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Key performance indicators continued
London Stock Exchange Group plc
Annual Report 2022
14
2022 NON-FINANCIAL KPIS
At LSEG, we’re committed to
creating an environment where
diverse talent can thrive, and to
driving the growth of a green
and sustainable economy.
These five core non-financial
KPIs measure our progress,
but also highlight the areas
where we can still improve.
Gender diversity
in leadership
Definition
The proportion of female
representation in senior
leadership roles.
Why this is important for LSEG
We strongly believe in promoting
diverse gender representation
across our organisation. In
December, we were delighted
to achieve our goal of ensuring
40% of senior leadership roles
were filled by women by the
end of 2022 and we have
created a number of policies
and programmes to ensure we
continue to build on this progress.
More information on page 61.
Analysis
In 2022, we were proud to deliver
a 7% year-over-year increase
in the proportion of senior
leadership roles filled by women.
We have now expanded the
scope of our gender goals
to the next level of leadership,
committing to the ambition that
40% of Group Director roles
will be held by women by the
end of 2027. This represents our
continued commitment to building
diverse pipelines of talent across
the organisation.
Female rep at senior leadership
40%
2021: 33%
2022
2021
40%
33%
Link to strategic objectives
Ensuring the diversity of our
people aligns to our Culture
objective: to foster a diverse,
inclusive culture and to
connect to create opportunity
and deliver excellence.
Engagement index
Definition
Our engagement index reflects
employee satisfaction and the
likelihood that our staff would
recommend LSEG as a great
place to work.
Why this is important for LSEG
We recognise the importance of
establishing a diverse, inclusive
workplace where opinions can
be openly shared, contributions
recognised and individual and
team achievements celebrated.
Analysis
Our second Group-wide
engagement survey indicated that
overall engagement levels had
improved to 75%, with sentiment
increasing for both satisfaction
and advocacy. 86% of colleagues
completed the survey.
Achieving this level of
engagement at a time when
many of our people are having
to transition to new ways of
working indicates that we are
making great progress on our
cultural transformation journey.
LSEG Engage engagement index
75%
2021: 73%
2022
2021
75%
73%
Link to strategic objectives
The employee engagement
index aligns to our Culture
objective: to foster a diverse,
inclusive culture and to connect
to create opportunity and deliver
excellence. In 2022, we exceeded
our target for this GSO.
Key performance indicators continued
London Stock Exchange Group plc
Annual Report 2022
14
These KPIs align to our Group Strategic
Objectives (GSOs) which help determine
Executive Director remuneration and
performance-related pay for all employees.
Further detail on the GSO performance
assessment can be found in our Directors’
Remuneration Report on pages 113 to 141.
Ethnic diversity
in leadership
Definition
The proportion of ethnically
diverse representation in
senior leadership roles.
Why this is important for LSEG
We are committed to building a
richly diverse team of leaders,
recognising exceptional talent
from a wide range of different
backgrounds. We have pledged
that 20% of our senior leadership
roles will be filled by those from
underrepresented ethnic groups
by the end of 2023, rising to 25%
by 2025. Going forward, we will
continue to evolve our goals in
line with our ongoing commitment
to build diverse pipelines of talent
across the organisation.
Analysis
We remain committed to ensuring
we have diverse representation at
senior leadership, acknowledging
that there is more we need to do
in this area. In 2022, we expanded
our ethnicity targets to Group
Director level, committing that
25% of these roles will be held
by those from underrepresented
ethnic groups by the end of
2027. We also piloted initiatives
including ‘Illuminate’, designed to
support Black and Latinx future
leaders at critical milestones in
their career.
Minority rep at senior leadership
15%
2021: 16%
2022
2021
15%
16%
Link to strategic objectives
Ensuring the diversity of our
people aligns to our Culture
objective: to foster a diverse,
inclusive culture and to
connect to create opportunity
and deliver excellence.
Sustainable issuers
Definition
The total number of issuers
across the Green Economy Mark,
the Sustainable Bond Market
and the Voluntary Carbon Market.
Why this is important for LSEG
Stimulating the green economy is
central to our purpose. We can
measure the progress we are
making here by tracking the
overall level of issuer engagement
in sustainable finance across the
London Stock Exchange. Our goal
is to grow the number of issuers
year-over-year.
Analysis
The total number of issuers was
flat year-over-year, but well ahead
of the 2020 figure. During 2022,
we aligned the AIM and Main
Market eligibility requirements
for the Green Economy Mark,
which meant fewer AIM
companies were eligible for
inclusion than previously.
Excluding this adjustment, there
was good underlying growth.
We launched the Voluntary
Carbon Market, attracting our
first issuer, and the number of
Sustainable Bond Market issuers
showed continued growth.
Number of sustainable issuers
217
2021: 217
2022
2021
217
217
Link to strategic objectives
This KPI aligns to our Sustainability
objective: to establish LSEG as a
strategic enabler of sustainable
economic growth. We met our
target for this GSO in 2022.
Carbon emissions
Definition
The change in the amount of
carbon emissions we produce as
a direct result of group activities,
relative to our 2019 baseline.
Why this is important for LSEG
We are a member of the
United Nations Climate Change
‘Race to Zero’ and we have set
science-based targets to reduce
our carbon emissions with an
ambition of reaching net zero
by 2040. We aim to halve our
operational emissions by 2030
from a 2019 baseline.
Analysis
This metric tracks the change in
our carbon emissions (scope 1,
scope 2 (market based) and
selected scope 3 (fuel and
energy-related activities (FERA))
vs a 2019 baseline. Like many
companies, we saw a steep
reduction in our carbon emissions
in 2020 and 2021, driven in large
part by lockdowns and travel
restrictions implemented as a
result of the Covid-19 pandemic.
As we emerge from the pandemic
and as the Group continues to
grow, we will stay focused on
achieving our long-term goals.
Reduction of scope 1, 2, 3 (FERA)
1
-62%
2021:-77%
2022
2021
-62%
-77%
Link to strategic objectives
The reduction of our carbon
emissions aligns to our
Sustainability objective: to
establish LSEG as a strategic
enabler of sustainable economic
growth. We met our target for
this GSO in 2022.
15 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Key performance indicators continued
1 Reduction of scope 1, scope 2 (market based) and scope 3 (FERA) emissions vs a 2019 baseline.
London Stock Exchange Group plc
Annual Report 2022
16
Data & Analytics
2
3
4
5
1
1 Trading & Banking £1,612m 33%
2 Enterprise Data Solutions £1,307m 26%
3 Investment Solutions £1,325m 27%
4 Wealth Solutions £275m 6%
5 Customer & Third-Party Risk Solutions £425m 8%
Revenue split
16
David Schwimmer
Group CEO, Interim Group Head, Data & Analytics
Data & Analytics has delivered a strong
and broad-based performance in 2022.
In particular, we have now achieved four
consecutive quarters of underlying growth
in our Trading & Banking business, following
a number of years of decline. Across Data &
Analytics, we’re continuing to invest in our
capabilities to enhance our offering and
we’re really excited about the momentum
we’re building.
Recurring revenue
97%
Transactional revenue
3%
In July 2022, David Schwimmer
took the role of Interim Head,
Data & Analytics (D&A) with Phil
Cotter taking the position of
Interim Head of Product Solutions
for D&A. The process to appoint
a new permanent Head of D&A
is ongoing and we expect to
confirm this appointment in 2023.
Ron Lefferts continues to lead the
Sales & Account Management
function across the Group.
The division is split into five
areas, each addressing different
customer needs.
Trading & Banking
Providing data, analytics and
workflow solutions across trading
and investment banking lifecycles,
including content and pricing,
productivity tools, trade execution,
and post-trade management.
Structural market trends
driving growth:
— Electronification and
workflow automation
— Increasing reliance on data,
analytics and technology
Performance:
+0.2% (2.3% excluding the impact
of the Ukraine/Russia conflict)
with delivery of four consecutive
quarters of underlying growth this
year. By partnering more closely
with our customers and improving
execution in a number of areas,
we have delivered a significant
improvement in product retention,
particularly within Trading.
Enterprise Data Solutions
Serving the entire spectrum
of data needs across asset
classes, latencies and delivery
mechanisms including real-time
data and news, reference and
legal entity data.
Structural market trends
driving growth:
— Regulation
— Increasing reliance on
technology and data
— Automation
— High speed trading &
regression analysis
— Algorithmic trading
Performance:
+6.1% driven by strong demand for
the quality and depth of our data
and our market-leading real-time
data distribution, with retention at
record highs. Growth in Enterprise
Data is supported by the ongoing
trend toward machine-readable
data to drive analytics and support
decision-making.
Investment Solutions
Delivering a range of benchmarks,
analytics and data solutions, that
serve customers in all stages
of the investment process,
supporting consistency and
accuracy in investment strategy
and asset allocation decisions.
Structural market trends
driving growth:
— Sustainability & ESG investing
— Growth in passive investing
— Growing sophistication in
fixed income indexing
— Multi-factor investing
OUR PART IN THE TRADE LIFECYCLE
We provide customers with a broad range
of high-value data and analytics services,
including investment solutions and indices,
trading workflow, wealth advisory and
investment banking solutions and risk
intelligence capabilities. The quality, depth
and integrity of our data gives our customers
the confidence to make critical decisions,
create leading investment and trading
products, and drive automation and
efficiencies across their operations.
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17 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Data & Analytics continued
Performance:
+6.2% driven by Benchmarks &
indices subscription revenues
continuing to grow well,
supported by strong inflows in
asset based revenues, partially
offset by falling equity markets.
Wealth Solutions
A suite of solutions designed
to facilitate wealth manager
workflows that enable advisers to
make better-informed decisions,
undertake timely communications
and access relevant insights.
Structural market trends
driving growth:
— Digitalisation
— Growth in mass-market
wealth management demand
Performance:
+3.0% driven by increasing
demand for our Wealth data feeds
in the Digital Solutions business
with growth across all core
wealth management data sets.
Customer & Third-Party
Risk Solutions
Providing a suite of risk solutions
that help regulated businesses
and corporate organisations
conduct due diligence, meet
Know Your Customer (KYC)
commitments, onboard customers
and combat financial crime.
Structural market trends
driving growth:
— Digitalisation
— Regulation
— Rising focus on reputational risk
— ESG
— Digital currency growth
Performance:
+9.5% with World-Check (our
KYC offering) continuing to
perform well, reflecting the
benefits of investment in product
functionality and high demand
this year. This was partially offset
by lower transaction volumes
and a subdued IPO market.
STRATEGIC REPORT
London Stock Exchange Group plc
Annual Report 2022
Data & Analytics continued
HIGHLIGHTS
ASV growth acceleration
Annualised Subscription Value
(ASV) is our forward-looking KPI
which shows the year-on-year
growth in the annualised value of
subscription contracts. This has
shown notable acceleration since
our acquisition of Refinitiv, up 320
basis points (excluding the impact
of the Ukraine/Russia conflict)
since Q1 2021. Year-on-year
growth in this metric is driven
by three factors: 1) new sales,
2) product retention and
3) annual price reviews.
Since the Refinitiv acquisition
through to 2022, we have kept
the magnitude of our price
reviews relatively consistent.
The acceleration in ASV we
have seen is coming from a
combination of new sales and
stronger customer retention
through a focus on solution
selling and a vastly improved
understanding of how we can add
value to our customers’ workflows.
Workspace
We’ve made great progress
on the multi-year rollout of
Workspace, our next-generation
data, analytics and workflow
delivery solution, with over 50%
of the rollout complete and all
variants now live or in beta testing.
Workspace has been built with
our customer groups in mind, with
variants aimed at our Trading &
Banking, Wealth and Investment
Solutions customers.
Workspace allows customers to
interact with our content and tools
in a flexible and open way, with
lighter processing requirements
than the predecessor platform,
Eikon. Workspace is delivered
across desktop, web, and mobile
environments, and has been
designed to provide a
customisable and intelligent
user experience. In addition,
Workspace offers an integrated
Python scripting environment for
developers to build their own
analytics and tools within our
environment. The Workspace
rollout to date has seen positive
customer feedback and improved
customer engagement scores.
Acquisitions in Data & Analytics
In the year, we closed three
transactions within Data &
Analytics, enhancing our offering
and adding capability:
TORA
A leading cloud-based technology
provider of multi-asset class
order & execution management
solutions across global markets.
The addition of TORA gives us
critical point-of-trade presence
with buy-side customers, allowing
us to increase traction with this
key market segment.
MayStreet
A high-quality low latency
technology and market data
provider. This acquisition
broadens and complements our
real-time feeds and historical
market data value proposition,
particularly for front office
customers, who use these
solutions to support research
and strategy development
and to power electronic
trading applications.
Global Data Consortium (GDC)
A global provider of identity
verification data to support
clients with Know Your Customer
(KYC) requirements. This addition
to our Customer & Third-Party
Risk Solutions business builds
strategic capability aligned to our
vision of becoming a market-
leading global Digital Identity
and Fraud solutions provider.
In the year, we divested our
BETA, Maxit and Digital Investor
businesses. These businesses
provide back-office processing
solutions to the wealth
management industry. The
divestment allowed for a more
streamlined Wealth business
focused on high growth areas
and our core capabilities. Upon
divestment, we announced a
long-term strategic partnership
with the acquirers for the provision
of data, content and tools.
London Stock Exchange Group plc
Annual Report 2022
18
STRATEGIC REPORT
Data & Analytics continued
19 London Stock Exchange Group plc
Annual Report 2022
HIGHLIGHTS CONTINUED
Our strategic partnership
with Microsoft
In December, we announced a
new long-term strategic
partnership with Microsoft to
architect our data infrastructure
using the Microsoft Cloud, and to
jointly develop new products and
services in the data and analytics
space. The partnership will build
on the good progress we have
made on the integration of
Refinitiv and enhance our position
as a world-leading financial
markets infrastructure and
data provider.
The deal significantly advances
our strategy of building an
efficient and scalable platform
for Data & Analytics to deliver
next-generation services for a
range of customers across the
financial markets value chain
through improved workflow
and greater flexibility.
Data platform in the cloud
Working with Microsoft’s Azure,
we will accelerate our cloud
migration strategy, creating
cloud-based data architecture that
consolidates our data sets onto
one, flexible infrastructure. This
will be simple, responsive and
efficient, and built with security,
privacy and compliance. LSEG
customers will be able to access
data faster when and wherever
they need it — enabling resilience
and adaptability as capital markets
continue to evolve.
Additionally, data scientists and
engineers will be able to utilise
our data and analytics services
on our infrastructure, or leverage
our open financial data ecosystem
by integrating their own data to
build custom solutions.
LSEG Workspace to use
Teams and Microsoft 365 to
transform user experience
for finance professionals
Alongside Microsoft, we plan a
step-change in the advancement
of Workspace. Together with
Microsoft, we will create an
all-in-one data, analytics,
workflow, and collaboration
solution, specifically designed to
help finance and investment
professionals improve
communications and productivity
while maintaining regulatory
compliance. It will be a connected,
intuitive experience with a single,
simple-to-use interface that
helps users:
— For the first time, collaborate
with other LSEG customers
inside and outside of their
organisations, using Teams to
connect, chat, call, and meet
with built-in compliance,
security, and privacy.
— Create financial models,
run data analysis, and design
graphs using LSEG content
delivered in Excel.
— Work seamlessly between
LSEG Workspace, Teams
and Microsoft 365 tools to
deliver financial presentations
and reports.
New cloud analytics
and modelling services
With Microsoft, we will use Azure
Machine Learning and our own
advanced analytics and modelling
capabilities to co-develop a new
suite of solutions. Businesses that
rely on analytics will be able
to scale without the need for
complicated processes and
systems that often require
extra servers, hardware, and
employee resources.
On the modelling side,
development will focus on
model construction, validation,
diagnostics and deployment,
helping banking and investment
institutions avoid the labour-
intensive and expensive
process of creating models
from the ground up.
Cloud infrastructure built
on Microsoft Azure
We have entered into a 10-year
commercial agreement with
Microsoft to migrate our
data platform and other key
technology infrastructure into
the Microsoft Cloud.
This infrastructure plan will be
the foundation for all product
development programmes and
enable us to build and run
scalable applications to achieve
faster speed to market and
greater customer reach. At the
same time, it will allow us to align
costs more directly to revenue
streams, reduce operational
complexity through the
consolidation of multiple legacy
technologies, and further
strengthen resilience and security.
Microsoft investment
and Board representation
Microsoft have purchased
a 4.2% equity stake in LSEG,
underscoring its commitment to
the strategic partnership. Scott
Guthrie, Microsoft’s Executive
Vice President, Cloud and
AI Group, joined our Board
as a Non-Executive Director
in January 2023. For more
information, please refer to the
Report of the Nomination
Committee on page 102.
London Stock Exchange Group plc
Annual Report 2022
20
Revenue synergies
As a result of the Refinitiv
acquisition, we announced we
would deliver £225 million of
run-rate revenue synergies by the
end of 2025. In March 2023, we
subsequently raised this target
to £350-£400 million. Bringing
together Refinitiv’s market-leading
data content, with its notable
depth and breadth of coverage,
and LSEG’s leading brands
provides the opportunity to launch
innovative solutions, enhance
existing products and cross-sell
to our existing client base. We
have delivered £68m in runrate
revenue synergies to date.
Two of the key areas of our
synergy delivery to date are:
Creating new products
Refinitiv’s extensive data offering
is enabling the build out of new
FTSE Russell indices. For
example, we launched the
following index series this year:
— Russell Fixed Income Index –
our complementary series to
the flagship Russell US equity
indices. The new offering is
designed to offer our customers
a more precise asset allocation
methodology to track the
domestic US corporate
bond market.
— FTSE JPX Net Zero Japan –
in partnership with JPX (Japan
Exchange Group). The series is
aimed at Japanese investors
seeking to mitigate climate
risks, capture climate
opportunities from the
green economy and ensure
alignment with Net Zero by
2050 in their portfolios.
Another area of product
development has been within
Yield Book, our fixed income
analytics platform. Using Refinitiv
data we have broadened our
Yield Book securitised offering
to include collaterised loan
obligations (CLOs), a major asset
class expansion within fixed
income, of great relevance and
interest to the global buy and
sell-side communities. A CLO is a
security investors can purchase,
backed by a pool of low-grade
corporate loans. Through the
enhancement of Yield Book’s
offering, customers can now
access CLO data, cash flows,
analytics and credit models within
Yield Book and integrate their
CLO analysis into their wider
fixed income portfolio analysis.
Cross-selling and
distribution opportunities:
The combination of our two
organisations has unlocked
new customer segments and
enhanced product opportunities.
Here are a few examples of
how these opportunities have
been realised:
— FTSE Russell customers
are interested in accessing
the underlying data which
underpins the indices which
they already subscribe to.
We can now provide the index
alongside the underlying
constituent data so customers
can now track the benchmark
and simultaneously perform
analysis on the data to make
investment decisions. We
continue to enhance our data
through the addition of new
attributes to existing data
sets and invest in new data
sets to broaden and deepen
the offering.
— Yield Book, LSEG’s fixed
income offering, has been
embedded into Workspace,
Refinitiv’s next-generation
workflow solution. Now our
customers can access a single
source solution for their fixed
income needs alongside
other asset classes. Expanding
Workspace’s coverage in
fixed income also improves
its usability for our customers’
back-office communities with its
expanded trade reconciliation
and reporting capabilities.
— In the Sustainable Investing
space, the FTSE Russell Green
Revenues data set is now
available via the Refinitiv
Data Platform and Datastream.
By making this data set
available through Refinitiv
distribution channels, it is easily
discoverable for new users
in a high-growth segment
of the market. The data enables
our customers to model
portfolio and company-level
analysis to understand climate
transition risks and identify
investment opportunities in
the green economy.
— Refinitiv’s global presence
has opened up opportunities
to leverage its salesforce
to introduce FTSE Russell
products into new customer
and geographical segments.
We have seen penetration of
FTSE Russell products in the
wealth management segment,
including increased flows within
regions such as the Middle East
and South America, which were
limited historically.
Revenue synergies target
£350-
£400m
Runrate delivered to date
£68m
London Stock Exchange Group plc
Annual Report 2022
20
Data & Analytics continued
STRATEGIC REPORT
21 London Stock Exchange Group plc
Annual Report 2022
Data & Analytics continued
Phil Cotter
Interim Head of Product Solutions, Data & Analytics
We’re building a more agile, scalable and
efficient Data & Analytics offering to the
benefit of our customers. We’re broadening the
cloud distribution of our services, meeting our
customers where they want to be, and we’re
providing more data sets, faster data processing
and greater flexibility of analytics.
London Stock Exchange Group plc
Annual Report 2022
22
Murray Roos
Group Head, Capital Markets
It was a strong year for Capital Markets
amidst a volatile market backdrop. Through
our multi-asset class offering, we’re positioning
ourselves to maximise the benefit from
macroeconomic and structural market growth
trends. We’re also continuing to harness
the power of our combined Group to create
innovative solutions that deliver real benefits
to our customers.
Capital Markets
2
3
1
1 Equities £248m 17%
2 FX £258m 18%
3 Fixed Income, Derivatives & Other £953m 65%
Revenue split
22
Recurring revenue
31%
Transactional revenue
69%
The division is split into three
areas by asset class:
Equities
Capital raising and trading venues
for equities — London Stock
Exchange and Turquoise
Structural market trends
driving growth:
— Globalisation
— Electronic trading
Performance:
+3.2% — increasing secondary
market activity driven by market
volatility, but offset by a lower
average yield. Subdued issuance
activity due to the challenging
primary market conditions for
customers this year.
FX
Providing electronic trading,
workflow and data to the
institutional foreign exchange
community through FXall and
FX Matching
Structural market trends
driving growth:
— Access to liquidity
— Cross-border trading and
business globalisation
Performance:
+4.2% with FXall continuing
to grow strongly as we replatform
Matching, our dealer-to-dealer
venue, modernising our
FX technology to secure
future growth
Fixed Income,
Derivatives & Other
Electronic marketplaces for rates,
credit, equities and money
markets products, built and
operated through Tradeweb
Structural market trends
driving growth:
— Electronification of fixed
income markets
Performance:
+13.4% — Tradeweb continues to
deliver double-digit revenue
growth across rates, credit and
equity asset classes, driven by
product innovation and increasing
market share in US Treasuries
and Cash Credit.
We offer our customers extensive access to
capital markets and liquidity across multiple
asset classes. We operate a broad range of
international equity, fixed income, exchange-
traded funds/exchange-traded products and
foreign exchange markets. Our Group is home
to several capital formation and execution
venues: the London Stock Exchange, AIM,
Turquoise, FXall, Matching and Tradeweb.
OUR PART IN THE TRADE LIFECYCLE
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Annual Report 2022
STRATEGIC REPORT
HIGHLIGHTS
We announced the development
of a new fully cleared NDF
(non-deliverable forwards)
Matching venue in Singapore
supported by the Monetary
Authority of Singapore. The
venue will be a key addition to the
FX ecosystem and will play an
important role in meeting Asian
market players’ growing FX
needs. This initiative, launching in
2023, will be the first FX venue
to be delivered on LSEG’s
proprietary trading technology.
In the emerging markets
bonds space, Tradeweb and
FXall are collaborating
to develop a workflow solution to
allow emerging market products
to be traded more efficiently.
Customers face currency and
price risk when trading, so the
seamless linking of workflow
allows for the ability to carry
out both legs of the trade
simultaneously — the purchase
of the bond and the currency
conversion. The more efficient,
versatile workflow ultimately
reduces execution risk for
the customer.
23 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Capital Markets continued
Voluntary Carbon
Market launched
We launched the London Stock
Exchange’s Voluntary Carbon
Market in October providing
the infrastructure to enable
companies and funds to raise
capital for projects that focus
on the removal or reduction
of greenhouse gases in our
atmosphere. In return for
investment in funds and
companies trading on the
Voluntary Carbon Market,
shareholders may receive carbon
credits in lieu of cash dividends.
The London Stock Exchange is
the first exchange to apply a
public equity market framework to
facilitate fundraising specifically
for green projects.
Alongside targeted funding for
green projects the platform also:
— Brings transparency to
sustainable finance – entities
raising capital are required to
disclose what projects they are
funding, directly or indirectly,
and the expected carbon credit
yield, whilst also disclosing the
industry standards they use to
certify their projects.
— Provides access to a wider
range of investors – following
the public equity market
framework, investors across
all backgrounds (institutional,
corporate, or retail) can partake
in the funding of green projects.
As the leading global venue
for sustainable finance, we are
committed to continuing to play
a leading role in the further
development of market solutions
to the climate crisis.
London Stock Exchange Group plc
Annual Report 2022
24
Daniel Maguire
Group Head, Post Trade
& CEO, LCH Group
In a year of intense market volatility, LCH
successfully carried out its role as a critical
financial markets infrastructure provider
and continued to deliver the robust risk
management that supports our customers
through this period of economic uncertainty.
Meanwhile, we’re continuing to build our
presence in new growth areas and we’re
expanding our regional coverage.
Post Trade
2
4
3
1
Revenue split
1 OTC Derivatives £402m 40%
2 Securities & Reporting £234m 24%
3 Non Cash Collateral £100m 10%
4 Net Treasury Income £255m 26%
24
Recurring revenue
1
30%
Transactional revenue
1
70%
1 Post Trade recurring and transactional
proportion excludes Net Treasury Income.
The division is split across
four lines reflecting the
product offering and types
of income generation.
All of these business lines serve
to position us well in the context
of the three key structural market
trends that are helping to drive
growth: increasing regulation
within which our customers must
operate and a continuing rise in
demand for both risk management
and capital optimisation solutions.
In general, market volatility is also
an important driver of
performance for our Post Trade
division. In 2022, macroeconomic
factors such as the ongoing global
uncertainty around interest rates
have helped to drive higher
clearing volumes and therefore
enlarge the pools of collateral
we hold on behalf of customers.
OTC Derivatives
Clearing and capital optimisation
solutions for OTC Derivatives.
SwapClear, our clearing service
for interest rate swaps, contributes
c.80% of OTC Derivatives
revenue. LSEG is responsible for
over 90% of the global interest
rate swap notional cleared.
Performance:
+10.0% driven by record volumes
in SwapClear and despite a
one-off revenue benefit in
Q4 2021. SwapAgent and
ForexClear, though smaller
areas of the business, continue
to grow strongly and show
exciting potential.
Securities & Reporting
Securities clearing, capital
optimisation and regulatory
reporting solutions.
Performance:
-3.8% with volume growth at
RepoClear offset by impacts
of regulatory change and
increased competition in
cash equities clearing.
Non-Cash Collateral
Fees are earned from handling
non-cash collateral balances.
Performance:
+3.6% as market volatility drove
strong clearing volumes and
higher collateral balances.
Net Treasury Income
Income earned on cash assets
lodged with the Central
Counterparty (CCP) as margin
and default funds as part of the
risk management process.
Performance:
+18.8% as market volatility
and uncertainty around interest
rates drove record clearing
volumes and higher cash
collateral balances.
We support our customers with their clearing
and reporting obligations. In addition we
provide risk, balance sheet and financial
resource management solutions, whilst working
with our other divisions to extend this support
across the value chain.
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25 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
HIGHLIGHTS
The exceptional performance we
delivered in our OTC Derivatives
business in 2022 was supported
by accelerating growth in
SwapAgent,
our processing service for
uncleared interest rate swaps.
We recognise the potential in
this space, as increasingly
workflow inefficiencies are
driving customers to seek
greater standardisation in OTC
derivatives trade processing.
Supported by our acquisition of
Quantile and the announcement
of an agreement to acquire
Acadia, we are bringing together
a set of capabilities that create a
seamless platform to standardise
these processes, supporting
greater financial resource
optimisation and operational
efficiencies for our customers.
Quantile is a provider of
compression and optimisation
services to reduce risk and
capital requirements for
customers, while Acadia is a
provider of automated uncleared
margin processing and integrated
risk and optimisation services for
the global derivatives community.
Both of these acquisitions are
highly complementary to LSEG’s
Post Trade capabilities. The
Acadia transaction is subject
to regulatory approval.
First Singapore member joins
LCH SwapClear
DBS, a leading financial services
group in Asia, joined LCH
SwapClear as the first direct
member in Singapore this year.
Central clearing continues to
be a focus for banks in the
APAC region, and in 2022
SwapClear recorded a 29%
year-over-year increase in
volumes in APAC currencies.
25 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Post Trade continued
LCH default
management in
action – VTB Capital
On 24 February 2022, LCH
member and parent company to
VTB Capital, VTB Bank was added
to the UK’s consolidated list of
asset freeze targets, following
Russia’s invasion of Ukraine.
VTB Capital became unable to
settle its cleared transactions
at LCH Ltd EquityClear.
Following the sanctions
announcement, LCH convened its
DCMT (Default Crisis Management
Team) to coordinate and plan
actions, and ultimately served
the member with a default notice
on 3 March 2022.
The EquityClear DMG (Default
Management Group) was
convened to liquidate the
portfolio, which contained listed
depositary receipts. An external
broker and EquityClear members
were counterparties to the
close-out, using arrangements
previously tested in annual
firedrill exercises.
All positions were resolved
and the default was managed
comfortably within VTB Capital’s
initial margin (which had been
conservatively calibrated) and
there was no recourse to the
member default fund.
The defaulted portfolio was
fully settled on 4 April 2022,
with final balances ready to be
repaid to the administrators of
VTB Capital plc, in compliance
with applicable sanctions.
During this time, the EquityClear
service remained open for its
members with 100% up-time,
registering heightened trade
volumes averaging 5 million
trades per day.
DIGITALISATION
How trends are shaping
financial markets and the
global economy
Electronification of financial
markets continues to drive trading
volume growth, improve efficiency,
and enable access to liquidity.
This trend is expected to continue
as adoption across asset classes
matures; for example, Tradeweb
saw average daily volumes (ADV)
across all asset classes grow
c.10% YoY in 2022.
Digital platforms are unlocking
new growth across multiple
segments including digital
exchanges, digital payments,
online banking, and retail
wealth – driving demand for
ever-greater quantities of data
and more powerful analytics.
Cloud-enabled business models
(e.g., Data-as-a-service (DaaS),
Platform-as-a-service (PaaS)) are
emerging, as firms look to build
new solutions, and do more
with data and analytics.
The proliferation of new
technology within society
(e.g. AI, IoT, Blockchain) is
changing business models
and creating new value
creation opportunities across
all economies globally. This
is impacting the expectations
of customers, where jobs
are created and how capital
is allocated.
ADV of US corporate bonds
traded electronically in 2022
1
$15bn
LSEG’s response
Operating leading electronic
venues – we are investing in our
leading FX and equity electronic
venues, as well as benefiting from
structural growth at Tradeweb,
which remains at the forefront of
electronification in rates and credit
markets. For more information on
how we’re harnessing the natural
linkages between our trading
venues, see our Capital Markets
highlights on page 23.
Helping customers with
improved workflow connectivity
– we are improving connectivity
between our leading platforms
and venues, for example
connecting ForexClear with
FXall, and our recent acquisition
of TORA for order and execution
management. To read more
about the acquisition of TORA,
see page 18.
Broad distribution of data and
analytics – we deliver through
multiple channels including
desktop, cloud, API and feeds
to meet a range of customer
needs. Our approach to cloud is
further enhanced by the recent
announcement of our strategic
partnership with Microsoft.
Read more about the potential
benefits of our partnership
with Microsoft on page 19.
Building next generation
capabilities – we are working to
deliver next generation solutions
including our cloud-based data
platform, leading workflow and
collaboration via Workspace, and
new cloud analytics and modelling
built with Azure Machine Learning.
LSEG’s success is built on
our ability to anticipate and
capitalise on the structural
changes that are shaping
financial markets and the
global economy.
Over the last 20 years, the Group
has achieved considerable
growth and delivered shareholder
value through a successful
combination of organic and
inorganic investment in areas of
change. We continue to position
ourselves to capture growth
opportunities as markets evolve.
The four key market trends we
see as crucial to financial markets
and the global economy today,
and in the future, are:
1. Digitalisation
2. Sustainability
3. Optimisation
4. Resilience
London Stock Exchange Group plc
Annual Report 2022
26
Market trends
and our response
1 Coalition Greenwich study: https://www.greenwich.com/market-structure-technology/
october-spotlight-another-us-corporate-bond-e-trading-record-15-billion.
SUSTAINABILITY
How trends are shaping
financial markets and the
global economy
ESG and climate factors are
now mainstream considerations
in investment decision-making,
driving demand for insight.
Business disclosure related to
ESG continues to broaden,
and is increasingly mandated
by regulators.
Analytical models are unlocking
insight, but challenges remain
in addressing the availability
and auditability of data and
benchmarks, with c.60% of global
asset owners citing the lack
of standardisation as the main
barrier to increased adoption of
sustainable investment (2021
FTSE Russell asset owner survey).
Customers are demanding
that companies meet higher
standards, with more than one
third of the world’s largest
companies now committed to
net zero
2
. Increasingly, companies
are expected to incorporate
diversity and inclusion, fair
governance and climate action as
key components in their ambition
statements and strategies.
ESG assets as a percentage of
total global AUM by 2026
3
c.20%
LSEG’s response
Facilitating sustainable investing
– we deliver leading ESG indices
through FTSE Russell, attracting
$296 billion in global AUM.
Enabling green financing –
our Voluntary Carbon Market and
Sustainable Bond Market are
supporting customers on their
journey to net zero. See page
52 for more information.
Supporting informed markets –
we provide ESG data and scores
for >15,000 companies, and are
building ESG data into many of
our products, including Yield
Book fixed income analytics,
and our Issuer Services platform.
Driving transparency – Customer
& Third-Party Risk propositions,
such as World-Check and
Media-Check, are enabling
more transparent insight on
critical areas including the fights
against financial crime, modern
slavery, and terrorist financing.
27 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Market trends and our response continued
2 Accenture report: https://newsroom.accenture.com/news/nearly-all-companies-will-
miss-net-zero-goals-without-at-least-doubling-rate-of-carbon-emissions-reductions-by-
2030-accenture-report-finds.htm.
3 PwC report: https://www.pwc.com/gx/en/news-room/press-releases/2022/awm-revolution-
2022-report.html.
OPTIMISATION
How trends are shaping
financial markets and the
global economy
Cost pressures are resulting in
firms looking to optimise their
operating models, reduce
headcount, and focus on
core markets.
Interest rate movements have
encouraged investors to look
beyond traditional public markets
in search of returns, with global
alternatives AUM forecast to
hit $15 trillion in 2026
1.
New technologies are being
applied to automate and
streamline post-trade workflows,
optimise how balance sheets
are utilised, and save costs.
Machine learning, AI and
process automation enable
customers to unlock value
in their operating models,
increasing process efficiency.
Cloud migrations enable more
agile approaches to controlling
data costs, remove legacy
infrastructure and servers, and
improve processes. It is estimated
that cloud adoption will unlock
c.$1 trillion in global business
value by 2030
2.
Cloud expected spend growth
by financial institutions CAGR
2022-26
3
>20%
LSEG’s response
Enabling efficient capital flows
– the launch of our NDF matching
venue in Singapore with a fully
cleared Central Limit Order Book
(CLOB), will reduce risk for our
clients, increase efficiency, and
create a more diverse pool of
liquidity. Read more on page 23.
Providing sophisticated
Post Trade solutions – the
recent acquisition of Quantile,
alongside innovations such as
SwapAgent, will provide
customers with greater control
and understanding of capital
requirements as they manage
cleared and uncleared securities.
Read more about our acquisition
of Quantile on page 25.
Unlocking emerging pools of
liquidity – we bring together deep
market infrastructure expertise
and reliable data coverage across
emerging pools of liquidity.
Supporting operating efficiencies
through our migration to cloud
– our recent partnership
announcement with Microsoft will
reduce operational complexity
through improved data distribution
and the consolidation of multiple
legacy technologies, and will
further strengthen resilience
and security.
London Stock Exchange Group plc
Annual Report 2022
28
Market trends and our response continued
1 Preqin report: https://www.preqin.com/insights/2022-preqin-global-alternatives-reports.
2 Mckinsey report: https://www.mckinsey.com/industries/technology-media-and-
telecommunications/our-insights/cloud-migration-opportunity-business-value-grows-
but-missteps-abound.
3 Grand View Research report: https://www.grandviewresearch.com/industry-analysis/
finance-cloud-market-report?utm_source=prnewswire&utm_medium=referral&utm_
campaign=ict_01-Sept-22&utm_term=finance-cloud-market-report&utm_content=rd.
RESILIENCE
How trends are shaping
financial markets and the
global economy
Regulation has created a more
stable financial system – firms
have progressed from a state of
rapid implementation to more
considered management,
shifting focus toward resilience.
Moves toward hybrid working
has shifted consumer demand
in many industries (e.g. retail,
real-estate, hospitality). From a
technology perspective, this
has led to increased focus on
secure access, cyber security,
and process controls. This is
expected to continue as the
proportion of employees working
in hybrid environments remains
consistently above 2019 levels
4
.
Market volatility highlights the
importance of trusted venues
and secure clearing houses that
are capable of meeting demand
spikes. Our market infrastructure
businesses have played a key role
in helping participants navigate
major market events in 2022.
Global supply chains have faced
increasing pressure due to the
impact of the pandemic, higher
inflation and geopolitical events.
This has led companies and
capital allocators to further focus
on identifying and mitigating
supply chain risk.
Large companies who have
experienced fraud in the last
24 months
5
>50%
LSEG’s response
Helping customers manage
operational risk – Post Trade
supports clients as they manage
clearing operations, and optimises
financial resources through
advanced analytics solutions
including SwapAgent.
Enabling resilient venues –
venue replatforming will reduce
latency across our FX venues,
bringing them in line with speeds
seen in equities markets, and will
improve reliability and robustness.
Tried and tested processes –
our track record in managing
defaults in Post Trade, while
minimising impact to the market,
gives us significant credibility
with our members and regulators.
To read about the default of a
customer, VTB Capital, in 2022
and our response, see page 25.
Running critical data
infrastructure – we are trusted to
operate the data infrastructure
that underpins our customers’
businesses and critical decision-
making, including our Real-Time
network, Managed Distribution
Service (RTMDS), and Data
Access Control System (DACS).
29 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Market trends and our response continued
4 Financial Times report: https://www.ft.com/content/91899837-0fc7-4fe8-9581-60517d85399b
5 PwC Global Economic Crime and Fraud Survey 2022: https://www.pwc.com/gx/en/forensics/
gecsm-2022/pdf/PwC%E2%80%99s-Global-Economic-Crime-and-Fraud-Survey-2022.pdf.
London Stock Exchange Group plc
Annual Report 2022
30
Integrate our
world-class businesses
1
Globally essential
We drive financial
stability
by operating businesses that
are of systemic importance,
fundamental to the financial
ecosystem and critical to
our customers.
Drive
growth
2
Multi-asset class
We empower
economies
by helping our customers to
raise capital, support
employment, innovate and
access global financial
networks, across multiple
asset classes.
This purpose underpins everything we do and sets the foundation for
our strategy, our operations and our culture.
LSEG is a key participant in the global economy as a leading financial
markets infrastructure and data provider.
Our purpose is driving financial stability, empowering economies and
enabling customers to create sustainable growth.
LSEG’s long-term strategy builds on our strengths as a Group. We are
investing in solutions and services that can adapt and scale in evolving
global financial markets.
Our strategy is to be:
In order to deliver on our strategy we are executing against three
key priorities:
Build an efficient
and scalable platform
3
Seamlessly connected
We enable customers to
create sustainable growth
by providing the tools and data
that enable financial markets
to manage risk and make
informed investment decisions.
Our purpose
Our strategy
Priorities to deliver
on our strategy
Our purpose and strategy
Read more on page 31 Read more on page 32 Read more on page 33
Read more on page 34 Read more on page 34 Read more on page 35
1
Globally essential
A global player that provides critical
infrastructure and insight to customers,
required for the efficient running of financial
markets. We deliver value to customers
in all the major economies of the world.
Why is this important?
The presence and the demands of our
customers are increasingly borderless
and complex. Our global coverage and
comprehensive offering underpins
customers’ critical workflows and
supports the allocation of capital across
international financial markets.
Arne Staal
Group Head and CEO, FTSE Russell
We have developed this broad range of
Shariah-compliant indices to offer additional
depth and choice for global investors. The
new series combines our high standards of
benchmark index design and governance
with a robust screening and selection
process based on Islamic principles.
31 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Our purpose and strategy continued
OUR STRATEGY
Supporting critical
workflows worldwide
Case study
Since 2020, we have launched
well over 3,000 new FTSE
Russell indices. In 2022, FTSE
Russell launched the FTSE
IdealRatings Islamic Index
Series in collaboration with
IdealRatings. The Index Series
measures the performance of
Islamic equity securities across
global markets, providing a
family of Shariah compliant
indices for global investors.
New FTSE Russell indices
launched since 2020
>3,150
2
Multi-asset class
A leader across traditional and emerging
asset classes, in both public and private
markets. We provide liquidity and asset-class
agnostic insight for our customers across
the world.
Why is this important?
Trading and investment strategies are
increasingly incorporating a greater mix of
asset classes which, in turn, broadens the
data and information required to manage
portfolios and execute transactions. The
extent of our coverage in both established
and emerging asset classes creates value
for our customers by simplifying workflows
and enhancing critical processes.
The breadth of
our coverage
drives value
Case study
The acquisition of TORA, a
leading cloud-based technology
provider, allows us to offer
customers an order and
execution management
system (OEMS) and a portfolio
management system (PMS)
covering equities, fixed income,
foreign exchange, derivatives
and digital assets trading.
Broker algos accessible through
TORA’s multi-asset class OEMS
500+
Global exchanges connected
to TORA
180+
Dean Berry
Group Head of Trading & Banking Solutions
LSEG’s strategy is to deliver global,
multi-asset class financial infrastructure for
our customers that operates as an open
ecosystem across the capital markets and
investment lifecycle. Our acquisition of
TORA is a great example of us delivering
on that strategy.
London Stock Exchange Group plc
Annual Report 2022
32
Our purpose and strategy continued
OUR STRATEGY
3
Seamlessly connected
A unique partner for customers, enabling
connectivity across the financial markets
value chain. We provide access to open
platforms and venues which integrate
seamlessly across the workflows that
matter, from pre-trade decision-making,
to trade execution and clearing.
Why is this important?
Financial markets continue to evolve.
The adoption of new technologies and
changes in regulation impact the complexity
and scope of our customers’ needs. By
providing integrated solutions across the
value chain, we are building deeper customer
relationships and working in partnership to
help customers address this complexity in
a way that few other providers are able to.
This in turn leads to new product innovation
and growth opportunities.
Creating powerfully
innovative solutions
Case study
Our comprehensive Fundamental
Review of Trading (FRTB) data
solution seamlessly brings
together multiple LSEG offerings,
enabling customers to calculate
capital charges under the
sensitivities-based method and
fulfil look-through requirements
for both funds and indices.
This provides customers with
the tools they need to achieve
compliance on a global scale.
LSEG’s Trade Discovery solution
provides access to
>1.1bn
Real Price Observations (RPOs)
across multiple asset classes
Stuart Brown
Group Head of Enterprise Data Solutions
Globally, banks are finding the
implementation of the FRTB requirements
very challenging. Through our extended
coverage of regulated markets and our data
partnerships with LCH, Tradeweb and other
leading market infrastructure providers, we can
provide access to billions of processed Real Price
Observations across exchange-traded and OTC
cross asset class instruments, covering rates,
credit, FX and equities in multiple jurisdictions.
33 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Our purpose and strategy continued
OUR STRATEGY
Integrate our world-class businesses Drive growth
Market reports available from
1,900sources
OUR PROGRESS IN 2022
How we deliver Strategy in action
Focus on customers’
needs across asset classes,
throughout their workflow
and on a global basis.
Regulation is driving the
adoption of FX clearing by
buy-side users (Uncleared
Margin Rules). We are improving
connectivity between FXall
and ForexClear, providing
customers with workflow
efficiencies. Improved
connectivity allows FXall clients
to access the risk management
and efficiency benefits of
clearing, by choosing to clear
non-deliverable forwards (NDFs)
in ForexClear if desired.
Leverage our unique and
growing position across financial
data and capital markets to
create innovative solutions
for customers.
Capital Markets is integrating
more tools from across the
Group into its Issuer Services
platform, improving our Primary
Markets offering. Access to
the Aftermarket Research
Collections allows issuers to
explore market reports from
over 1,900 sources.
How we deliver Strategy in action
Develop strategic partnerships. Our recently announced 10-year
strategic partnership with
Microsoft will help develop
new products and services for
data and analytics, delivering
next-generation services for a
range of customers across the
financial markets value chain.
Improve sales execution and
partnership with customers.
We are creating a differentiated
sales and service model.
We are focusing more resources
on our largest accounts and
developing deeper solution
selling expertise, while also
optimising and standardising
the digital sales experience.
Optimise commercial
relationships with customers.
We have successfully positioned
complementary solutions that
enable us to optimise the
commercial relationship we
have with customers. For
example, as part of our revenue
synergy programme we have
successfully focused on selling
more Pricing and Reference data
into FTSE Russell customers.
Improve our product offerings. We are bringing together
leading assets from across the
Group to improve the customer
experience. Examples include
the addition of Refinitiv data
to the LSEG Issuer Services
platform, and providing Refinitiv’s
ESG data sets via the Yield Book
fixed income analytics platform.
LSEG’s ESG data covers
600+metrics
15,000+
companies
Our purpose and strategy continued
London Stock Exchange Group plc
Annual Report 2022
34
Build an efficient and scalable platform
We are well positioned to
capitalise on the strong underlying
drivers that support our business
model (see following pages).
In 2023 our priorities will continue
to evolve, as we progress from
the integration of Refinitiv to
the transformation of the
combined Group. These updated
priorities combine continuity
with an even greater ambition
for long-term growth:
Improving execution
including delivery of our Group
strategic programmes, resilience
and cyber security initiatives, and
our sales transformation journey.
Investing in better products
including the development and
deployment of product
improvements across key
business lines such as Workspace,
FTSE Russell and replatforming
our FX venues; and the
development of ‘next generation’
projects such as our Post Trade
Solutions offering.
Harnessing our integrated
offering to create value greater
than the ‘sum of the parts’
including improved customer
experience across the workflows
and asset classes that we
serve; new innovative solutions
developed in partnership with
market participants, such as the
LSEG Voluntary Carbon Market;
and unlocking the scalability
provided by cloud technologies,
in partnership with Microsoft.
2022 underlying EBITDA margin
improvement vs PY
+110bps
EVOLVING PRIORITIES FOR 2023 AND BEYOND
How we deliver Strategy in action
Targeted investment to create a
more scalable business centred
on cloud-based, open platforms.
LSEG has launched new
cloud-based offerings, such as
Real-Time Optimised, in 2022.
Real-Time Optimised is reducing
customer infrastructure
requirements, broadening
access, and reducing lead
times for real-time data.
Accelerating our strategic
approach to the data platform.
LSEG has made good progress
on its existing programme for
the delivery of its cloud-based
data platform since the
completion of the Refinitiv
acquisition in January 2021.
Work on our new strategic
partnership with Microsoft will
enable LSEG to utilise Azure for
cloud-based data architecture,
consolidating LSEG data sets
onto one, flexible infrastructure.
The programme accelerates
LSEG’s cloud migration plans.
Cost synergies from integrating
Refinitiv and LSEG.
We continue to improve our
underlying EBITDA margin
performance, up +110bps
year-over-year, supported
by the successful delivery
of cost synergies in 2022.
As we continue to deliver
on our integration efforts
we expect to see further
long-term improvement in
our margin profile.
Our purpose and strategy continued
STRATEGIC REPORT
35 London Stock Exchange Group plc
Annual Report 2022
London Stock Exchange Group plc
Annual Report 2022
WE ARE A LEADING PROVIDER OF FINANCIAL
MARKET DATA AND INFRASTRUCTURE
Across our business divisions we
provide products and services
that are essential to financial
markets. This includes:
Data and distribution
Workspace provides end users
with access to critical financial
data, news and content from
over 150,000 data sources.
Our real-time feeds drive trading
and investment decisions across
multiple speeds, delivering data
covering more than 77 million
instruments through proprietary
distribution channels as well as
partner applications.
We gather data from
>150,000
data sources
Our real-time data covers
>77m
instruments
World class indices
World class indices: FTSE Russell
provides indices supporting over
$20 trillion in global assets under
management (AUM), enabling
investment flow for the buy-side.
2022 FTSE Russell ETF AUM
>$1trn
2022 FTSE Russell ESG
passive AUM
1
$296bn
Leading venues
We operate leading equities
venues including LSE Main
Market and LSE AIM; globally
significant dealer-to-dealer and
dealer-to-client venues in FX,
supporting more than $450 billion
in ADV; as well as a leading
position in credit and rates
trading through Tradeweb.
2022 FX ADV
$452bn
2022 Tradeweb rates – cash ADV
$343bn
Critical infrastructure
Through LCH, we operate a
leading global clearing house with
a >90% share of cleared interest
rate swap notional outstanding.
Our infrastructure underpins
capital movements being made
by the largest financial institutions
around the world.
SwapClear client trades in 2022
2.7m
ForexClear notional value cleared
in 2022
$24.7trn
LSEG is positioned across the
breadth of the financial markets
value chain.
The three business divisions we operate are:
Data & Analytics
A leading provider of high-value financial market data,
indices and analytics.
Capital Markets
A global operator of leading capital raising and multi-asset
class trading venues.
Post Trade
A leading provider of clearing, risk management and capital
optimisation solutions.
Our business is underpinned by scalable and global technology,
which supports the delivery of the Group’s solutions through
resilient, efficient and secure platforms and operations.
For more details on our businesses,
please see our divisional overviews
on pages 16 to 25.
LSEG is well positioned to deliver
long-term sustainable growth
Five factors underpin the value we deliver:
1. We are a leading provider of financial market data and infrastructure.
2. We bring deep expertise and a trusted reputation across the
financial markets value chain.
3. We are exposed to structurally high growth markets.
4. We generate high quality revenue that is mostly recurring in nature.
5. We consistently invest for growth.
36
Our business model
1 ESG Passive AUM is at 30 June 2022 and prior period comparator is at 30 June 2021.
The metric is updated bi-annually.
STRATEGIC REPORT
We operate across the breadth of
the financial markets value chain,
from issuance and investment
decision making, through to trade
execution, clearing and post
trade reporting.
WE BRING DEEP EXPERTISE AND A TRUSTED REPUTATION
ACROSS THE FINANCIAL MARKETS VALUE CHAIN
Data and analytics
Providing crucial insight to
customers through a variety
of data, indices, analytics
and workflow solutions.
Capital formation
Through primary markets
operated by London
Stock Exchange.
Capital deployment
Through our trading venues and
across asset classes, including
FX, fixed income and equities.
Capital optimisation
Clearing and reporting
services through LCH
and UnaVista, as well as
innovative post-trade solutions.
We are trusted by customers,
partners, and regulators as a
provider of critical infrastructure.
This stems from decades of
experience operating trading
venues, clearing systems, and
data and analytics infrastructure.
We are uniquely positioned,
and bringing together these
capabilities is enabling scale
and new value creation as
we serve financial markets.
Uniquely positioned
As the boundaries between data and infrastructure blur,
we will generate new areas of opportunity and collaborative
customer partnerships:
— Unique trading and risk analytics.
— Improved workflow connectivity.
— More connected and intelligent data sets.
— New cloud-based models – Data-as-a-service,
Platform-as-a-service, Analytics-as-a-service.
Our business model continued
37 London Stock Exchange Group plc
Annual Report 2022
LSEG’s offering spans the entire trade lifecycle
Data & Analytics
Capital Markets
Post Trade
Global data
and analytics
provider
Globally
recognised
market
infrastructure
business
Global
clearing,
settlement and
reporting
provider
Global
leader in data
and FMI
C
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38
We benefit from a footprint that
positions us in multiple global
markets, with a broad range of
customers, and exposure to
multiple asset classes.
Growing markets
Across the Group we are exposed
to a broad array of asset classes
and growing liquidity pools,
including equities, FX and fixed
income markets. Through our
Data & Analytics business, we
are also able to capitalise on the
growing demand for insight and
automation. We expect this to be
further accelerated through the
adoption of cloud in coming years.
Diverse geographies
We have a balanced global
exposure, generating 45% of
income in EMEA, 40% in the
Americas, and 15% in APAC.
This is supported by the
distribution and diversity of
our people – with 56% of
our headcount based in APAC,
including our leading operations
and customer support hubs in
Bengaluru, Manila, and Colombo.
Significant customer
relationships
We are a leading partner for the
financial services sector, with
customers including the world’s
largest banks, asset managers,
asset owners, wealth advisers,
and hedge funds. Additionally,
we support critical central
banking and regulatory institutions
with our solutions. We have a
sizeable and growing footprint
across corporate communities,
serving 48 of the top 50 largest
corporates globally, with offerings
including FX hedging solutions,
risk management tools, and
capital raising.
Our business model continued
OUR FOOTPRINT IS DIVERSIFIED ACROSS
MARKETS, GEOGRAPHIES AND CUSTOMERS
2
1
3
1 Americas 40%
2 APAC 15%
3 EMEA 45%
Revenue by geography
1
1 Total income including recoveries
London Stock Exchange Group plc
Annual Report 2022
48
We serve 48 of the world’s
top 50 corporates
2
2 By market capitalisation, as of February 2023.
We generate a substantial
proportion of our income through
recurring revenue associated with
data subscriptions and licences.
This business model benefits
from a consistently high level
of retention, contracts that are
typically 12-24 months in duration,
and improving performance in our
Annual Subscription Value (ASV).
We are well exposed to growing
pools of transactional income
through its venues. This includes
Tradeweb, which continues to
benefit from the electronification
of rates and credit markets, and
other businesses positioned to
attract liquidity flow such as
FXall (FX dealer-to-client),
Matching (FX dealer-to-dealer),
and LCH which benefits from
volume growth in swaps and
other OTC derivative markets,
as well as the underlying income
associated with treasury and
collateral operations.
Recurring revenue
Visible revenue
Mostly subscription and
licence revenue, typically
12-24 months duration.
Highly diversified
Revenues are broadly
based across activity,
product, geography and
>45,000 customers.
Strong customer relationships
Consistently high retention.
Transactional revenue
Highly diversified and
growing with strong
Tradeweb performance.
2
3
1
1 Recurring revenue 73%
2 Transactional revenue 23%
3 Net treasury income 3%
Total income
We are highly cash generative,
allowing us to continually
modernise our infrastructure,
invest organically in new
products and services, and
acquire businesses that are
complementary to our business
model and distribution footprint.
In 2022 we invested £750 million
3
in BAU capex that supports our
approach to growth, resilience
and security. We also closed four
acquisitions: MayStreet, Quantile,
GDC and TORA. Each of these
businesses has significant growth
potential that is enhanced by
being part of the Group. For more
information on these acquisitions,
see our case studies on pages
18 and 25, and read about capital
allocation in more detail in the
CFO review on page 40.
Our recently announced 10-year
strategic partnership with
Microsoft will also help build
next-generation services that
empower customers to generate
business insights, automate
complex and time-consuming
processes, and ultimately,
do more with less.
More details can be found on
pages 19 and 71 and on our website:
www.lseg.com/investor-relations/
London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Our business model continued
WE GENERATE HIGH QUALITY REVENUE
THAT IS MOSTLY RECURRING IN NATURE
WE CONSISTENTLY INVEST FOR GROWTH
39
3 Business-as-usual capex, on a constant currency accrued basis.
London Stock Exchange Group plc
Annual Report 2022
Anna Manz
Chief Financial Officer
In less than two years,
we have significantly improved
the growth rate of many of
the Refinitiv businesses,
in most cases just by doing
the basics better.
Introduction
LSEG hit all its financial targets
in 2022: our execution on the
Refinitiv integration has
progressed well, and through
our strong market positioning we
have been able to capture the
benefit from renewed market
volatility and interest rate
uncertainty in our transactional
businesses this year. Our financial
performance is covered in detail
in the pages that follow. My own
review focuses on two topics at
the forefront of our shareholders’
thoughts: how do we sustain
growth, and how do we allocate
capital to support that growth?
The pathway to
sustained growth
Investors often ask me how I think
about the opportunities in front
of LSEG. First and foremost, we
benefit from having leading, scale
businesses that offer long-term
growth. We have all witnessed in
other sectors how data can be
liberated by technology, creating
new insights and use-cases to
drive growth. Financial services
are at that tipping point and LSEG
is well positioned to take these
opportunities. I see three levers
of growth that we are pulling:
1. Improving execution
In less than two years, we have
significantly improved the growth
rate of the Refinitiv businesses
within Data & Analytics, in most
cases just by doing the basics
better. We have changed sales
incentives, simplified our product
portfolio, set more ambitious
retention targets, learned more
about customers’ actual usage
and worked in closer collaboration
with them as we roll out
Workspace to different groups
of end-users. Our 2023 price
reviews in part reflect this
incremental value that we are
delivering for our customers.
In addition, we set ambitious
synergy targets for both revenue
and cost, and have raised those
targets. We now expect runrate
revenue synergies of £350-400
million by 2025, and runrate cost
synergies of at least £400 million.
Although in common with all
companies we are facing cost
inflation, we have a number of
levers at our disposal to mitigate
its impact.
2. Investing to transform
our businesses
In areas like Investment Solutions
or our FX venues, we have strong
brands and customer loyalty but
historically investment has not
always kept pace with technology
change. We have significant
projects in flight not only to
address this “technology debt”
but to take the opportunity to
leap ahead of our competitors
in speed and functionality.
In FX for example, we have rebuilt
our tech stack and improved
latency – speed – by a factor
of 10. We are making similar
investments, driving greater
volume and customisation,
in our index business. These
investments have not yet come
to fruition, but should begin to
contribute to growth in 2023.
3. Making LSEG more than the
sum of its parts
Increasingly our customers see us
as a strategic capital markets and
data partner. They expect us to
come up with innovative solutions
to help them generate investment
ideas, trade efficiently, manage
risk and optimise capital.
Our businesses are highly
complementary but we are far
from realising the full benefits for
our customers today. For example,
the potential for data from our
trading platforms to inform
decisions for our index clients, or
for our leadership in FX and fixed
income trading to come together
to manage risk in cross-border
trading, is huge. Sustaining our
growth rate into the long term
depends on our ability to bring
our businesses together in ways
that no other company can.
We have already begun this
process. We have connected our
dealer-to-client foreign exchange
platform, FXall, with ForexClear
to drive growth in the foreign
exchange clearing market. We’ve
also brought together FXall and
Chief Financial
Officer review
For more information see our Financial
Statements on pages 148 to 245.
40
41
Tradeweb to develop hedging
workflow solutions to allow
emerging market products to
be traded more efficiently.
The complementary nature of our
combined offering creates the
opportunity for us to deliver
innovative solutions like these.
There is so much more we can
do here.
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 £3.3 billion in
operating cash flow in 2022,
and a further £1.1 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:
1. BAU capex – £750 million
Business-as-usual capex, on a
constant currency accrued basis,
was £750 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
£184 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
£966 million.
2. M&A – £786 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. For
information on these acquisitions,
see pages 18 and 25.
3. Dividend – £567 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% over the last 20 years.
4. Share buyback – £300 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
£750 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 £750 million in
directed buybacks by April 2024.
Chief Financial Officer review continued
Growth in total income excluding recoveries (excl. Ukraine/Russia)
1
+6.6%
2021: +6.1%
Annual Subscription Value growth (excl. Ukraine/Russia)
+6.2%
2021: +4.6%
London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
1 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 £80 million in 2021 and £18 million in Q1 2022, and nil beyond that.
London Stock Exchange Group plc
Annual Report 2022
Financial review
42
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
1
£m
2021
¹
£m
Variance
%
Pro-Forma Constant
Currency Variance
(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 £80 million in 2021 and £18 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 £7,428 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 £7,743 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 £3,140 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
£1,896 million (2021: £1,666 million). IT costs amounted to £567 million (2021: £447 million) with professional fees of £420 million (2021: £327 million).
Adjusted EBITDA increased by 6.0% to £3,550 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 £12 million in 2022, down from £22 million in 2021.
Reported depreciation, amortisation and impairment of £1,900 million (2021: £1,570 million) includes £1,078 million (2021: £883 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 £822 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 £1,065 million to £1,417 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 £2,728 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.
43 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Financial review continued
Reconciliation of Adjusted Operating Profit to Reported Operating Profit
2022
£m
2021
£m
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 tangible assets (34) (32)
Operating Profit 1,417 1,065
Transaction costs of £85 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 £156 million include the gain arising
on the disposal of a freehold property in the UK. Amortisation and impairment of purchased intangible assets of £1,044 million mainly arise from
the Refinitiv acquisition.
Strong revenue growth across all divisions
2022
2
£7,428m
2021
2
£6,587m
FX and other
3
+7.5%
Capital Markets Post Trade
+9.8%
Data & Analytics
+5.3%
1
(+4.2% incl U/R)
Growth rates on a constant currency pro-forma basis, excluding the deferred revenue adjustment, unless otherwise noted:
1 Ex U/R excludes Ukraine/Russia impacts
2 Total income excluding recoveries, 2021 on a pro-forma basis
3 Includes the impact of other revenues and the deferred revenue adjustment
4 Pro-forma growth on an actual rates basis including the deferred revenue adjustment
Reported growth
+12.8%
4
Growth excl. U/R
+6.6%
1
Good improvement in underlying profitabilty
2022
1
(0.5%)
(0.3%)
2021
1
47.8%
Ukraine/Russia
conflict
M&A
Underlying
business
performance
FX
(0.3%)
+1.1%
47.8%
1 Reported EBITDA margin
Underlying Margin
improvement
+1.1%
The deferred revenue accounting adjustment had a +0.2% impact on margin which was offset by the pro-forma impact of -0.2% on margin.
London Stock Exchange Group plc
Annual Report 2022
44
Net Finance Expense/Tax/Non-Controlling Interest
Adjusted Net Finance Expenses were £160 million (2021: £166 million), and were £176 million (2021: £171 million) on a reported basis.
Reported Profit Before Tax increased by 38.8%, from £894 million to £1,241 million. Adjusted Profit Before Tax increased by 21.4% in the year to
£2,568 million (2021: £2,116 million). The Group incurred a tax charge in the year of £262 million (2021: £302 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 £258 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
£m
2021
£m
Variance
%
Pro-Forma Constant
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 £4,944 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.
Financial review continued
45 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Trading & Banking Solutions revenue increased by 0.2% to £1,612 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 £1,307 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 £1,325 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 £275 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 £425 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 £879 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.
Better sales and retention driving acceleration in ASV growth
Q4 2022
+4.9%
+5.4%
Q1 2021
+3.0%
Q1 2022
Q2 2022
Q3 2022
+4.6%
Q3 2021
Q4 2021
+4.0%
Q2 2021
+3.9%
+5.8%
+6.2%
Increase since
acquisition
+320bp
ASV growth rate
Annual Subscription Value (ASV) growth is a constant currency point-in-time year-on-year organic measure of subscription growth in our Data & Analytics business.
Impact of Ukraine/Russia conflict
Adjusted operating expenses before depreciation, amortisation and impairment increased to £2,142 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 £2,238 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.
Financial review continued
London Stock Exchange Group plc
Annual Report 2022
46
Financial review continued
Capital Markets
Continuing operations
2022
£m
2021
£m
Variance
%
Pro-Forma Constant
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 £1,459 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 £248 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 £258 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 £953 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 £34 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 £665 million, again driven by the strong
revenue growth at Tradeweb.
Adjusted EBITDA rose 10.2% to £760 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 (£bn) 10.7 34.8 (69.3%)
Secondary Markets – Equities
UK Value Traded (£bn) – 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%
47 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Post Trade
Continuing operations
2022
£m
2021
£m
Variance
%
Pro-Forma 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. Total revenue grew by 4.2% to £736 million
and total income, including Net Treasury Income, was £991 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 £402 million, driven by a strong performance in SwapClear
client clearing.
Securities & Reporting revenue decreased by 3.8% to £234 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 £100 million as high volumes continued and includes the full year impact of 2021 pricing changes.
Net Treasury Income (NTI) increased by 18.8% to £255 million as sustained market volatility drove record collateral balances.
Cost of sales increased by 22.9% to £150 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 £324 million demonstrating good cost
control. As a result, Adjusted EBITDA was up 9.0% to £517 million and the Adjusted EBITDA margin improved by 210 basis points to 52.2%.
Non-Financial KPIs
2022 2021
Variance
%
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 (€bn) 3,358 2,283 47.1%
CDSClear members 25 25 0%
Securities & Reporting
EquityClear trades (m) 2,163 1,996 8.4%
Listed derivatives contracts (m) 262.6 285.8 (8.1%)
RepoClear – nominal value (€trn) 288.4 237.6 21.4%
Non-Cash Collateral
Average non-cash collateral (€bn) 168.5 165.5 1.8%
Cash Collateral
Average cash collateral (€bn) 140.8 107.2 31.3%
Financial review continued
London Stock Exchange Group plc
Annual Report 2022
48
Cash Flow
2022
£m
2021
£m
Operating Cash Flow 3,282 3,090
Net interest & royalties paid (231) (208)
Other dividends, net (70) (73)
Net taxes paid (351) (390)
Capex (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 0 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 £3,282 million (2021: £3,090 million).
Cash outflows for purchases of property, plant and equipment and intangibles amounted to £966 million (2021: £632 million), which includes our
business-as-usual investment programmes as well as investments related to the Refinitiv integration. Equity free cash flow was £1,664 million
(2021: £1,787 million). During the year the Group received disposal proceeds of £1,056 million, principally in relation to the sale of the BETA business,
and deployed £768 million on acquisitions, net of £18 million cash acquired. Dividends paid during the year were £567 million, reflecting the
continued strong growth in dividends per share. £383 million was spent on share buybacks, of which £300 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 £2,665 million as at 31 December 2021 to £3,209 million as at 31 December 2022.
Balance Sheet/Leverage/Ratings
Net Debt
Year ended 31 December
2022
£m
2021
£m
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 £6,226 million after setting aside £1,236 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 £2.5 billion. In 2022, the Group had access to a £1,425 million
facility maturing in December 2024 and a £1,075 million facility maturing in December 2026. The second one-year extension option was exercised
on the £1,075 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 €150 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: $1,660m 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.
Financial review continued
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 adjusted EBITDA before foreign
exchange gains or losses.
49 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
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.
USD GBP EUR Other
2022 Total Income¹ 57% 18% 17% 8%
2022 Underlying Expenses² 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 12 months
ended 31-Dec-22
Closing rate
at 31-Dec-22
Average rate 12 months
ended 31-Dec-21
Closing rate
at 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
£m
2021
£m
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.
Financial review continued
LSEG is dedicated to enabling
sustainable economic growth.
Given our central role in capital
markets, our global footprint
and presence throughout the
trade lifecycle, we are uniquely
positioned to play a leading
role in this respect.
A more detailed account of our
sustainability progress during
the year can be found in our
Annual Sustainability Report.
David Schwimmer
Chief Executive Officer
Through our sustainability
strategy we’re contributing to
the global effort to decarbonise,
innovate and grow the green
economy, while ensuring that
everyone can share in the
benefits of sustainable
economic growth.
Enabling sustainable
growth
See our separate online Sustainability
Report at the following address:
www.lseg.com/en/sustainability-
strategy/disclosures-and-reports
London Stock Exchange Group plc
Annual Report 2022
50
51 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Our sustainability framework
Anchored in our purpose of
driving financial stability,
empowering economies and
enabling customers to create
sustainable growth, our
Sustainability Strategy focuses on
three strategic priorities where
we can have the greatest impact:
accelerating the transition to net
zero, growing the green economy
and creating inclusive economy
opportunity. We deliver on our
strategy through our products and
services, our market engagement,
and our own operations.
Materiality
We carried out an assessment
in 2021 to ensure that our
Sustainability Strategy focuses on
topics which are most important
to our business and its long-term
performance. The materiality
assessment included a broad
review of relevant regulations,
disclosure frameworks and
other information. It involved
interviews with stakeholders
such as employees, customers,
shareholders, suppliers, policy-
influencers and media. The
relative prioritisation of topics
was then evaluated, accounting
for internal and external
stakeholder perceptions, and then
validated by LSEG. The resulting
material topics for LSEG are listed
here in order of importance:
Material sustainability topics
1 Sustainable finance
and investment
2 Climate risk management
3 Talent attraction and retention
4 Information security
and data privacy
5 Diversity and inclusion
6 Corporate governance
7 Environmental management
and GHG emissions
(operational)
8 Human rights
9 Employee health,
safety and wellbeing
10 Business ethics
11 Community engagement
Alignment with global goals
Our Sustainability Strategy was
informed by the UN Sustainable
Development Goals. Our
approach supports the SDGs
that are most relevant to our
business, and our delivery plans
align with specific focus areas of
the seven listed here.
SUSTAINABILITY STRATEGY
Strategic priorities
Accelerating the
just transition
to net zero.
Enabling the
growth of the
green economy.
Creating inclusive
economic
opportunity.
Supporting customers to create sustainable growth.
Market engagement and policy advocacy.
Embedding sustainability into our operations.
Enabling activity
Enabling sustainable growth continued
UN Sustainable Development Goals
SDG 4 Quality Education
Ensure inclusive and equitable quality education and promote
lifelong learning opportunities for all.
SDG 5 Gender Equality
Achieve gender equality and empower all women and girls.
SDG 8 Decent Work & Economic Growth
Promote sustained, inclusive and sustainable economic growth,
full and productive employment and decent.
SDG 10 Reduced Inequalities
Reduce inequality within and among countries.
SDG 13 Climate Action
Take urgent action to combat climate change and its impacts.
SDG 16 Peace Justice and Strong Institutions
Promote peaceful and inclusive societies, providing access to
justice for all and building effective, accountable and inclusive
institutions at all levels.
SDG 17 Partnership for the goals
Strengthen the means of implementation and revitalise the global
partnership for sustainable development.
London Stock Exchange Group plc
Annual Report 2022
52
We use our unique market
position, capabilities, products and
services to accelerate the
transition to net zero.
Key objectives
— Enable more capital to
be allocated to transition-
related activity.
— Promote the role of data and
disclosure to enable transition.
— Reduce the Group’s Scope 1 &
Scope 2 carbon emissions by
50% by 2030, with an ambition
to be net zero by 2040.
See our separate Sustainability
Report at the following address:
www.lseg.com/en/sustainability-
strategy/disclosures-and-reports
See our separate Climate
Report at the following address:
www.lseg.com/en/sustainability-
strategy/disclosures-and-reports
2022 highlights
— We published our first
Climate Transition Plan in
March which received 98.6%
shareholder support at our
Annual General Meeting.
— We achieved a 62% reduction
in our Scope 1, 2 (market-based)
and 3 (business travel,
fuel-and-energy-related
activities, employee commuting)
emissions since our 2019
base year.
— We launched the Voluntary
Carbon Market (VCM)
designation and welcomed
Foresight Sustainable Forestry
as the first listed issuer to be
admitted onto the market.
Reduction in business travel
Scope 1, 2 and 3 emissions
(full definition above)
-62%
At the centre of capital markets,
we are playing a pivotal role
in enabling the flow of capital
towards projects that help
deliver solutions to the
world’s environmental and
social challenges.
Key objectives
— Provide market infrastructure
to support the growth of
green finance.
— Support green growth with
research, data and analytics.
— Engage with the market and
policymakers to scale green
economic activity.
2022 highlights
— £10 billion was raised on the
London Stock Exchange Green
Bond segment and £12 billion
was raised on the Sustainable
Bond segment.
— We published the 2022 cohort
of 108 companies and funds
receiving the London Stock
Exchange Green Economy
Mark, provided to those that
contribute to environmental
objectives through their
products and services; their
combined market cap was
£156 billion.
Green Bond capital raised
£10bn
Sustainable Bond capital raised
£12bn
SUSTAINABILITY STRATEGY IN ACTION
Accelerating the transition to net zero Enabling the growth of the green economy
Enabling sustainable growth continued
53
STRATEGIC REPORT
Aligned with our purpose to
empower economies as a whole,
we also strive to empower
individuals and communities
by championing inclusion and
economic opportunity.
Key objectives
— Embed an inclusive culture
at LSEG.
— Promote inclusion in the market
and society more widely.
— Support economic
empowerment in
the community.
See our separate Pay Equity
Report at the following address:
www.lseg.com/en/sustainability-
strategy/disclosures-and-reports
2022 highlights
— We achieved our gender
diversity goal of 40% female
representation within our senior
leadership community.
— We published our first Pay
Equity Report that considers
gender (globally) and ethnicity
(for US and UK). More detail
can be found on our Pay
Equity Report.
— Economic empowerment in
the community was mobilised
through the LSEG Foundation,
which forged four new strategic
charity partnerships in 2022
with Room to Read, Girls
Who Code, Skills Builder
and Women’s World Banking.
For further information on the
LSEG Foundation, please see
our Sustainability Report.
Target achieved for women in
senior leadership roles
40%
A RESPONSIBLE BUSINESS
Creating inclusive economic opportunity
Enabling sustainable growth continued
In addition to pursuing our three
strategic sustainability priorities
we are committed to operating
our business in a responsible way.
Our sustainability approach is
therefore underpinned by the
following policies and standards:
Business ethics
We are committed to the highest
standards of integrity. The
standards and behaviours
expected of all LSEG employees,
regardless of geography or
discipline, are set out in the
LSEG Code of Conduct.
Cyber security and
data protection
The Information Security Policy
sets out the overarching
enterprise-wide information
security guidance through which
information security risks are
identified and managed. It is
aligned to global industry
standards, including those
defined by the National Institute
of Standards and Technology
and the Financial Services
Sector Coordination Council
(NIST FSSCC).
The LSEG Privacy and Data
Protection Policy applies to all
personal data that is collected,
maintained, and used in any
format by any division, business
unit or affiliate of LSEG.
Financial crime,
bribery and corruption
Our Financial Crime policy
sets out requirements to
minimise financial crime, which
encompasses, but may not be
limited to, money laundering,
terrorist financing, breach of
international trade sanctions,
bribery and corruption, fraud and
false accounting, insider trading,
market abuse, theft or misuse of
confidential information or other
malpractice. LSEG has a
dedicated policy on anti-bribery
and corruption which applies
globally and is aligned with the UK
Bribery Act and the US Foreign
Corrupt Practices Act. Anti-Bribery
and Corruption policy is owned
and maintained by the Financial
Crime team and is updated
annually. There were no breaches
reported in 2022.
Human rights
Our Human Rights statement
sets out the requirements on
human rights and is aligned
with international human rights
standards and principles.
We monitor all current and
emerging human rights-related
regulation and as a UK-
headquartered business are
committed to adhere to the
UK Modern Slavery Act 2015.
Sustainability Policy
Our Sustainability Policy sets out
the requirements for us to ensure
we identify, manage and improve
our sustainability performance.
The Policy is approved by the
LSEG Board and is supported by
several issue specific standards
including community investment,
human rights, environmental
management, diversity
and inclusion.
Whistleblowing
We are committed to providing
an open environment where our
colleagues, contractors and other
third parties feel comfortable
raising concerns about adherence
to our Code of Conduct, relevant
laws and regulations or if they
consider something unethical or
potentially harmful. Employees
can raise concerns independently
through our Speak Up confidential
24-hour hotline or online to
lseg.ethicspoint.com. The Group’s
whistleblowing policy provides
a method of addressing
concerns while at the same
time offering whistleblowers
statutory protection.
See more in our Sustainability Report
online at the following address:
www.lseg.com/en/sustainability-
strategy/disclosures-and-reports
London Stock Exchange Group plc
Annual Report 2022
SUSTAINABILITY GOVERNANCE
We have established a robust sustainability governance framework both at the Board and
Executive level. This is summarised here, and further detail can be found in the Governance
section of this report and the separate Sustainability Report.
Group Responsibility Chair
Number of times
sustainability
covered 2022
LSEG Board Oversight of LSEG’s overarching sustainability ambition,
strategy and performance.
Group Chair 3
Board Risk
Committee
Oversight of LSEG’s approach to identifying and managing
sustainability and climate-related risks.
Non-Executive Director,
Professor Kathleen DeRose
1
Board Audit
Committee
Oversight of LSEG’s approach to regulatory requirements
related to sustainability disclosures.
Non-Executive Director,
Dominic Blakemore
1
Board Remuneration
Committee
Oversight of LSEG’s approach to linking executive compensation
to sustainability.
Senior Independent
Director and Chair of the
Remuneration Committee,
Cressida Hogg CBE
1
Executive Committee Setting the Group’s sustainability ambition and strategy and
monitoring progress.
Group Chief Executive 2
Sustainability
Committee
The Sustainability Committee reports to the Executive Committee
on progress and meets quarterly as a minimum.
Six members of the Sustainability Committee are also members
of the LSEG Executive Committee.
The Sustainability Committee is responsible for:
— Providing direction on the Group’s sustainability ambition
and strategy.
— Approving sustainability KPIs and targets and monitoring
progress against strategy.
— Overseeing and approving sustainability reporting.
Chief Corporate Affairs and
Marketing Officer
5
Sustainability
Working Group
Group comprises senior sustainability experts from across
LSEG and is responsible for shaping and delivering
the Group Sustainability Strategy and supporting the
Sustainability Committee.
Group Head of Sustainability 12
During 2022, the Board approved the Climate Transition Plan which was subsequently approved by shareholders at the AGM in April.
The Board and the Audit Committee review our disclosures in the Annual Report and Accounts and other elements of the year-end reporting
suite of documents, to make sure that they are fair, balance and understandable and provide the information necessary for our shareholders
to assess the company’s performance.
Enabling sustainable growth continued
London Stock Exchange Group plc
Annual Report 2022
54
For more information see the
Governance section of this
report on pages 86 to 147.
55 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Enabling sustainable growth continued
Linking executive remuneration
to sustainability
Our executives are incentivised
to drive progress towards our
sustainability ambition through
the achievement of our Group
Strategic Objectives (GSOs),
which relate to 40% of the annual
bonus pool. Our Remuneration
Committee assesses performance
against the GSOs. One of
our GSOs is dedicated to
sustainability, while sustainability is
also relevant to other GSOs such
as those focused on Culture,
Resilience and Customer.
Further detail of the GSO performance
assessment can be found in our
Directors’ Remuneration Report on
pages 113 to 141.
Climate
We published our first Climate
Transition Plan in March 2022
setting out how we will achieve
our targets which are approved
by SBTi (Science Based Targets
initiative) against a 1.5°C
trajectory to:
— Halve our Scope 1, Scope 2 and
selected Scope 3 emissions
(fuel and energy-related
activities, business travel and
employee commuting) against
a 2019 baseline by 2030.
— 67% of our suppliers (by Scope
3 purchased goods and
services emissions) to set
science-based targets by 2026.
— Our long-term ambition is to
achieve net zero by 2040.
We include Group emissions
as one of our key non-financial
performance indicators. For more
information, see page 14.
Target reduction of our Scope
1, 2 and 3 emissions (fuel and
energy-related activities, business
travel and employee commuting)
by 2030
-50%
Target of our suppliers (by Scope
3 purchased goods and services
emissions) to set science-based
targets by 2026
67%
TCFD Compliance Statement
In recognition that climate change
is a critical global issue which has
significant implications for our
stakeholders including our
investors, customers, employees,
suppliers and partners, we
produced our first stand alone
Climate Report, which integrates
our Climate-related Disclosures
and our Climate Transition plan.
The report covers our climate
ambitions, governance, scenario
analysis, risk management
and climate-related metrics.
We adopted this approach due
to the detailed and technical
nature of the content and believe
that this is the most useful and
transparent way to present our
climate-related disclosures.
In accordance with the Listing
Rule 9.8.6R, we disclose against
the recommendations of the Task
Force on Climate-related Financial
Disclosures (TCFD) which helps us
improve our understanding of the
financial implications of climate-
related risks and opportunities
for our business for the year
ended 31 December 2022.
This information is disclosed
in our Climate Report which also
presents an update on our
Climate Transition Plan.
See a TCFD summary table
at the following address:
www.lseg.com/en/sustainability-
strategy/disclosures-and-reports
See our separate online Climate
Report at the following address:
https://www.lseg.com/en/sustainability-
strategy/disclosures-and-reports
Ambition for LSEG to reach net zero
2040
We published our first Climate Transition Plan in
March 2022 setting out how we will achieve our
targets which are approved by SBTi against a
1.5°C trajectory.
London Stock Exchange Group plc
Annual Report 2022
56
Enabling sustainable growth continued
The table below sets out the 11 TCFD recommendations and summarises where additional information can be found in our Climate Report.
TCFD recommendation LSEG approach Reference
Governance The board’s oversight of climate-related risks
and opportunities.
LSEG Board has ultimate oversight of the
sustainability agenda and strategy.
LSEG 2022
Climate Report
Page 32
Management’s role in assessing and managing
climate-related risks and opportunities.
Sustainability Committee is chaired by Chief
Corporate Affairs & Marketing Officer. The Chief
Risk Officer and Chief Operating Officer are
members of the Sustainability Committee.
Strategy Identification of climate-related risks
and opportunities.
Led by Group Sustainability, engagement
occurs across our business units to identify
and manage future climate-related risks and
opportunities that have a material impact on
and our business model.
LSEG 2022
Climate Report
Page 11 onwards
Impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy, and financial planning.
LSEG’s business purpose and commitment
to sustainable growth reflects approach and
consideration of climate-related risks and
opportunities in our products and services
and business operations.
Resilience of strategy under varying
climate-related scenarios.
Group Sustainability leads and co-ordinates
projects to understand climate-related risks
and opportunities against impact pathways to
show operations and business exposure amid
external changes in climate and subsequent
impacts on the business in terms of costs
and revenue.
Risk management Processes for identifying and assessing
climate-related risks.
Our Enterprise Risk Management Framework
includes and embeds sustainability risks which
are raised and owned by the business.
LSEG 2022
Climate Report
Page 24 onwards
Processes for managing climate-related risks. Risks are managed day-to-day by business
owners with support from Group Risk as
second line of defence.
Integration of climate-related risks into overall
risk management.
Climate-related risks are embedded within the
Enterprise Risk Management Framework.
Metrics and targets Metrics to assess climate-related risks
and opportunities.
Accurate data collection in place to support
interim targets.
LSEG 2022
Climate Report
Page 28 onwards
Disclosure of scope 1, scope 2, and scope 3
greenhouse gas (GHG) emissions and the
related risks.
Combined data inventory reflecting legacy
business emissions for 2019, 2020, 2021 and
2022 has been verified and published.
Targets used to manage climate-related
risks and opportunities and performance
against targets.
Near-term science-based targets approved
with 2026 and 2030 target dates with a
ambition to achieve net zero by 2040.
For more information, please refer to our
Climate Report which can be found on our
website: www.lseg.com/en/sustainability-
strategy/disclosures-and-reports
57 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Enabling sustainable growth continued
Overall performance 2022 2021 2020 2019 % Change
7
Total Group Carbon Footprint (tCO
2
e)
1,5
718,706 571,885 640,693 657,008 +9%
per headcount (HC)
1
30 24 27 27 +9%
per £m Total Income
1
93 80 90 96 -4%
Scope 1
2,5
1,450 1,000 1,960 2,163 -33%
Scope 2 Market based
3,5,6,8
4,167 3,138 6,492 10,189 -59%
Scope 2 Location based
3,8
69,833 106,566 111,644 143,206 -51%
Scope 3
4,5
713,089 567,747 634,175 646,569 +10%
Notes
1 Group total and intensity metrics Scope 1, Scope 2 market-based, and all relevant and calculated Scope 3 categories. The full breakdown of Scope 3 categories is available in our Sustainability
Report. Within these totals we report both market-based Scope 2 and Scope 3 fuel-and-energy-related-activities (FERA) emission factors. Group carbon footprint includes tenant consumption and
excludes client-based workers.
2 Scope 1 emissions: combustion of fuel and operation of facilities – includes natural gas, diesel, LPG, fugitive emissions and fleet vehicles.
3 Scope 2 emissions: purchase of electricity and heat by the Group for its own use. Market-based emissions use supplier-based emission factors and energy attribute certificates for where
100% renewable supplier tariffs are not in place.
4 Scope 3 includes emissions from purchased goods and services, fuel and energy-related emissions, air travel, rail travel, taxis, car hire, hotels and ground transfers, waste, water, employee
commuting (including home working) and upstream leased assets.
5 DEFRA UK Government GHG Conversion Factors are used for all fuels, business travel, water, waste, upstream leased assets. US EPA factors are used for United States electricity and employee
commute emissions. IEA country specific emissions factors are used to calculate emissions for all other electricity use. Defra IO factors have been adjusted to reflect reporting year consumer
index pricing to estimate emissions related to purchased goods and services. LSEG do not yet use Defra 2022 EEIO factors published in November 2022, as their use will require recalculation
of base year emissions. US and UK National Travel Surveys have been used to inform our estimations for employee commuting. Emissions related to working from home have been based on
EcoAct’s ‘Homeworking emissions whitepaper’ (2020).
6 Energy attribute certificates have been purchased to claim renewable electricity consumption for all sites where 100% renewable supplier tariffs are not in place. These certificates comply
with the requirements of RE100 and have been sourced from an internationally recognised trader who is an IETA member and gold partner of CDP. Some of these certificates are associated
with electricity generation from sustainable biomass. The combustion of biomass for electricity generation does result in emissions and these are reported within Scope 2 Market-based values
(for example, this is the reason for the increase in Scope 2 Market-based emissions in the UK in 2022). The biogenic CO
2
emissions from these sources are reported in our Sustainability Report.
7 % Change is calculated between 2022 and 2019, the Group’s target baseline year.
8. The Market-based method is based on the GHG emissions emitted by the generator from which the reporter contractually purchases electricity bundled with contractual instruments, or
contractual instruments purchased on their own. Location-based method is based on average energy generation emission factors for defined geographic locations, including local, subnational
or national boundaries. (WRI and WBSCD, 2015. GHG Protocol Scope 2 Guidance).
Our emissions – methodology
& verification statement
We report all the emission
sources required under the
Companies Act 2006 (Strategic
Report and Directors’ Reports)
Regulations 2013. These sources
fall within our consolidated
statement and we do not have
responsibility for any emission
sources that are not included in
our consolidated statement.
Our emissions are calculated
according to an ‘operational
control’ boundary using the
GHG Protocol Corporate
Accounting and Reporting
Standard (revised edition) and the
UK Government Environmental
Reporting Guidelines: Including
streamlined energy and carbon
reporting guidance (March 2019).
LSEG’s Scope 1, 2 and 3
emissions disclosed here, and in
our Sustainability Report, have
been externally verified by
Cameron-Cole against the
requirements of the WRI/WBCSD,
GHG Protocol, GHG Protocol
Corporate Accounting and
Reporting Standard (revised
edition), GHG Protocol Scope 2
Guidance: An amendment to
the GHG Protocol Corporate
Standard and the GHG Protocol
Corporate Value Chain (Scope 3)
Standard. Conduct of the
verification met the requirements
of ISO 14064-3:2006(E).
London Stock Exchange Group plc
Annual Report 2022
58
(SECR) table 2022 2021 2020 2019 % Change
2
Total Energy Consumption (kWh)
1
164,955,639 262,134,466
3
276,810,614
3
371,895,033 -56%
UK Energy Consumption (kWh)
1
56,452,497 54,401,256 80,552,486 118,956,031 -53%
Scope 1 458 556 716 1,381 -67%
Scope 2 – Market Based
4
612 422 577 153 +300%
Scope 2 – Location Based
4
10,672 10,908 17,758 27,805 -62%
tCO
2
e/HC (Scope 1 & 2 location-based) 2.52 2.53 4.07 6.75 -63%
tCO
2
e/HC (Scope 1 & 2 market-based) 0.24 0.22
3
0.28
3
0.35
3
-32%
EMEA Energy Consumption (kWh)
1
5,646,972 12,353,859 14,077,652 42,882,337 -87%
Scope 1 7 4 5 34 -78%
Scope 2 – Market Based
4
71 586 755 1,082 -93%
Scope 2 – Location Based
4
2,061 4,928 4,709 9,043 -77%
Americas
1
Energy Consumption (kWh)
1, 3
73,162,491 155,778,235
3
130,961,747
3
158,530,000 -54%
Scope 1 547 187 450 393 -39%
Scope 2 – Market Based
4
3,188 1,786 2,431 6,550 -51%
Scope 2 – Location Based
4
40,476 77,060 63,969 80,463 -50%
APAC Energy Consumption (kWh)
1
29,674,070 39,189,207 49,521,785 48,161,602 -38%
Scope 1 438 253 788 356 +23%
Scope 2 – Market Based
4
297 343 2,729 2,405 -88%
Scope 2 – Location Based
4
16,627 13,670 25,208 25,895 -36%
Notes
1. Electricity, Natural Gas, Diesel, LPG, and Fleet Vehicle fuel have each been converted from their respective units to kWh in order to be presented as an aggregate fuel consumption value.
Defra GHG Conversion Factors 2021 (Fuel Properties) have been used as the basis for this conversion. Refrigerant consumption is not included in kWh totals.
2. % Change is calculated between 2022 and 2019, the Group’s target baseline year.
3. Corrections have been made for 2021 and 2020 Americas energy consumption, as these were incorrectly reported in 2021. The total energy consumption has also been corrected to reflect
this change.
4. The Market-based method is based on the GHG emissions emitted by the generator from which the reporter contractually purchases electricity bundled with contractual instruments,
or contractual instruments purchased on their own. Location-based method is based on average energy generation emission factors for defined geographic locations, including local,
subnational or national boundaries. (WRI and WBSCD, 2015. GHG Protocol Scope 2 Guidance).
Reduction in total energy consumption since 2019
-56%
LSEG calculates greenhouse gas emissions to
cover all material sources of emissions for
which the Group is responsible.
Streamlined Energy and
Carbon Reporting (SECR)
LSEG calculates all available
emissions sources required under
The Companies (Directors’ Report)
and Limited Liability Partnerships
(Energy and Carbon Report)
Regulations 2018, along with the
addition of fugitive and process
emissions and the extension of
the scope to global emissions,
rather than UK emissions only.
LSEG calculates greenhouse gas
emissions to cover all material
sources of emissions for
which the Group is responsible.
The methodology used was that
of the Greenhouse Gas Protocol:
A Corporate Accounting and
Reporting Standard (revised
edition, 2015). Responsibility
for emissions sources was
determined using the operational
control approach.
Enabling sustainable growth continued
59 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Enabling sustainable growth continued
Reporting
requirement
Page references
in this document
Relevant policy and statement
available on lseg.com
Business model — Our strategy
— Our purpose-led areas of focus
— How we create value
— Our business performance
Pages 26 to 39
Our stakeholders — Section 172(1) statement
— Stakeholder focus areas
Pages 60 to 73
Environment — Climate-related disclosures Pages 50 to 58 — Sustainability Policy
— Environmental statement
Our employees — Employees
— Diversity and Inclusion
Pages 60 to 63 — Code of Conduct
— Diversity & Inclusion statement
Governance — Section 172(1) statement
— Corporate governance
— Directors’ remuneration report
Pages 70 to 73
and 86 to 141
— Sustainability Policy
Respect for
human rights
— Human rights and Modern Slavery Page 53 — Human Rights Statement
— Modern Slavery Act statement 2022
Anti-bribery
and corruption
— Risk overview
— Mandatory learning for all employees
Pages 53 and 74 to 84 — Anti-Bribery and Corruption statement
Risk management — Principle Risks and uncertainties
— Enterprise Risk Management Framework (ERMF)
— Risk governance
Pages 74 to 84
See our separate online Sustainability
Report at the following address:
www.lseg.com/sustainability-strategy/
disclosures-and-reports
See our separate online Climate
Report at the following address:
www.lseg.com/sustainability-strategy/
disclosures-and-reports
Non-financial
information statement
This non-financial information
statement provides an overview
of topics and related reporting
references in our external
reporting as required by sections
414CA and 414CB of the
Companies Act 2006. We
integrate non-financial and
sustainability-related information
across the Strategic report
and wider reporting suite,
thereby promoting cohesive
reporting of non-financial and
sustainability matters.
Sustainability reporting
frameworks and guidance
We are actively monitoring
developments including in relation
to metrics. In 2022, our focus
included among others,
the Task Force on Climate-related
Financial Disclosures (TCFD), and
the Global Reporting Initiative
(GRI) standards metrics.
As signatories of the UN Principles
for Responsible Investment, we
are committed to an ongoing
process to align our strategy with
the 2015 Paris Agreement and
the UN Sustainable Development
Goals (SDGs). Our climate
ambition strives to make a
positive contribution.
Further information on non-
financial and sustainability
matters can be found within
our reporting suite.
Our people and culture are
integral to our purpose of
driving financial stability,
empowering economies, and
enabling sustainable growth.
We have made progress in
embedding an inclusive culture
at LSEG that values a range of
perspectives and embraces
diversity of every kind.
Goal achieved for women in senior leadership roles by 2022
40%
2022 employee engagement score
75%
London Stock Exchange Group plc
Annual Report 2022
60
Our culture:
building one LSEG
See our separate online Sustainability
Report at the following address:
www.lseg.com/en/sustainability-
strategy/disclosures-and-reports
Our full Pay Equity Report is available
here: www.lseg.com/en/sustainability-
strategy/disclosures-and-reports
61 London Stock Exchange Group plc
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STRATEGIC REPORT
Our culture of connecting,
creating opportunity and
delivering excellence shapes
how we work and how we help
our people fulfil their potential.
In 2022, we introduced a wide
range of programmes to activate
our culture, including:
Developing strong, engaged
and inclusive leaders
Leadership development is at the
centre of how we are creating
diverse and inclusive teams.
Leaders are accountable for
making sure they attract, retain
and develop great people by
maximising their potential and
encouraging new ways of
thinking. There are several
programmes to reach those
at all stages of their Leadership
journey including:
— Emerge: for those who
are interested in becoming
a leader.
— Compass: for new People
Leaders who bring our
culture to life and build high
performing teams.
— Evolve: for existing leaders who
are developing to lead several
teams, often globally.
— Through our One Leadership
series we bring our senior
leaders together and in 2022
this community focused on
‘Leading with Ambition’.
Driving Diversity & Inclusion
We believe there is a strong
correlation between diversity
and inclusion and business
performance. Our intent is
to create a truly inclusive
organisation where:
— We invest in our people.
— Our leaders take accountability
for driving sustainable change.
— We are all accountable for
creating an inclusive culture.
— All our people can achieve
their potential.
This year we have made
good progress against our
four D&I ambitions.
1. Creating a culture that
fosters belonging
At LSEG, we strive to create an
environment where everyone
feels they are given a fair
opportunity, their voice is heard,
and where everyone is respected
for who they are. Our policies
and processes are constantly
reviewed to support the needs
of our people, including the
introduction of a new global policy
to support “Menopause at Work”.
To build awareness across our
sites globally, we ran spotlight
campaigns to celebrate a range of
events from International Women’s
Day to Black History Month to
Pride Month, as well as a number
of religious festivals. We have
eight thriving Inclusion Networks
which represent voices of
colleagues who are historically
underrepresented in the
corporate environment and in
senior leadership.
2. Building a globally diverse
leadership team
In 2021, we introduced the
following diversity goals at
senior leadership:
— 40% women in roles by the
end of 2022.
— 20% underrepresented ethnic
groups in roles by the end of
2023 and 25% by the end
of 2025.
As of December 2022, we have
met our gender goal of 40% at
senior leadership resulting in a 7%
increase since December 2021.
In 2022, we expanded our
diversity goals to Group Directors:
— 40% women in roles by the end
of 2027.
— 25% underrepresented ethnic
groups in roles by the end
of 2027.
While we are proud of the
progress we have made on
gender representation, we
acknowledge that there is more
we need to do to increase levels
of ethnic representation at Senior
Leadership and within our Group
Director population and this
remains a key area of focus for us.
Going forward, we are working
on providing more clarity around
our ethnicity disclosures and will
continue to evolve our diversity
goals to ensure they are
representative of our growing
employee and customer base
and are useful measures of
our progress.
In 2022, we have developed a
number of initiatives to make
our commitment clear. LSEG’s
Inclusive Leadership Programme
looks to strengthen our leaders’
capability to foster innovation
among diverse groups and our
Returner Programme prioritises
professionals returning to work
after a career break, with a special
focus on women.
Our culture: building one LSEG continued
Gender
2022 2021 (combined org)
Female % Male %
Disclosure
rate % Female % Male %
Disclosure
rate %
LSEG plc Board 6 46 7 54 100 6 46 7 54 100
LSEG Subsidiary Boards 83 25 243 75 100 90 28 234 72 100
Senior Leadership
1
42 40 64 60 100 34 33 69 67 100
People Leaders (Line Managers) 1,388 35 2,568 65 100 1,024 33 2,046 67 100
All employees 10,513 43 13,783 57 100 9,920 43 13,341 57 100
Ethnicity
2
2022 2021 (combined org)
White %
Under-
represented
ethnic groups %
Disclosure
rate % White %
Under-
represented
ethnic groups %
Disclosure
rate %
LSEG plc Board
3
11 85 2 15 100 – – – – –
Senior Leadership
1
77 85 14 15 90 76 84 14 16 90
People Leaders (Line Managers)
(US and UK only) 1167 74 401 26 85 952 78 273 22 86
All employees (US and UK only) 3,908 67 1,933 33 86 4,197 69 1,859 31 84
1 Senior Leadership refers to members of Executive Committee (ExCo) and Group Leaders. The LSEG Subsidiary Board members and the members of the ExCo and Leadership Teams together
comprise ‘Senior Managers’ for the purposes of section 414C(8)(c)(ii) of the Companies Act 2006.
2 Global ethnicity representation only includes colleagues based in countries where we collect ethnicity information. Representation percentages reflect the proportion of those who disclosed
ethnicity information, per the disclosure rate.
3 New disclosure from 2022 onward on ethnicity in Board representation aligning to the changes put forward by the Financial Conduct Authority (FCA) in 2022.
London Stock Exchange Group plc
Annual Report 2022
3. Creating equity in our
practices to maintain a
diverse pipeline of talent
Our Talent Identification
programme helps People Leaders
to better understand individuals’
strengths and career interests,
supporting their growth.
These individuals feed into our
Talent Accelerator programmes
that build our internal succession
pipeline while supporting our
inclusion commitments. The APAC
Accelerator programme focuses
on our APAC leadership pipeline
and ‘Illuminate’ focuses on
building Black and Latinx
representation across the UK
and US.
4. Shaping inclusion in
our industry
We recognise that LSEG has a
significant platform to help shape
inclusion across organisations
and industries.
This year, to provide a more
comprehensive study into our
pay equity position, we partnered
with Mercer to carry out analysis
across sub-sections of pay data:
gender (globally) and race and
ethnicity (for the US and UK).
We are also active participants in
a number of important industry-
wide initiatives, including the first
ever sector-wide Socio-Economic
Diversity Taskforce, the Women in
Finance Charter and the Change
the Race Ratio Programme.
Our progress has been
recognised through a number of
awards including Company of the
Year at the European Diversity
Awards and Large Brand of the
Year at the Bank of London
Rainbow Honours. LSEG was
rated Gold in the India Workplace
Equality Index and we are a
member of the Valuable 500.
To underline our commitment,
Diversity and Inclusion forms
part of our Group Strategic
Objectives which are directly
linked to overall pay and reward.
For more information, please refer
to our Remuneration Report on
pages 113 to 141.
Adopting a hybrid approach
to work
In 2022, we continued to evolve
the ways in which we work and
connect. We introduced a
framework to guide working
patterns, recognising that different
roles have different needs.
This approach includes three
workstyles: Office First, Blended
and Digital First. Our approach
balances the benefits of being
co-located with colleagues in our
offices and customer sites with the
flexibility of being able to work
from home.
During the year, we also
continued to invest in our office
spaces and digital tools. We
brought together more colleagues
under one roof by consolidating
offices in six cities, and renovated
nine offices to cater for more
collaborative workspaces.
Supporting our
colleagues’ wellbeing
At LSEG, our colleagues’
wellbeing is a priority. Ensuring
that they have the emotional,
physical, social, and financial
support to perform at their best
is a key part of our culture. Our
global Employee Assistance
Programme (EAP) is a 24/7
confidential support service that
provides qualified assistance to
colleagues and their dependants
on a wide range of topics.
We have also trained close to
180 Mental Health Awareness
Champions globally, who are key
to helping us improve mental
health literacy and support healthy
behaviours in the workplace.
Measuring our progress
During the year, we further refined
the way we measure our culture,
supported by clear governance
and standards to ensure data
privacy and protection. LSEG
Engage, our Group-wide survey,
helps us to confirm what is
working well and identify areas
where we need to improve.
Our culture: building one LSEG continued
62
63
Feedback from 2021 showed us
that colleagues were motivated
by LSEG’s future potential but that
there was more we could do
to simplify processes for our
colleagues. We have responded
in a number of ways, including
streamlining cross-divisional
communication and speeding
up our hiring processes.
Results from our 2022 survey
indicated that we are continuing
to make good progress on our
cultural transformation journey.
Highlights include:
— Engagement score up 2 points
from 2021 to 75 points;
participation remained high
at over 85%.
— Colleagues feel increasingly
positive about their career
development opportunities
and they feel a stronger sense
of belonging.
— People feel confident to speak
up and are encouraged to find
better ways to get things done.
Focus areas include:
— Continuing to simplify our
systems and processes for
colleagues.
— Providing more clarity around
decision-making.
Another key element of our
listening strategy is our ongoing
dialogue between employees and
the LSEG Board. In 2022, we had
4 sessions covering more than
50 colleagues globally. As well as
discussing our integration journey,
the sessions focused on how we
can create a more collaborative
culture and support our
colleagues through change.
Attracting the best talent
At LSEG, we aim to attract
and retain the very best
people by tailoring the
opportunities we provide and
partnering with colleagues to
build long-term careers.
LSEG’s scale and global presence
provides the opportunity for our
colleagues to broaden their skills
and experience. 38% of vacancies
were filled internally in 2022 and
we continue to look for ways to
drive internal mobility.
Externally, to strengthen and build
LSEG’s global talent reach, we
targeted priority marketplaces to
roll out our new employer brand.
In 2022, we launched campaigns
in Bucharest, Bengaluru, Bangkok
and Manila centring on the
exciting opportunities we can
deliver for our people.
Building resilient teams
LSEG continues to monitor
geopolitical events affecting
our colleagues globally, taking
interventions to support our
teams where necessary.
We responded to the Ukraine/
Russia conflict by focusing on
the safety and wellbeing of our
people, remaining vigilant to the
increased systemic risks and
working with our customers to
facilitate business continuity
efforts. Our teams in Romania and
Poland set up donation banks and
used their allocated two days of
volunteering to directly support
people displaced by the crisis
and, through LSEG Foundation
donations and matched colleague
fundraising, more than £250,000
was committed to the International
Rescue Committee’s (IRC)
humanitarian efforts in the region.
LSEG continues to review
economic challenges in the APAC
region, specifically in Sri Lanka
where we have run regular
wellbeing checks and made
exceptional compensation
adjustments where necessary.
Our teams in all of these
locations have shown remarkable
resilience and many, like Ukrainian
colleague Maria Kolos pictured
right, have valued being able
to continue working despite
the challenges.
Our culture: building one LSEG continued
London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Photo credit: Alexey Ermakov
Board engagement
with stakeholders
The Board recognises the
importance of engaging with
the Group’s stakeholders
throughout the year.
Meaningful engagement and
two-way dialogue allows
the Board to understand the
interests, needs, and concerns
of the stakeholders relevant
to the Company’s success,
how they influence the
operation of the business
model, the delivery of strategy
and decision-making, and the
actions that the Board and
management need to take
in response.
The following pages set out how
the Board has engaged with, and
sought to understand the views of,
our key stakeholders:
Customers
Workforce
Regulators
This has been achieved through
a combination of direct Board
engagement and indirect
engagement, for example
via executive management.
Management has used the
outputs of its engagement with
stakeholders to inform business-
level decisions, with an overview
of developments and relevant
feedback reported to the Board
and/or a Board Committee.
In addition, the Board recognises
that the Company’s shareholders
are a key stakeholder, and the
views and interests of
shareholders influence the
decisions and actions taken
by the Board.
The Board seeks to engage
with shareholders throughout the
year with more detail provided
in the Corporate Governance
Report on page 95. Further
information on the activities of the
Board can be found on page 96.
London Stock Exchange Group plc
Annual Report 2022
64
Read more about the activities of the
Board in the Corporate Governance
Report beginning on page 86.
London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
Our diversified global business is built on
customer partnership, delivering value across
the trading ecosystem in Data & Analytics,
Capital Markets, and Post Trade. We remain
focused on the opportunities from bringing our
businesses together to benefit our customers
and drive sustainable long-term growth.
We believe that aligning our strategy, services
and products to the needs and interests of our
customers is central to supporting long-term
value creation.
Customers we serve
45,000+
How the Board has engaged
We monitor customer feedback
to help us understand our
customers’ views on the Group’s
products and services as well as
the ways that they would like us
to improve our offering. Customer
engagement meetings are held to
enable our senior management to
understand what matters to our
customers and to build strategic
relationships with them.
During 2022, the Group CEO
engaged with customers in a
number of ways, including: an
extensive outreach programme
to key customers; individual
meetings with particular emphasis
on technology transformation,
operational resilience and product
offerings; and attendance at the
FTSE Russell World Investment
Forum to meet asset owners and
asset managers in person.
Management also engages
regularly with our customers on
a day-to-day basis, in meetings,
at roundtable events and
conferences. In 2022,
management was pleased to
meet with customers in person
and regularly welcomed
customers to the office in
Paternoster Square for meetings
and also for market open and
market close ceremonies, which
were well attended. The Board is
regularly updated on customer
views and input.
Many of our shareholders are also
customers, so the Group regularly
receives informal customer
feedback through investor
outreach programmes.
Key matters for
stakeholder group
Key matters for customers
include product offering, product
innovation, a focus on digitisation/
transformation, managing and
reducing costs, system stability
and sustainability.
How this engagement
influenced Board discussions
and decision-making
Customer feedback is
communicated by the Group
CEO, CFO and other members
of the Executive team to
the Board when decisions
and actions are taken which
could impact on customers.
A key area of focus for our
customers is the development
of new products and services.
During the year, the Board
reviewed the new FX trading
capability in Singapore, as well as
new FTSE Russell partnerships
with SGX, Bursa Malaysia and
JPX in Japan. The Board also
monitored the embedding of
our FX trading functionality into
Tradeweb’s emerging market
bond trading interface so that
customers can, in a single
workflow, hedge their FX
exposure when they trade
those bonds.
Customers (and other
stakeholders) have also been
focused on technology and the
operational resilience of the
Group. The Board has supported
management in the year in
allocating capital and investing in
further improving our technology
and operational resilience. This
includes the strategic partnership
with Microsoft which will include
the development of next-
generation data, analytics and
cloud infrastructure solutions in
order to provide even better
services for our customers on a
cloud platform which will provide
greater efficiency and agility.
The Board approved the
acquisitions of TORA, MayStreet,
Global Data Consortium
and Acadia which further
strengthen our data and trading
propositions and meet evolving
customer needs.
To support our customers with
their climate transition journey,
the Group has facilitated the
raising of over £1.4 billion in
capital since inception of the
LSE Transition Bond segment and
£26.8 billion on the LSE Social
Bond segment. In October 2022,
we launched our Voluntary
Carbon Market designation to
facilitate financing at scale into
projects that mitigate climate
change. Further information can
be found in our Sustainability
Report on pages 10 and 11 –
www.lseg.com/en/sustainability-
strategy/disclosures-and-reports.
CUSTOMERS
65
Board engagement with stakeholders continued
London Stock Exchange Group plc
Annual Report 2022
How the Board has engaged
Engagement with our employees
includes formal and informal
meetings, an annual employee
engagement survey and
townhall meetings.
The Board seeks to engage with a
wide cross section of employees
to better understand their
perspectives on the business.
Board members engaged in
person with employees when
they undertook their annual visit
to an overseas office, which was
New York in 2022.
Board members also met with
colleagues virtually through a
series of conversations with
employee forums held in key
regional locations. These
meetings provided Board
members with an opportunity to
gain insight into the culture and
any concerns at different levels of
the business. Directors provided
feedback to the Board at the
next meeting and several of the
engagements were shared with
the workforce via intranet articles.
These engagements included:
— Dominic Blakemore and
Cressida Hogg meeting with
colleagues from the North
and Southeast Asia region
— Martin Brand and Kathleen
DeRose meeting with
colleagues from the
EMEA region
— Tsega Gebreyes and Don
Robert meeting with colleagues
in the South Asia region
— Erin Brown, Valerie Rahmani
and Douglas Steenland meeting
with colleagues from the
Americas region.
In 2022, townhall meetings were
held across the Group which were
attended in person and virtually.
Townhalls are held at the Group
and Divisional levels, and topics
are tailored to the different
audiences with interactive Q&A
sessions. A number of these
townhalls were led by the CEO,
CFO and other members of the
Executive Committee. Over 13,000
colleagues joined the global
townhall livestream for the
2021 full-year results.
The Group CEO met colleagues
in the US during visits to New
York, Fort Mill and Washington.
He also met colleagues in Saudi
Arabia, United Arab Emirates,
Japan, Philippines and Singapore
and held virtual meetings with
colleagues in other regions.
A series of leadership events
were held in 2022 to provide
information on the Group’s
strategy as well as focusing
on ‘Leading with Ambition’.
The annual ‘LSEG Engage’
employee survey provided
colleagues with an opportunity
to share their views on working
at LSEG.
More information on employee
engagement can be found
on pages 60 to 63 of the
Strategic report.
WORKFORCE
The Group’s workforce is approximately
24,000, across 65 countries and is fundamental
to the success of the Group. Integration of the
Refinitiv business is progressing well with
ongoing two-way dialogue and feedback
with employees at every level to ensure this
happens effectively and efficiently, and we
build a unified and distinctive culture.
Group workforce
24,000+
Board engagement with stakeholders continued
66
Key matters for
stakeholder group
The key themes arising from these
engagements are: integration
activity and removing barriers to
execution; communications,
including updates on business
performance and plans; culture,
including inclusion and sense
of belonging, hybrid working,
wellbeing, empowerment, and
career progression; gender
and ethnic diversity, including
increasing leadership presence
in the APAC region; remuneration
and reward; sustainability; and
Covid-related support.
Key themes from the Board
conversations in each region
were as follows.
— EMEA: integration activity and
removing barriers to execution;
the Board’s position on
sustainability matters; inclusive
culture and career progression;
empowerment and talent
acquisition; technology;
employee wellbeing and
support to colleagues in
countries experiencing crisis
or conflict; and products and
services for customers.
— Asia: culture, including inclusion
and sense of belonging; gender
and ethnic diversity, including
increasing leadership presence
in the APAC region; talent
acquisition, career progression
and the Group’s future leader
accelerator programme;
hybrid and flexible working;
and technology.
— The Americas: integration
activity and removing
barriers to execution; culture;
technology; talent acquisition;
gender and ethnic diversity;
innovating for customers;
career progression, including
the Illuminate programme
(a programme designed to
support the development
and progression of our Black
and Latinx colleagues); and
hybrid working.
How this engagement
influenced Board discussions
and decision-making
The Board was kept informed of
developments in Sri Lanka,
Ukraine and Russia throughout
the year, including the welfare of
our colleagues and actions taken
by management to support them.
This included inflationary pay rises
in Sri Lanka, advancing salaries
to those in Ukraine and ensuring
funding was available to pay
colleagues in Russia.
Feedback from the Board’s
engagement sessions in the
previous year (see 2021 annual
report) included concerns around
underrepresentation of leaders
based in Asia. Responding to this
and other feedback, LSEG has
created an Accelerator
Programme to support the
development of high potential
candidates in APAC, providing
them with the experiences and
exposure needed to progress
their careers. The first cohort
launched in February 2022 for
64 individuals and concludes
in March 2023. In 2022, we
also launched the Illuminate
programme, designed to support
the acceleration of Black and
Latinx talent and strengthen
inclusive leadership capability.
The first cohort launched in
September 2022 for 12 Black and
Latinx leaders and 12 ally leaders
and concludes in March 2023.
Board engagement with stakeholders continued
67 London Stock Exchange Group plc
Annual Report 2022
STRATEGIC REPORT
London Stock Exchange Group plc
Annual Report 2022
Board engagement with stakeholders continued
Maintaining an open and cooperative
relationship with policymakers and regulators
on matters that affect our Group, industry,
customers, and people is critically important.
The Group has a significant number of
regulated entities around the world. These
entities are supervised at the legal entity level,
with our primary regulators predominantly
engaging with the boards of those entities.
Countries where we operate
190
How the Board has engaged
The Board considers policy,
regulation and supervisory
guidance that may affect the
Group’s businesses globally and
in the countries in which we
operate. These matters are also
discussed as part of the Chairs’
Forum (composed of the Chair
of the Group Board and the
chairs of the principal regulated
subsidiaries), the outputs of which
are provided by the Chair to the
Group Board at subsequent
Board meetings.
Key matters for
stakeholder group
Relevant key matters include:
market competitiveness, including
the attractiveness of the UK as
a global financial centre;
cross-border access to financial
services and data; sustainability
and ESG issues; data and
technology, including data privacy
and digital assets; and resilience
and financial stability, including
cloud and operational resilience.
How this engagement
influenced Board discussions
and decision-making
The Group Board takes into
consideration the priorities and
focus areas of policymakers and
regulators when discharging its
duties and responsibilities. This
includes Board discussions on
setting strategy and assessing
the delivery of key objectives.
The Group CEO updates the
Group Board on regulatory views
and priorities.
The Board takes into
consideration any regulatory
concerns when reviewing and
approving any acquisitions for
the Group. The acquisitions of
Quantile, Global Data Consortium
and TORA required regulatory
approval prior to completion.
POLICYMAKERS, REGULATORS AND SUPERVISORS
68
Suppliers
Our third-party suppliers are also
important stakeholders of the
Group. Given their significance,
management regularly reassesses
the tiering of our suppliers based
on factors including the degree of
criticality of the goods/services
being provided to LSEG, financial
spend, and risk. The Board
approves all supplier contracts
with a financial value of £50m or
more (over the lifetime of the
contract), and receives updates
on the management of, and
relationships with third-party
suppliers where appropriate.
The Risk Committee provides
oversight of the risk relating to
third-party suppliers to ensure
these arrangements are managed
within risk appetite and any issues
are appropriately remediated.
In addition to the procurement
and ongoing management of
suppliers, a number of the Group’s
subsidiaries are required to report
their supplier performance and
policies as part of the Small
Business, Enterprise and
Employment Act 2015. During
2022, further steps were taken to
accelerate the payment process
to our suppliers and we focused
on making sure purchase orders
are raised and receipted promptly
in compliance with the Group’s
procurement policy.
The Company continues to be a
signatory to the Prompt Payment
Code, a voluntary code of practice
for businesses, administered by
the Office of the Small Business
Commissioner (SBC) on behalf of
BEIS. It sets standards for payment
practices between organisations
of any size and their suppliers.
As a signatory, the Company has
agreed to:
— pay suppliers on time, within
agreed terms
— give clear guidance to suppliers
on terms, dispute resolution
and prompt notification of
late payment
— support good practice
throughout their supply chain
by encouraging adoption of
the Code.
Each year we publish a statement
setting out the Group’s approach
to managing its supply chain.
More information on the
Group’s approach can be found
at: www.lseg.com/en/policies/
modern-slavery-act-statement.
Board engagement with stakeholders continued
STRATEGIC REPORT
69 London Stock Exchange Group plc
Annual Report 2022
London Stock Exchange Group plc
Annual Report 2022
How the Board
has complied with
Section 172(1)
Section 172 of the Companies
Act 2006 (Section 172) requires
a Director of a company to act
in the way he or she considers,
in good faith, would most likely
promote the success of the
company for the benefit of
its members as a whole.
Section 172 requires a Director
to have regard, amongst other
matters, to the:
— Likely consequences of any
decisions in the long-term;
— Interests of the company’s
employees
— Need to foster the company’s
business relationships
with suppliers, customers
and others
— Impact of the company’s
operations on the community
and environment
— Desirability of the company
maintaining a reputation for
high standards of business
conduct and
— Need to act fairly as between
members of the company.
In discharging its Section 172
duties, the Board considered
these factors throughout the year.
The Board recognises the
importance of engaging with
stakeholders and understanding
their views, to help inform
strategy, Board discussions
and decision-making. In making
decisions during the year, the
Board has considered the views
and interests of its stakeholders,
as well as the need to promote
the long-term, sustainable success
of the Company. We acknowledge
that every decision we make
will not necessarily result in a
positive outcome for all of our
stakeholders. However, the
Directors recognise that having a
good understanding of the views
and interests of the Group’s
stakeholders is important in
delivering the Group’s strategy.
By having a process in place
for decision-making, the Board
ensures that relevant stakeholder
interests, including those of
employees, customers, regulators
and suppliers are considered by
the Board during its discussions
and when it takes decisions.
Decision-making
and Section 172
Information on how the Board
engaged with stakeholders
during the year, and how this
engagement influenced Board
discussions and decision-making
during 2022 are set out on the
previous pages. The following
principal decisions and activities
demonstrate how the Board has
assessed and addressed different
stakeholder interests and impacts
in making decisions that support
the implementation of the Group’s
purpose and strategy (as set out
on pages 30). We believe that
principal decisions are those
that are material, or of strategic
importance to the Group, and
those that are significant to
the Group’s key stakeholders.
Details on how our Board and
its Committees operate, their
responsibilities, and the matters
considered during the year are
contained in the Corporate
Governance Report and the
Committee Reports on pages
86 to 116.
Read more about the activities of the
Board in the Corporate Governance
Report beginning on page 86.
70
71 London Stock Exchange Group plc
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STRATEGIC REPORT
Set out below are some examples of how the Directors have had regard to the matters set out in Section 172.
Key matter Decision Stakeholders considered
Strategic
partnership
with Microsoft
In December 2022, the Company announced a 10-year strategic partnership with Microsoft
Corporation for next-generation data and analytics and cloud infrastructure solutions. Further
information on the partnership can be found on pages 7 and 19. The Company and Microsoft
have agreed to co-invest in the product development roadmap for the data platform,
Workspace, and in analytics initiatives.
The partnership will help ensure that the Group remains competitive in its current markets and
ensure the Company is responsive to how customers use and consume cloud computing. It will
enable the Group and Microsoft to build intuitive next-generation productivity, data and analytics
and modelling solutions with Microsoft Azure, AI, and Microsoft Teams. For example, LSEG
Workspace, which is the Group’s next-generation data and analytics workflow solution, will
become interoperable with certain Microsoft applications, including Teams communication and
Microsoft 365, as well as having built-in compliance for the first time.
The partnership will also seek to improve the resilience of the Group’s technology estate and to
revolutionise the way capital markets discover, analyse and trade securities around the world.
The partnership will enable the Group to build and run scalable applications to achieve faster
speed to market and greater customer reach. Further information on customer feedback can be
found on page 65. A key component of our technology strategy is ensuring resilient, reliable and
uninterrupted access to financial markets for our customers.
At the same time, the partnership will allow LSEG to align costs more directly to revenue
streams and reduce operational complexity through the consolidation of multiple
legacy technologies.
Microsoft have also purchased a 4.2% stake in LSEG. This has several benefits to shareholders,
including the alignment of interests from a long-term, strategic partner.
The Board assessed the implications of the partnership on the pension schemes and agreed that
there was no material impact on any of them. It was also agreed that the partnership was also
unlikely to trigger any of the provisions in the covenant relating to support arrangements for the
defined benefit schemes.
For colleagues, the partnership presents an opportunity to attract and retain top product and
development talent by offering experience working on the latest technology. As a leading global
financial markets infrastructure and data provider, our employees have conveyed their enthusiasm
for the strategic partnership. The strategic partnership is expected to increase LSEG’s revenue
growth meaningfully over time as the key workstreams are delivered, which the Board agreed
would be in the best interests of shareholders, employees and suppliers.
The Board was advised by executive management of the regulatory engagement that took place
prior to agreeing to the partnership.
— Customers
— Employees
— Shareholders
— Pension schemes
— Regulators
How the Board has complied with Section 172(1) continued
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Annual Report 2022
72
How the Board has complied with Section 172(1) continued
Key matter Decision Stakeholders considered
Capital
allocation
Each year the Board makes an assessment of the strength of the Group’s balance sheet and
future prospects taking into account uncertainties in the external environment. During 2022,
the Group has delivered a strong financial performance with continued revenue growth across
our businesses against the backdrop of uncertainty in the macro environment. LSEG is well
positioned to continue to deliver its strategy, purpose and vision. The Group remains highly cash
generative which, together with its strong financial position, has enabled strategic investment
and product development. Such investment and development are beneficial for customers,
employees, shareholders and other stakeholders.
M&A
During the year, the Board approved the acquisitions of TORA, Global Data Consortium (GDC),
MayStreet and Acadia. These businesses are described on pages 18 and 25. These acquisitions
further strengthen the Group’s range of products and provide additional benefits to customers,
including increased value to customers’ electronic trading workflows, expanding the Group’s
order and execution management capabilities and providing more ways for customers to optimise
financial resources and trade more efficiently. These acquisitions provide the Group with
opportunities to offer new products and services to the Group’s existing customer base and
also to offer the Group’s existing products and services to new customers.
Dividend
The Board is proposing an increased final ordinary dividend of 75.3 pence per share, bringing
the total ordinary dividend for 2022 to 107.0 pence per share, an increase of 12.6% on 2021
(2021: total dividend of 95.0 pence). In making its decisions on capital allocation and dividends,
the Board considered a range of factors. These included: the long-term viability of the Group;
its expected cash flow and financing requirements; the ongoing need for investment in our
business and our workforce; and the expectations of our shareholders and investors.
Share buyback
In March 2022, the Group announced the divestment of the BETA, Maxit and Digital Investor
businesses. The Group also announced that a significant proportion of the net proceeds of the
divestment would be returned to shareholders via a share buyback scheme. In deciding to return
the funds to shareholders, the Board took into consideration the capital allocation framework,
the macro environment, the long-term viability of the Group, its expected cash flow and financing
requirements, and the ongoing need for strategic investment in the business and workforce.
It was determined that the buyback would not affect the Group’s leverage target of 1.0x–2.0x
net debt/adj EBITDA, which is deemed a key driver of the Group’s credit rating. The Board also
considered the impact to the three UK defined benefit pension schemes which the Group
supports. It also agreed that the buyback would have limited impact on the financial position of
the employers and guarantors which support the pension schemes and would not adversely
affect the strength of the covenant or overall funding of the schemes.
The impact for shareholders was considered in the decision to announce a buyback scheme.
Following the announcement in March, the Board noted the positive reception from shareholders.
This was prior to starting the buyback programme, which began in August 2022.
— Customers
— Employees
— Shareholders
— Credit ratings
agencies
— Pension schemes
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STRATEGIC REPORT
Key matter Decision Stakeholders considered
Sustainability
During the year the Board considered and discussed updates on sustainability matters and the
Group’s position on sustainability. LSEG is committed to being an enabler of sustainable economic
growth. In 2022, following the completion of the Refinitiv acquisition, we reset our sustainability
ambition and strategy, to reflect the scale and urgency of global sustainability challenges,
our central role in financial markets and LSEG’s new scale and capabilities. As part of this,
the Board approved the sustainability strategy for the Group. In doing so, it also considered
and subsequently put to shareholders a resolution to approve the Climate Transition Plan.
Further information on the Climate Transition Plan can be found on page 55. The Board also
approved the TCFD report and annual sustainability report 2021.
Our sustainability strategy is anchored in LSEG’s purpose of driving financial stability, empowering
economies and enabling customers to create sustainable growth.
The Board noted shareholders’ expectations for the Company to have a robust approach to
sustainability, that customers require solutions to support their own sustainability ambitions, and
that our employees have sought to work for a company that values sustainability. Our sustainability
approach, including our public targets and activities, also affects the Group’s supply chain,
as well as the communities within which we operate.
The Board received regular updates on LSEG Foundation, the Group’s charitable incorporated
organisation which aims to help people access economic opportunities and build a secure future
with financial independence.
More details on our approach to sustainability, our sustainability product offering and the
LSEG Foundation can be found in the Sustainability section on page 50 and in the separate
Sustainability report.
— Communities
— Customers
— Employees
— Shareholders
— Suppliers
Change
of auditor
EY has been the Company’s auditor since 2014, and the Company is required to undertake
an audit tender every 10 years and to change external auditor after 20 years. The Audit
Committee, on behalf of the Board, carried out a tender process in 2022 for its external audit
services. Further information on the tender process can be found in the Audit Committee
Report on pages 105 to 110.
The Board agreed that it was important to run a thorough process, to follow good practice
and to treat all participating audit firms fairly and transparently, noting that all firms in the tender
process were existing suppliers of the Group. This included considering audit firms outside
of the “Big Four”. The Group’s major shareholders were asked to provide input into the process.
Guidance and insight was obtained from the Financial Reporting Council, as well as other
companies that had recently completed their own audit tenders.
Following the conclusion of a formal tender process for its statutory audit, the Board selected
Deloitte LLP as its new auditor for the financial period ending 31 December 2024. The Board
ensured that its decision would not restrict shareholders’ choice in relation to the appointment
of the statutory auditor, enabling shareholders to vote accordingly at the next AGM.
— Shareholders
— Suppliers
— Regulators
How the Board has complied with Section 172(1) continued
London Stock Exchange Group plc
Annual Report 2022
Principal risks
and uncertainties
Managing risk is fundamental
to the successful execution
of our strategy and to the
resilience of our operations.
Risk management – introduction
The effective management of risk
is critical to the execution of the
Group’s strategy. Accordingly,
the Group maintains a robust
Enterprise-wide Risk Management
Framework (ERMF), which sets
out the Group’s approach to risk
management and its appetite
for taking risks. Our regulated
entities, including clearing houses,
manage their risks in line with
both local regulation and internal
risk and investment policies.
For each principal risk, the Group
has Executive leads with the Chief
Risk Officer and Risk function
providing a second line of
oversight. The risk trend, shown
for each principal risk, is based
on the Group’s 2022 risk profile.
As well as our principal risks, we
continue to identify and monitor
emerging risks which are either
new to the Group or are difficult
to quantify due to their remote or
evolving nature. In most cases,
the mitigation for such emerging
risks is to establish appropriate
contingency plans and monitor
the development of the risk until
it can be quantified and removed
or included as a principal risk.
Risk culture
A strong risk culture requires
everyone to understand and
embrace their role in managing
risks and this is critical to the
effective embedding of the ERMF.
Risk culture is a key enabler of the
Three Lines of Defence (3LOD)
model, used to manage risk within
LSEG, and is promoted by the
ERMF in three ways:
— It sets expectations by
articulating risk appetite
and desired behaviours
through policies.
— It ensures risk is considered
in key business decisions
through frameworks and tools.
— It ensures risk is made
transparent and included in
accountability and performance
management.
Three Lines of Defence
The 3LOD model provides
appropriate segregation of
duties and clear roles and
responsibilities across LSEG
business divisions, corporate
functions, risk, compliance and
internal audit. It clearly defines
roles and responsibilities,
with accountability for risk
management sitting within the
First Line of Defence, which is
the relevant business unit.
Risk management approach
The ERMF manages risk
throughout the full risk lifecycle.
It is in place to support the ongoing
and systemic identification,
evaluation, management,
monitoring and reporting of the
significant risks faced and the
mitigating controls in place against
them. This process is supported by
robust risk governance, designed
to give a coherent view of risk
across the full Group.
In order to maintain a risk
management system that applies
effectively and consistently across
all areas of the business, we have
in place a risk taxonomy. This is
an inventory of all types of risk
that are identified as inherent
in business strategies and
objectives, including strategic,
non-financial and financial risks.
These risks are reflected in the
Group risk appetite statements
and are managed through
principles set out in the Group’s
policies. Risk assessments
determine whether risks are within
the appetite set by the Board
and are reported to senior
management and the Board.
Risk governance
Risk governance and oversight is
enabled through an effective
governance structure comprising
Board-level committees (Board,
Audit and Risk) and executive-
level committees to promote
active discussion and resolution
of risk issues.
The risk framework defines the
risk roles, responsibilities and
governance structure. The risk
governance structure ensures the
appropriate expertise and overall
input in order to adequately
oversee and challenge the risk
positions across the Group.
74
Read more about the activities of the
Board in the Corporate Governance
Report beginning on page 148.
LSEG’s new partnership
with Microsoft
In December, LSEG and Microsoft
announced a new long-term
strategic partnership to architect
LSEG’s data infrastructure using
the Microsoft Cloud, and to jointly
develop new products and
services for data and analytics.
The partnership will inevitably
change LSEG’s current risk profile,
specifically transformation risk,
as we begin to co-develop new
products and services with
Microsoft, and non-financial risks
associated with large-scale cloud
migrations as we deliver more of
our services from Microsoft Cloud.
Our existing ERMF and risk
governance practices described
above will be used to assess,
manage and report on these risks
and the change to our risk profile.
Equally, the partnership with
Microsoft provides strategic
risk mitigation in response to
observable shifts within the
Financial Market Infrastructure
(FMI) and Technology sectors,
thereby ensuring LSEG remains
relevant, competitive and
responsive to how our customers
are adopting cloud computing.
We also expect to see risk
reduction opportunities as we
migrate our systems from legacy
technology and on-premises data
centres to more modern, resilient
technology in the Microsoft Cloud.
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STRATEGIC REPORT
The risk committees, sub-
committees and relevant working
groups are embedded within the
overall governance structure of
the Group. A Group and divisional
committee structure provides risk
oversight with escalations
between forums as needed.
Group-level committees consist
of: an overall Group Executive
Risk Committee (ERC) and
Group-level sub-committees,
including Financial Risk (FRC),
Technology, Cyber and Resilience
Risk (TC&RC) and Non-Financial
Risk (NFRC) committees which
meet on a regular basis. Other
sub-committees, such as the
New Product and Market
Committee meet on an ad-hoc
basis, when required.
Each of the risk committees
has detailed terms of reference,
approved by the Board or their
parent committee, setting out
their respective roles and
responsibilities.
Group risk appetite
Risk appetite is the level of risk
that LSEG will accept in pursuit
of its strategic objectives and is
aligned with the Group’s strategy.
The risk appetite is a central
pillar of the ERMF and is used
as a benchmark for both risk
assessment and monitoring, with
regular reporting of aggregated
risks to both the Board Risk
Committee and the ERC.
The Board, on an annual basis,
articulates LSEG’s risk appetite.
This is cascaded throughout the
organisation with divisions and
functions establishing more
detailed risk appetite statements
and monitoring their risk profile
against the agreed appetite levels.
Risks that are outside risk appetite
are escalated to Executive
Committee members and to the
appropriate Risk Committee
and Boards.
Risk Governance Structure
Board Risk Committee
Group Executive Risk Committee
Group ERC sub-committees
Group ERC sub-committees
Financial Risk
Committee
LCH Ltd and SA
Risk Committees
Technology, Cyber and
Resilience Committee
Capital Markets
Risk Committee
Non-Financial
Risk Committee
Data & Analytics
Risk Committee
UnaVista Group
Risk Committee
Escalation as needed
Escalation as needed
Escalation as needed to relevant Group Sub-Committee
Escalation of cross-divisional and/or material items
Principal risks and uncertainties continued
Overview of principal risks
Three Lines of Defence
Strategic risks
Global economic and geopolitical
Reputation/Brand/IP
Transformation
1st line of defence
Business units
— Implementation of
business strategy
— Day-to-day risk management
and decision making
— Effective implementation
of the risk management
framework, including
reporting and escalation
Financial risks
CCP risk
Model risk
Board/Board Risk Committee/Board Audit Committee
Emerging risks
Disruptive technology
Sustainability risk
3rd line of defence
Internal audit
— Independent assurance of
business risk management
activities, including that the
risk management framework
is both designed and
operating effectively
Non-financial risks
Technology
Information and cyber security threats
Business continuity
Third-party risk
Data governance
People and talent
Regulatory change and compliance
2nd line of defence
Risk and compliance
— Review and challenge
of business units
— Oversee the level of risk
appetite within LSEG
— Development of the risk
management framework
— Provide specialist advice
and training across
the organisation
Principal risks and uncertainties continued
Risk category Risk Mitigation
Global
economic
and geopolitical
Executive lead
Chief Executive Officer
Risk trend
Risk overview
Whilst the Group is well diversified, global economic
underperformance or the influence of geopolitical relations
on global financial markets could have an adverse impact on
our people, businesses, operations or financial conditions.
Risk description
We operate in a broad range of equity, fixed income, foreign
exchange and derivative markets servicing customers who
increasingly seek global products and innovative solutions.
If the global economy underperforms, or there is reduced
activity in our markets, it may lead to lower revenues. Central
banks have recently taken steps to counteract inflationary
pressures, mainly through raising interest rates. This has
impacted on financial markets, raising the risk of recession in
advanced economies and the risk of default in some emerging
economies. More broadly, geopolitical relations continue to
influence global financial markets, particularly the development
of Western countries’ relations with China and the ongoing
conflict between Russia and Ukraine which is severely
impacting global energy and food supplies.
The Group’s income streams benefit from diversification
across both a broad global footprint and large customer
base, helping mitigate the exposure to localised economic
downturns. Furthermore, a significant proportion of income
streams across our business divisions comprise annuity
and subscription-fee based recurring revenues, limiting the
Group’s exposure to shorter-term movements in the global
credit cycle. In conditions of volatility the Group benefits
from market infrastructure capabilities exposed to trading
volumes and pricing movements, including FX venues,
LSE secondary markets, Tradeweb, and the London
Clearing House (LCH).
The Group performs regular monitoring and assessment
of the potential impacts of market prices and volume
movements. It also monitors and manages exposures to
the market through hedging both foreign exchange and
interest rate risks, tracking key risk indicators and stress
testing financial resilience.
The Group regularly monitors external threats and
emerging risks including geopolitics, and incorporates
the output into business continuity and strategic plans.
The Financial Risk Committee monitors and reviews
multiple financial metrics and scenarios including response
to changes in macroeconomic conditions, with mitigating
actions agreed.
Reputation/
brand/IP
Executive lead
Chief Executive Officer
Risk trend
Risk overview
Several of the Group’s businesses are iconic and trusted
international brands, and as these businesses are more closely
aligned under one overarching LSEG name, there is potential
for an event or incident to damage not only the reputation and
value of an individual brand but also the broader set of LSEG
branded products.
Risk description
The strong reputations of LSEG’s businesses are valuable
for the Group, its business credibility with regulators, and its
attractiveness to customers and potential workforce alike.
As these businesses are more closely aligned under one
Group, there is greater potential for an event or incident to
damage the reputation and value of the LSEG brand as a whole.
In addition, some of the Group’s products and processes may
include material which is not subject to intellectual property
protection by the Group. Competitors of the Group may also
independently develop or otherwise protect products or
processes that are the same or similar to our products and
processes. This could result in reputational damage, impact on
LSEG’s ability to attract new or retain existing business, and
result in financial costs to defend or enforce intellectual
property rights.
Policies and procedures are in place to ensure the
appropriate use of the Group’s brands and to manage the
integrity of the Group’s reputation. LSEG actively monitors
the use of its brands to prevent, identify and address any
infringements. The Group protects its intellectual property
by relying upon a combination of trademark, copyright,
patent and design laws, trade secret protection, database
rights, confidentiality agreements and other contractual
arrangements with its employees, affiliates, customers,
suppliers, strategic partners and others.
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76
STRATEGIC RISKS
Risks related to our strategy (including the
implementation of strategic initiatives and
external threats to the achievement of our
strategy). The category also includes risks
associated with reputation or brand values.
Risk trend key
Increasing
Stable
Decreasing
Emerging
STRATEGIC REPORT
Principal risks and uncertainties continued
Risk category Risk Mitigation
Transformation
Executive lead
Chief Executive Officer,
Chief Operating Officer
Risk trend
Risk overview
The Group is materially exposed to risk of loss or failure
resulting from transformation or integration as it continues to
grow rapidly both organically and inorganically.
Risk description
As LSEG makes acquisitions, these may, in some cases, be
complex or necessitate change to operating models, business
models, technology and people. The Group’s success has a
high dependency on its ability to integrate all parts of its
business, including acquisitions, realise synergies across the
Group, and ensure that the Group is able to compete on a
global scale. A failure to align the businesses of the Group
successfully may lead to: an increased cost base without a
commensurate increase in revenue; a failure to capture future
product and market opportunities; and risks in respect of capital
requirements, regulatory relationships and management time.
During 2022, the Group continued to undertake M&A activity,
both acquisitions and divestments. Acquisitions require the
Group to operate and integrate different technology platforms
and systems while divestments require supporting the divested
business through provision of transitional services. In addition,
challenges for the Group include maintaining the operational
resilience and security of legacy platforms, and consolidating
services, or developing new services, where underlying assets
used to provide those services are subject to contractual
commitments with third parties.
The Group faces significant competition in each of its main
business areas. The businesses have to respond to this at
the same time as navigating through various transformation
and integration activities. The markets for the Group’s data,
information, services and products are highly competitive and
are subject to rapid technological changes and evolving
customer demands and needs. Accordingly, the Group has
a sizeable strategic change agenda to transform its products,
services and platforms as it leverages growth synergies and
upgrades and replaces legacy infrastructure.
Transformation risk is reduced by the application of the
Group’s Enterprise Risk Management Framework to deploy
consistent, appropriate Risk Management and specific
mitigations across the Group, both during and post-
acquisition. The risk and change governance of the
Group following a merger or acquisition is aligned and
strengthened as appropriate following review.
The Group Transformation Forum, reporting to the
Executive Committee, is responsible for the successful
delivery and risk management of the Group Strategic
Programmes. Oversight and assurance across the
Group’s change portfolio is provided by Group Risk and
Internal Audit.
The Group has an effective track record of integrating
acquisitions, separating disposals and delivering tangible
synergies in an evolving regulatory and technological
landscape. This is supported by robust governance and
programme management structures through the Group’s
Change Framework.
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Annual Report 2022
Risk trend key
Increasing
Stable
Decreasing
Emerging
Principal risks and uncertainties continued
Risk category Risk Mitigation
CCP risk
Executive lead
Group Head of
Post Trade
Risk trend
Risk overview
The Group’s CCP activities – through LCH – expose it to a
number of financial risks that arise from the CCP’s obligation
to guarantee the performance of cleared contracts between
its members in the event a member defaults.
Risk description
In the event of a member default, the CCP must restore a
matched book by liquidating or transferring the defaulting
member’s positions held with the CCP. This can expose the
CCP to both adverse changes in the market value of the
positions (such as changes in asset prices, interest rates,
credit spreads and foreign exchange) and liquidation costs
(such as the cost of finding liquidity to exit the positions).
In addition, the CCP has investment risk arising from the
investment of member cash and liquidity risk arising from
its ongoing payment obligations. If the CCP does not have
sufficient cash available, there is a risk of a liquidity shortfall
(i.e. the CCP failing to meet its payments). Non-financial risks
arise as a result of the CCP’s day-to-day operations, such as
operational, legal & compliance and reputational risk.
CCPs by design are financially resilient against the largest
default risks. The CCP rulebook is the foundation of its
resilience. The CCP rulebook is a legally binding document
signed by members that governs all clearing activities.
It details the powers of the CCP to assess appropriate
margins, to place a member in default and to liquidate a
defaulting member’s positions and collateral. The key lines
of defence laid out in the CCP rulebook include minimum
standards for member eligibility, initial and additional
margins posted by members, a portion of the CCP’s own
capital, and then member default funds and mutualisation
of losses. Additionally, the CCP can use powers of
assessment to further absorb losses beyond the default
fund. The resilience of these mechanisms is tested via
an annual fire-drill.
In its cash investment activities, the CCP’s primary
objective is to protect principal and liquidity and to ensure
prompt availability of cash when needed. Establishing
strict criteria for the eligibility of counterparties, securities
and limits minimises investment risk, but the risk will
not be completely eliminated. Deposits at central banks
and secured placements (reverse repos) are preferred
where possible.
Unsecured commercial bank deposits are strictly limited
to less than 5% of the investment portfolio. Outright bond
purchases are limited to high-quality short-term sovereign
bonds or equivalent. All issuers and counterparties are
subject to internal credit scoring and regular reviews.
The effectiveness of the investment and liquidity risk
framework, namely operational capacity, and ability
to raise liquidity are tested in quarterly ‘war games’
exercises to ensure ongoing resilience, as well as
annual default fire-drills.
Model risk
Executive lead
Divisional Group Heads,
Chief Risk Officer
Risk trend
Risk overview
The Group’s model risks could arise from omitting models from
inclusion into model inventory, from errors during the data
sourcing, development, implementation or use of models,
or from errors in the decisions made based on their outputs.
Risk description
The Group utilises an increasing suite of models, including
Artificial Intelligence (AI), across all of its business divisions
(e.g., margin models used within our CCPs, D&A client facing
analytics, market abuse detection models within the Capital
Markets division, or stress models used to calculate capital and
climate risk). Model risks could impact both the reputation and
the financial condition of the Group.
LSEG businesses have an industry standard model risk
control and governance framework in place, including
our Model Risk Policy, the Model Management System,
developer and validation documentation templates and
development and documentation standards. Robust model
validation, performed by an independent team, is in place
to confirm our critical models are fit for purpose, and has
been rolled out across the full suite of models within the
Group. Model lifecycle controls are in place including
ongoing performance monitoring for key models and
tracking of model changes for all models. The risk oversight
is provided by the Model Risk Committee (MRC), which is a
subset of the Financial Risk Committee (FRC). Additionally,
Model Risk Management undertakes reviews of vendor
systems to identify models that could impact the Group.
Furthermore, model risk training has been rolled out across
LSEG to all model risk stakeholders to create better
awareness of model risk governance and risk policy.
The model attestation by business unit model inventory
owners is in the process of being completed.
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78
FINANCIAL AND MODEL RISKS
The risk of financial failure and loss of earnings
and/or capital as a result of investment activity,
lack of liquidity, funding or capital, and/or the
inappropriate use of models.
Risk trend key
Increasing
Stable
Decreasing
Emerging
STRATEGIC REPORT
Principal risks and uncertainties continued
Risk category Risk Mitigation
Technology
Executive lead
Chief Information Officer
Risk trend
Risk overview
LSEG is highly dependent on the development and operation of
its sophisticated technology and advanced information systems
and those of its third-party service and outsourcing providers.
Risk description
Technology failures potentially leading to system outages may
impact our customers and the orderly running of our markets,
data services and distribution. Overall, the number and severity
of incidents linked to the legacy estate continues to decline.
The Group continues to invest in the resilience of the
technology systems and processes that underpin its
important business services. These investments are
balanced across business growth, risk reduction initiatives
and strategic transformation as an enabler to longer term
objectives. The performance and availability of the Group’s
systems are constantly reviewed and monitored to prevent
problems arising and, where possible, to ensure a prompt
response to any potential service-impacting incident.
Enhancements to the technology operating model have
enabled continuous risk and control monitoring. They have
also improved resilience, helping our technology risk
reduction initiatives to identify focus areas for 2023.
Regular rigorous business impact and operational risk
scenario analysis is performed to identify, assess and
remediate potential system and governance vulnerabilities.
In addition, technology solutions are comprehensively
tested by both LSEG Technology and third-party quality
assurance providers as appropriate; functional, non-
functional, user-acceptance and other testing is performed
across technology environments to ensure products are
ready for deployment and have robust business continuity
and crisis management plans in place.
The Group actively manages relationships with key
strategic technology suppliers to minimise disruption to
service provision. Where possible the Group has identified
alternative suppliers that could be engaged in the
event of a third party failing to deliver on its contractual
commitments. Service Level Agreements (SLAs) and
ongoing monitoring are in place for key suppliers.
The risks associated with change are mitigated by
effective implementation of the Group’s change framework.
Appropriate governance, risk and executive oversight is
exercised over individual programmes and projects based
on the scale, complexity and impact of the change. The
purpose of this oversight is to confirm changes do not
breach the Group’s risk appetite and are compliant with
the approved project management policy, as well as to
manage budget, resource, escalations, risk, issues and
dependencies. For software specific development,
software design methodologies, testing regimes and
test environments are continuously being enhanced to
minimise implementation risk.
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NON-FINANCIAL RISKS
The risk of loss or other adverse consequences
to the business resulting from inadequate,
or failures associated with, internal processes,
people and systems, or from external events.
Risk trend key
Increasing
Stable
Decreasing
Emerging
Principal risks and uncertainties continued
Risk category Risk Mitigation
Information and
cyber security
threats
Executive lead
Chief Information Officer
Risk trend
Risk overview
As a global Financial Markets Infrastructure (FMI) and data
provider, LSEG is exposed to cyber risk. Increasing in
sophistication, frequency and persistence, cyber risks are
growing more dangerous and diverse.
Risk description
Significant cyber events continue to be observed in the financial
sector and in the broader economy that demonstrate the
sophistication of cyber adversaries and the impact they can
have on the victim organisation. Cyber risk is driven by the
increasing use of data, technology and digital services by
LSEG directly and by our supply chain. In addition to the direct
impact on ourselves and our customers, our role as an FMI
means that a significant cyber event could create a systemic
impact to the UK financial sector and the global markets that
we serve. We must acknowledge, to remain competitive in this
era of data and digitalisation, that cyber risk cannot be
eliminated. However, it can be managed to a level of risk
that we are prepared to take as a cost of doing business.
We continue to make significant investments in cyber
security and have a dedicated Cyber Security function led
by our Chief Information Security Officer (CISO) which is
focused on protecting and defending LSEG against cyber
attacks. Due to the increasing sophistication of cyber
adversaries and the techniques that they use, we
proactively collect and evaluate threat intelligence.
We recognise that the prevention of cyber attacks may
not always be possible and our focus and priority is on
remaining resilient to withstand cyber attacks with minimal
disruption to our business. Our approach to cyber security
aligns to industry frameworks such as the National Institute
of Standards and Technology (NIST) cybersecurity
framework and we will continue to invest and advance
our cyber defence, detection, response and recovery
capabilities. Our Group operates a three lines of defence
framework and we have a dedicated Cyber Risk function
within Group Risk providing independent oversight
and challenge.
Business
continuity
Executive lead
Chief Operating Officer,
Chief Risk Officer,
Divisional Group Heads
Risk trend
Risk overview
Business continuity is one of the key objectives of the Group’s
operational resilience strategy. It helps address the Group’s
ability to prevent, adapt to, respond to and recover from
operational disruptions to minimise the impact on our customers
and on the financial stability of capital markets.
Risk description
While the Group has processes and controls in place to ensure
the continuity of its services and operations, unforeseen events
such as physical security or cyber threats and increased
geopolitical concerns could impact on the continuity of the
Group’s services. The Group’s operations in Ukraine and
Russia were impacted by the conflict, requiring us to comply
with relevant sanctions and local legislative concerns and to
ensure the wellbeing of affected colleagues.
We have been updating our business continuity plans
throughout 2022 to reflect operating model changes
following the integration of Refinitiv. We continuously
review our plans and ensure they reflect the changing risk
landscape. Our plans are being migrated onto a single
platform to ensure consistency across the Group for 2023.
We have implemented a three-tiered Group crisis
management structure to improve our ability to respond
effectively at the appropriate level. A revised Group crisis
management plan is in place with improved playbooks for
key scenarios and is exercised to ensure the Group can
respond effectively.
We have performed a review of vulnerabilities in our
key locations and are implementing a resilience strategy
which includes reducing concentration risk and improving
resilience standards for our critical locations. Location
based business continuity exercises will continue
throughout 2023 to provide assurance that key locations
are appropriately resilient. Meanwhile, we are dedicated to
supporting affected staff and their families as well as our
third-party suppliers in countries impacted by current
global events.
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NON-FINANCIAL RISKS CONTINUED
Risk trend key
Increasing
Stable
Decreasing
Emerging
STRATEGIC REPORT
Principal risks and uncertainties continued
Risk category Risk Mitigation
Third-party
risk
Executive lead
Chief Operating Officer,
Divisional Group Heads,
Chief Information Officer
Risk trend
Risk overview
Failure to manage the risks associated with the selection,
management and oversight of critical third parties could impact
on the Group’s ability to deliver its strategic objectives.
Risk description
Our third parties are exposed to a range of risks including
geopolitical and cyber security threats and regulatory
compliance risk, whereby events may result in suppliers being
unable to meet their contractual, regulatory, confidentiality or
other obligations to the Group. This could lead to material
financial loss, higher costs, regulatory actions and reputational
harm. The Group and its entities engage third-party service
providers including Cloud Service Providers (CSPs).
The Group has engaged CSPs to host critical services and
data. The Group also relies on access to certain data used
in its business through licences with third parties. Some of this
data is provided exclusively by suppliers and may not be
obtained from other sources.
The Group continues to refine its third-party risk
management framework to provide controls across all
stages of the third-party lifecycle, covering: planning and
selecting; contracting and onboarding; managing and
monitoring; and termination and exit.
The framework helps make sure that the Group assesses
risk at key stages in the lifecycle and actively manages
relationships with critical third parties to avoid a breakdown
in service provision.
The Group focuses on the ability of critical third parties to
continue to supply goods and services in accordance
with requirements and in compliance with contractual
obligations. Throughout the year, there have been no
significant impacts to the supply chain for the Group.
Data
management
Executive lead
Divisional Group Heads,
Chief Operating Officer
Risk trend
Risk overview
LSEG plays a significant role in the financial market
infrastructure and data landscape with commitments to its
customers, counterparties, owners, vendors, regulators
and the public in the proper usage of its data.
Risk description
LSEG collects, processes, licenses, calculates, owns,
transforms, administers, and distributes data in many formats
(e.g. structured, unstructured, electronic and print formats,
audio-visual, production, testing and archive data, derived
data and personal data).
Failure to govern the Group’s data successfully could result in
those data being unfit for purpose with respect to quality and
usage. This could result in the Group or its customers and
stakeholders utilising deficient data when making decisions
which could adversely affect the Group’s reputation, financial
condition and operating results. Data privacy breaches, misuse
of personal data or failure to protect confidential information
could adversely affect the Group’s reputation and expose it to
litigation or other legal or regulatory actions. Unauthorised data
access or privacy breaches may cause some of the Group’s
customers to lose confidence in its security measures and
could impact on the Group’s financial performance.
LSEG’s Enterprise Data Governance function, led by the
Group Data Officer and the divisional data leadership
teams, works to develop and institute a comprehensive
programme to ensure Group data is of the highest quality
in order to support its intended use and the needs of our
stakeholders, customers and regulators. The Group Data
Policy and its framework support initiatives that promote a
data culture that embodies customers’ needs, improves
efficiency and quality of decision-making and ensures
adherence to regulatory obligations. As such, the Group
has defined and implemented a standardised approach
to data management oversight, governance, controls,
measures and monitoring, as well as efficient issue
resolution to mitigate any adverse impacts to the business.
In addition, the Group’s Data Protection & Privacy Policy
sets out a framework for privacy compliance to make sure
that personal data that is processed during the Group’s
business is used fairly, lawfully and in compliance with all
applicable data protection and privacy legislation. The
Group’s Information Security Policy includes a framework
for data leakage prevention and information security
incident management. LSEG employees complete annual
mandatory training courses on the Group’s data policies.
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Risk trend key
Increasing
Stable
Decreasing
Emerging
Principal risks and uncertainties continued
Risk category Risk Mitigation
People
and talent
Executive lead
Chief People Officer
Risk trend
Risk overview
Risks to the Group could arise from a lack of critical skills, talent
and knowledge, resulting in the Group being unable to achieve
its objectives.
Risk description
People and culture risks can arise from ineffective career
development, organisational structures and leadership, all of
which could impact on the engagement and wellbeing of our
people. Furthermore, increased market competition and
challenging geopolitical or economic conditions can result
in an ability to attract and retain diverse, high-performing
talent, and/or could lead to a disengaged workforce.
In 2022, the Group focused on continued progress towards
D&I objectives, aligning benefit frameworks and processes
globally, embedding reward and performance frameworks
and launching leadership development and acceleration
programmes. There has also been a focus on ensuring
efficiency in internal processes and on supporting
colleagues as they return to office environments through
the hybrid working model. Talent identification and career
development frameworks were launched in 2022 to
support our people in ensuring they have appropriate skills
and resources available to undertake their roles effectively
and to support their career journey at LSEG.
Regulatory
change and
compliance
Executive lead
General Counsel,
Chief Executive Officer,
Divisional Group Heads
Risk trend
Risk overview
LSEG is a global business operating within many regulatory
environments. The Group is exposed to risks associated with
changes to regulatory requirements and how we manage
those changes.
Risk description
Regulatory change risks that LSEG may face include: risks
arising from the conditions under which LSEG can access a
particular market (e.g. EU equivalence for UK CCPs); the
regulation and supervision of new activities; the overall reforms
in the wholesale markets in the EU and the UK; and the greater
focus on information and cyber security, data localisation and
ESG data and scoring providers. There is also a risk that one
or more of the Group’s entities may fail to comply with the
laws and regulatory requirements to which it is subject. In this
event, the entity may be subject to censures, fines and other
regulatory or legal proceedings.
Changes in the regulatory environment form key inputs into
our strategic planning, including the political impact on our
growth strategies, both organic and inorganic. We monitor
regulatory developments continually and engage directly
with policymakers as well as regulatory and governmental
authorities at local, regional and national levels.
The Group continues to maintain systems and controls
to mitigate compliance risk. In addition to the overall
Group Compliance function, compliance resources with
specialised knowledge of each of the regulated services
provided by the Group are aligned with the regulated
entities operating within each business division. They
provide regulatory advice to the business, corporate
functions and committees to support them in ensuring
that both day-to-day operations and business
developments are undertaken in accordance with the
relevant regulatory obligations.
Compliance policies are reviewed regularly and employees
across the Group are reminded of the requirements to
which they are subject under these policies through
mandatory annual training, the completion of which
is tracked.
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82
NON-FINANCIAL RISKS CONTINUED
Risk trend key
Increasing
Stable
Decreasing
Emerging
STRATEGIC REPORT
Risk category Risk Mitigation
Disruptive
technology
Executive lead
Chief Information Officer,
Divisional Group Heads
Risk trend
Risk overview
Structural market changes, new business models and advances
in cloud, artificial intelligence (AI) and distributed ledger
technology (DLT) could lower entry barriers, increase
competitive pressures and change the markets we serve.
Risk description
Change driven by disruptive technology could negatively
impact on the performance of our core business and disrupt
our commercial models. This risk spans the business, and the
pace of change of business models, technology advances and
market entrants continues to accelerate.
Cloud providers are expanding their capabilities from storage
to a wide range of data management and analytics solutions.
They also enable a whole new ecosystem of providers,
including new market entrants, who can now take advantage of
cloud providers’ customer bases and fast development cycle.
The increased use of AI internally and among customers
brings with it associated risks such as inherent bias and
automated decision-making and data management. It will also
introduce new challenges for cyber security defence and
detective mechanisms.
As technology and regulatory clarity improves, aggressive
competitor activity in DLT could increase risk of disruption. DLT
presents a potentially disruptive risk to parts of our business
as it may result in a reduced need for centralised intermediaries,
thereby bypassing some of the services we offer.
The Group actively monitors new technological
developments and the pace of change, developing robust
innovation strategies to mitigate the risk resulting from
emerging technology. The Group, including through our
Strategy function, actively scans for potential investment
opportunities in emerging technology and has a dedicated
innovation function with subject matter expertise in specific
areas of technology. The Group partners with advisers and
builds proof of concepts to test new hypotheses and, by
collaborating with our customers, can identify and quickly
react to changing consumption preferences.
Regulators are actively exploring the application of new
frameworks to manage the development of innovative
financial services technologies. We expect these to be
important for maintaining resilience and stability in the
market while enabling innovation with emerging
technology. The Group participates in relevant industry
and academic forums, partnering closely with regulators.
The Group continues to maintain systems and controls
to mitigate the risk resulting from emerging technology.
Risk arising from the Group’s use of cloud, AI and DLT is
identified, assessed, managed and reported through the
Group’s risk framework. We align with industry best
practices and guidance when considering increased
use of AI and DLT.
Principal risks and uncertainties continued
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EMERGING RISKS
Risks which are new to the Group or which
are difficult to quantify due to their remote or
evolving nature.
Risk trend key
Increasing
Stable
Decreasing
Emerging
Principal risks and uncertainties continued
EMERGING RISKS CONTINUED
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84
Risk category Risk Mitigation
Sustainability
risk
Executive lead
Chief Corporate Affairs
and Marketing Officer,
Divisional Group Heads
Risk trend
Risk overview
Sustainability risk can be defined broadly as an environmental,
social or governance event or condition that, if it occurs, can
cause significant negative financial or non-financial impact
on the Group. Sustainability risk also includes the opportunity
that may be available to LSEG because of changing social,
economic, environmental or regulatory factors.
Risk description
Sustainability risk encompasses a wide variety of other risks
which are diverse in nature, ranging from regulatory reporting
and Diversity and Inclusion to greenwashing, amongst others,
and their individuality needs to be recognised and addressed.
The Group’s focus to date has been primarily on integrating
climate risks and opportunities into investment decision-making,
to enable transition to a low-carbon economy (see page 55
on Climate Risk). International organisations, governments and
regulators are focused on integrating climate-related risks and
opportunities into strategic and investment-related decision-
making in order to prepare for a world which will be impacted
by rising global temperatures. This remains an area of emerging
and wide-ranging policy development, impacting on financial
market participants and corporates.
We assess climate risk for the Group to encompass both
physical and transitional risks. Physical risks are acute and
chronic risks which may impact on our people as well as our
global, geographically-dispersed property portfolio. Transitional
risks are factors such as product availability, policy, regulatory
and market-related developments that may impact on our
business as the world transitions to a Paris-aligned carbon
emission trajectory.
Our aim is to reinforce the Group’s resilience to both physical
and transitional risks including how the transition will impact
on demand for financial products and services. These efforts
draw on internationally-recognised guidance, including the
Task Force on Climate-related Financial Disclosures (TCFD)
recommendations, and we aim to be well prepared for ongoing
and forthcoming mandatory reporting requirements and to
protect the Group’s reputation. LSEG continues to report and
submit disclosures aligned to TCFD.
For more information on our approach to sustainability,
please see our “Enabling Sustainable Growth” section on
pages 50 to 59 and our 2022 Climate Report which can be
found on our website: www.lseg.com/en/sustainability-strategy/
disclosures-and-reports.
We support the development and adoption of global
standards for sustainable finance and encourage
consistency in regulation across jurisdictions. LSEG is an
active member of a number of groups that are helping set
global standards including: the Transition Plan Taskforce,
the Green Technical Advisory Group, the Glasgow Financial
Alliance for Net Zero, the Climate Financial Risk Forum,
the Voluntary Carbon Markets Forum, the Singapore Green
Finance Industry Taskforce, the India-UK Sustainable
Finance Working Group, and the Hong Kong Financial
Services Agency ESG Focus Group.
Internationally, we work with our peers in the financial
sector to drive collaboration on sustainable finance and
investment, including through the Glasgow Financial
Alliance for Net Zero, the Climate Data Steering Committee
and the United Nations Sustainable Stock Exchanges
initiative. This engagement helps shape the policy
and disclosure response to climate-related risks and
opportunities and supports the review and enhancement
of our market position with regards to sustainable finance.
In line with increased disclosure requirements for
corporations and financial markets participants, LSEG has
taken proactive steps to develop its methodology to
understand how climate change impacts its businesses,
both from a risk and opportunity perspective.
With regards to physical climate-related risks, given
incidences of flooding which have impacted on LSEG over
the course of 2022, we continue to carry out extensive
reviews, including the initiation of detailed environmental
assessment of our property locations. This work will
continue to progress in 2023, and will feed into our
enhanced mitigation response across our portfolio.
From a transitional climate risk perspective, we have
made progress this year in designing architecture to
allow us to potentially deploy departmental-wide carbon
budget targets, the first step in a multi-year process of
implementing carbon pricing mechanism considerations
into business decisions. This initiative will allow us to
prepare the business for any potential future regulatory
initiatives on carbon pricing, allowing us to better
understand the cost and opportunity associated with
any such action.
Finally, we incorporate sustainability risk into LSEG’s
taxonomy at different levels to recognise the diversity
of risks. This is a nascent area for risk assessment,
with key risk projects still being delivered to ensure all
sustainability-related risks are subject to adequate and
relevant risk processes.
Risk trend key
Increasing
Stable
Decreasing
Emerging
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STRATEGIC REPORT
Financial viability
statement
In accordance with provision
31 of the Code, the Directors
confirm that they have a
reasonable expectation that the
Group will continue to operate
and meet its liabilities, as they
fall due, for the next three years.
A period of three years has been
chosen for the purpose of this
viability statement, in line with
the Group’s business plan.
Viability period
The Directors’ assessment has
been made with reference to
the Group’s current position and
prospects, the Group’s three-year
business plan, the Group’s risk
appetite and the expected impact
of severe but plausible downside
scenarios and updated based
on the observed impact of
the Covid-19 pandemic on
the business.
Given the Group’s acquisitive
nature in recent years and future
organic growth strategy, a
three-year window is considered
the most appropriate horizon for
the Group’s management to make
its viability statement because
it is the period over which it can
forecast with sufficient clarity, the
Group’s financial performance,
cash flows and strategic position.
A 12-month period from the
expected date of the signing
of the financial statements is
considered for the going concern
assessment (see note 1.2 to the
financial statements of page 166).
Business planning process
The business plan makes
certain assumptions about the
performance of the core revenue
streams and segments, using
existing product lines as well
as assumptions on take up of new
product lines. It considers known
inorganic activity, as well as
assumptions on: the appropriate
levels of investment to support
expected performance; the ability
to refinance debt as required; and
expected returns to shareholders.
Assessment of viability
The principal risks and
uncertainties facing the Group are
set out on pages 74 to 84 of the
Strategic report. In addition, the
Financial Risk management note
on page 220 of the accounts
includes: the Group’s objectives,
policies and processes for
managing its capital; its financial
risk management objectives;
and its exposure to credit risk,
liquidity risk and market risk.
The business plan is stress tested
using severe but plausible
downside scenarios as
determined relevant by the
Financial Risk Committee, over
the full three-year plan period.
These scenarios are then
assessed against the Group’s
risk appetite parameters. Impacts
on the performance of core
revenue streams and segments
are modelled through business
inputs, with appropriate mitigating
factors also considered.
The scenarios modelled are
discussed in the table on the
right-hand side of this page.
The results show that a repeat
of the Global Financial Crisis
would have the largest impact
on Group EBITDA. No scenario
over the three-year period
leads to a breach of the Group’s
risk appetite thresholds, or an
inability to meet the Group’s
financial obligations through
insufficient headroom.
A reverse stress test has been
completed, to evaluate the
financial impacts required to
breach the Group’s risk appetite
thresholds. The likelihood of this
scenario materialising is viewed
as remote.
Borrowing facilities
The Group’s borrowing facilities
and respective repayment dates,
and the net debt position of the
Group, are included in note 22
from page 207. The facilities that
mature during the viability period
are expected to be refinanced.
Conclusion
The Directors assessed the
prospects and viability of the
Group in accordance with
provision 31 of the UK Corporate
Governance Code taking into
account the Group’s three-year
business plan, and the principal
risks to the Group’s future
performance and liquidity. The
Directors have a reasonable
expectation that the Group has
the ability to meet its obligations
over the viability period.
Scenario Assumption Associated
principal risk
Global Financial
Crisis
A replay of the 2008 crisis,
re-assessed to align with
current market conditions.
The scenario considers the
collapse of a major financial
institution and a simultaneous
default of one medium-sized
(domestic rather than
international) bank.
Additionally, the scenario
includes the consolidation
of four medium-sized banks
into two.
Global economic
and geopolitical.
See page 76
for more
information
Global Pandemic The scenario considers the
proliferation of Covid-19,
or a similar pandemic, with
significant impacts throughout
the global value chain.
There are severe, highly
synchronised downturns
associated with a persistent
loss of output in developed
and emerging economies.
Governments worldwide
implement restrictions on
human interaction and travel
to control virus contagion.
Global economic
and geopolitical.
See page 76
for more
information
Severe UK
economic downturn
This scenario assumes
GBP-USD currency rates
move to parity with outsized
moves in UK interest rates,
inflation, unemployment,
house prices and GDP.
Global economic
and geopolitical.
See page 76
for more
information
Cyber security
threats
The scenario considers a
cyber ransomware attack
impacting the Group’s ability
to serve a large portion of
its customers.
Information and
cyber security
threats. See
page 80
for more
information
Change delivery
failure
This scenario assumes
key supplier unavailability
due to geopolitical and
technological issues, which
results in the delayed
delivery of one of the Group’s
key strategic programmes.
Transformation.
See page 77
for more
information
This section of the Annual
Report describes how LSEG is
governed and the control
structures we have in place.
Good corporate governance is
key to promoting the long-term
sustainable success of the
Company, achieving the
Group’s objectives, generating
value for shareholders and
contributing to wider society.
Governance
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86
In this section
Corporate governance introduction 88
Board of Directors 90
Corporate governance 94
Complying with the provisions of the Code 101
Report of the Nomination Committee 102
Report of the Audit Committee 105
Report of the Risk Committee 111
Directors’ Remuneration Report 113
Directors’ Report 142
Statement of Directors’ responsibilities 147
GOVERNANCE
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London Stock Exchange Group plc
Annual Report 2022
88
Don Robert
Chair
The Board is responsible for
the long-term sustainable
success of the Company,
generating value for
shareholders and contributing
to wider society.
Dear Shareholders,
I am very pleased to present the Corporate Governance Report for the
year ended 31 December 2022. This report provides an overview of
how LSEG is governed and the control structures we have in place.
The Board is responsible for the long-term sustainable success of the
Company, generating value for shareholders and contributing to wider
society. The Board does this by supporting and challenging executive
management to ensure we operate to high governance standards.
This report explains how we seek to achieve this. It also contains some
highlights from my perspective as Chair.
Together with the reports of the Committees, we have set out how
the UK Corporate Governance Code has been applied in the year.
At the heart of the Code is a set of principles that emphasise the value
of good corporate governance to long-term sustainable success.
Board composition and diversity
On 27 April 2022 Jacques Aigrain stepped down following the
Annual General Meeting (AGM) after serving almost nine years on
the Board. I would like to thank Jacques for the valuable role he has
played in the Group’s success as a director, and as the Chair of the
Remuneration Committee.
On 3 October 2022, William Vereker joined the board as Non-Executive
Director. William also joined the Risk, Remuneration and Nomination
Committees. His background in the global financial services sector,
as well as international experience in developing senior relationships,
managing risk and organisational change will benefit the Group as
we look to further capitalise on the trends shaping our industry.
On 1 February 2023, Scott Guthrie joined the Board as a Non-Executive
Director in connection with the strategic partnership with Microsoft.
Scott has worked at Microsoft for the past 25 years and is Executive
Vice President, Cloud and AI Group. The Board looks forward to
leveraging Scott’s deep technology expertise which will provide a
distinct perspective to the Group. Further information on the strategic
partnership with Microsoft can be found on page 7 and 19.
In accordance with the terms of the Relationship Agreement, Erin Brown,
representative of Thomson Reuters, will step down from the Board on
17 March 2023. The purpose of these Board changes is to ensure we
continue to refresh the key skills and experience and to enhance the
effectiveness of the Board, while having regard to board diversity. The
Board believes that diversity of thought, experience and background
makes us more dynamic, fosters innovation and boosts performance.
The Board seeks to comply with Listing Rule 9.8.6(9) on gender and
ethnic diversity. I am pleased to confirm that two of the four senior
positions in the Company outlined in the Listing Rule are held by
women and that two of its directors are from a minority ethnic
background. At the end of 2022, the Board was over 40% female.
The work of the Nomination Committee, including the process followed
in relation to Board appointments, is described on pages 102 to 104 of
this report.
Board effectiveness review
This year’s effectiveness review was externally facilitated by Jan Hall of
No 4. The UK Corporate Governance Code recommends that FTSE 350
companies undertake an externally facilitated review every three years.
Jan Hall facilitated the 2020 effectiveness review, and it was agreed
that she would be invited to undertake a further review following the
Refinitiv acquisition given the transformational effect the acquisition
had on the Group. Results and agreed areas of focus for the Board are
described on page 97 and 98. The Board will ensure that these focus
areas are acted upon to further improve Board performance. I can
confirm that the actions from the 2021 effectiveness review have
been completed.
Corporate governance
introduction
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GOVERNANCE
Board site visits and workforce engagement
Opportunities to visit our operations globally, engage directly with the
workforce, and learn about the business continue to be very important
and valuable for the Board. After two years of restrictions on in-person
engagement, the Board was pleased to be able to visit colleagues in
the New York office during the year. Further information on this
engagement can be found on pages 66 and 67.
The Board also engaged with the workforce virtually through a series of
Board conversations in key regional locations. These meetings were
designed to increase Board members’ visibility with the workforce, to
gain real insights into the culture and any concerns at different levels
of the business, and to have meaningful, two-way dialogue with the
workforce. This was particularly important in 2022 as we sought to
continue with the integration of the Refinitiv business and embed the
Company’s culture across the Group. The feedback that Board members
received from this direct engagement was shared with the Board at
each meeting and the Board has encouraged management to respond
to any feedback and to take appropriate action. Further information can
be found on pages 66 and 67.
Committee governance
The Chairs of the Audit Committee, Risk Committee, Nomination
Committee and Remuneration Committee report on the activities of
each of the Committees during the year. I would like to thank the
Committee Chairs for the work they have done during the year,
including attending the AGM in-person to meet with shareholders.
Sustainability
As described in the Enabling Sustainable Growth section of the
Strategic Report (pages 50 to 59), LSEG has many initiatives in place
to deliver our commitment to be a strategic enabler of sustainable
economic growth. Given our central role in capital markets, our global
footprint and presence throughout the trade lifecycle, LSEG is uniquely
positioned to play a leading role in this respect.
LSEG’s role in sustainability, and tackling climate change in
particular, is very important to the Board, as well as the Group’s
shareholders, employees, customers and regulators. The Board is
committed to meeting the expectations of our shareholders and
stakeholders in this regard.
The Board agreed to put to shareholders at the AGM a resolution
on the Group’s Climate Transition Plan, and the resolution was passed,
with 98.65% of the votes in favour.
Compliance with the UK Corporate Governance Code 2018
(the “Code”)
The Company has complied with the principles of the Code throughout
the financial year ended 31 December 2022 and to the date of this
report, and complied with all provisions of the Code, except for provision
20. Provision 20 of the Code states that companies should generally
use open advertising and/or an external search consultancy for the
appointment of the Chair and Non-Executive Directors. Scott Guthrie,
who was appointed after the financial year end but before the date of
this report, was appointed in connection with the strategic partnership
with Microsoft.
For more detailed information on the Board appointment process,
please see pages 102 to 104 of the Nomination Committee Report.
This report is intended to give shareholders a clear and comprehensive
picture of the Group’s governance arrangements and how they
operated during the year. Pages 94 to 101 set out details of the areas
of our focus during the year, followed by the Committee reports.
Conclusion
I hope you find this report helpful and informative in understanding
governance at LSEG.
I encourage all shareholders to vote their shares in favour of all
resolutions to be considered at our AGM in April 2023, even if you
are unable to attend in person. Details of the AGM will be included
in the Notice of Meeting.
Don Robert
Chair
14 March 2023
Corporate governance introduction continued
London Stock Exchange Group plc
Annual Report 2022
The Board’s membership
reflects a wide range of skills
and business experience,
drawn from a number of
industries, which is critical for
bringing both the expertise
required and to enable different
perspectives to be brought
to Board discussions.
Director changes in 2022
Jacques Aigrain
Stepped down from the Board on
27 April 2022, having served over
eight years on the Board.
William Vereker
Joined the Board on 3 October 2022.
* Director changes since
31 December 2022
Scott Guthrie
Joined the Board on 1 February 2023.
Erin Brown
In accordance with the terms of the
Relationship Agreement, Erin Brown,
representative of Thomson Reuters,
will step down from the Board on
17 March 2023.
Don Robert
Chair of the Company and
the Nomination Committee
Appointed to the Board
in January 2019 and Chair of
the Company in May 2019.
Skills, knowledge
and contribution
— Strong track record in
global financial services,
international business and
mergers and acquisitions
— Expert regulatory knowledge,
accompanied with a deep
understanding of technology
and data & analytics
— Significant executive
and non-executive listed
board experience
Experience
Don spent 18 years at multinational
information company Experian plc,
where he most recently served as
Chairman (2014-2019). Prior to that
he was Group Chief Executive
(2005-2014) and CEO of the North
American business (2001-2005).
Don has served in a variety of senior
roles including Chair of the US
Consumer Data Industry Association,
Senior Independent Director of
Compass Group plc and Non-
Executive Director of the Court
of Directors, Bank of England.
Other current appointments
Non-Executive Director and
Chair-designate, Keywords Studios
plc (becoming Chair in May 2023);
Chair of Council, The London School
of Hygiene & Tropical Medicine;
Partner, Corten Capital; Non-
Executive Director of Validis
Holdings Limited and FlexCharge;
Visiting Fellow, Oxford University;
and Honorary Group Captain,
Royal Air Force.
Committee membership
Nomination (Chair)
Remuneration
David Schwimmer
Group Chief Executive Officer
Appointed to the Board in
August 2018.
Skills, knowledge
and contribution
— A wealth of knowledge
surrounding market structure,
investment banking and
emerging markets
— Extensive experience in corporate
finance, capital markets, and
mergers and acquisitions
— Deep understanding of the
business and the markets within
which the Group operates
Experience
Prior to joining the Group in August
2018, David spent 20 years at
Goldman Sachs, where he held a
number of senior roles, most
recently as Global Head of Market
Structure and Global Head of Metals
& Mining. During his tenure, he also
served as Chief of Staff to Lloyd
Blankfein, who was then President
and COO of Goldman Sachs, and
spent three years in Russia as
Co-Head of Russia/CIS. Prior to
joining Goldman Sachs, he practised
law at Davis Polk & Wardwell.
Other current appointments
Non-Executive Director, Centre
for New American Security
(Not-for-Profit).
Board of Directors
90
91 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Board of Directors continued
Anna Manz
Group Chief Financial Officer
Appointed to the Board in
November 2020.
Skills, knowledge
and contribution
— Extensive expertise in accounting,
corporate finance and mergers
and acquisitions
— Significant financial and
strategic leadership in areas
such as risk, treasury
management and accounting
— Expertise in business
diversification and transformation
Experience
Anna is a chartered accountant. Prior
to joining the Group in November
2020, Anna was Chief Financial
Officer and Executive Director of
Johnson Matthey plc (2016-2020),
leading its Finance, Procurement,
and IT functions. Prior to joining
Johnson Matthey plc, Anna spent
17 years at Diageo plc in a number
of senior finance roles, including
most recently as Chief Strategy
Officer and member of the
Executive Committee.
Other current appointments
Non-Executive Director of ITV plc.
Dominic Blakemore
Independent Non-Executive
Director and Chair of the
Audit Committee
Appointed to the Board in
January 2020.
Skills, knowledge
and contribution
— Extensive experience in corporate
finance, investor relations,
and capital markets
— Significant financial leadership
experience from various
international financial institutions
— Strong strategic planning and
decision-making experience
Experience
Dominic is a chartered accountant
and has been Group Chief Executive
Officer of Compass Group plc since
2018. Previously, he served as
Group Finance Director (2012-2015),
Group Chief Operating Officer,
Europe (2015-2017) and Deputy
Chief Executive Officer in 2017.
Dominic was formerly a Non-
Executive Director and Chair of the
Audit, Risk and Compliance
Committee of Shire plc (2014-2018).
He previously served as Chief
Financial Officer of Iglo Foods Group
Limited (2010-2011). Before joining
Iglo, Dominic was European Finance
& Strategy Director at Cadbury plc
(2008 -2010).
Other current appointments
Group Chief Executive Officer,
Compass Group plc; and Vice-Chair,
University College London.
Committee membership
Audit (Chair)
Nomination
Risk
Martin Brand
Non-Executive Director
Appointed to the Board in
January 2021.
Skills, knowledge
and contribution
— Significant board and
executive experience across
listed companies
— Highly accomplished in corporate
finance, with a focus on the
financial technology sector
— Extensive experience in strategic
planning, data & analytics and
mergers & acquisitions
Experience
Martin’s work at Blackstone Inc.
has seen him involved in several
of their high-profile investments
including; Sphera, Ellucian, Refinitiv,
Bumble, IntraFi and Paysafe. He
previously worked as a derivatives
trader with Goldman Sachs in New
York and Tokyo, and with McKinsey
& Company in London. He was a
Director of Refinitiv until 2021 and
was Chair of Tradeweb Markets
(a subsidiary of LSEG) until
February 2022.
Other current appointments
Head of North America Private
Equity, and Global Co-Head of
Technology Investing, Blackstone
Inc.; Director, UKG Software; Director
Liftoff Mobile; Director, First Eagle;
Trustee, American Academy Berlin.
Committee membership
Nomination
Erin Brown*
Non-Executive Director
Appointed to the Board in
January 2021.
Skills, knowledge
and contribution
— Significant international financial
management experience
— Expertise in mergers &
acquisitions
— Specialised knowledge
of accounting, corporate
finance, data & analytics,
and treasury-related matters.
Experience
Erin is currently Head of Finance at
Thomson Reuters Corporates. Her
previous roles at Thomson Reuters
includes Treasurer, Vice President
of Knowledge Solutions – Tax &
Accounting, Vice President, Finance,
and Vice President and Assistant
Treasurer. In 2018, Erin led Thomson
Reuters’ sale of a 55% interest in its
former Financial & Risk business
(now Refinitiv) to certain investment
funds affiliated with Blackstone.
Prior to joining Thomson Reuters,
Erin held a number of finance roles
at General Motors (2003-2011).
Current appointments
Head of Finance, Thomson
Reuters Corporates; Director,
York Parent Limited.
Committee membership
Nomination
London Stock Exchange Group plc
Annual Report 2022
92
Board of Directors continued
Professor Kathleen DeRose
Independent Non-Executive
Director and Chair of the
Risk Committee
Appointed to the Board in
December 2018.
Skills, knowledge
and contribution
— Executive leadership experience
in capital markets and asset and
wealth management
— Significant non-executive listed
board experience
— Expertise in the financial
technology market,
risk management and
data & analytics.
Experience
Kathleen held a number of senior
roles at Credit Suisse Group AG
(2010-2015). Other positions
Kathleen has undertaken have
included Managing Partner, and
Head of Portfolio Management and
Research at Hagin Investment
Management (2006-2010), and
Managing Director, Head of Large
Cap Equities at Bessemer Trust
(2003-2006). Prior to 2003,
Kathleen also held a number of roles
at Deutsche Bank and JPMorgan
Chase (formerly Chase Manhattan
Bank). In addition to her senior
executive positions, Kathleen served
as a board member of EDGE
(Economic Dividends for Gender
Equality) (2014-2015), and she
was founding Chair of Evolute
Group AG (2016-2017).
Other current appointments
Non-Executive Director, Experian plc;
Non-Executive Director, Voya
Financial Inc.; Non-Executive
Director, Enfusion Inc.; Clinical
Associate Professor of Finance,
New York University Leonard N.
Stern School of Business; Director,
Fubon Centre for Technology,
Business, and Innovation.
Committee membership
Risk (Chair)
Audit
Nomination
Tsega Gebreyes
Independent
Non-Executive Director
Appointed to the Board in
June 2021.
Skills, knowledge
and contribution
— Deep financial services and
capital markets experience
gained from various global
senior executive and
non-executive roles
— Significant expertise in
international business
and technology
— Strong background in strategy
and business development.
Experience
Tsega spent seven years at Celtel
International, a leading mobile
telecommunications provider in
the Middle East and North Africa.
During her tenure at Celtel, Tsega
held a variety of senior roles
including Senior Group Adviser,
Zain Africa BV (2007-2016), Chief
Strategy and Development Officer
(2005-2007), Chief Business
Development and Mergers &
Acquisitions Officer (2003-2005)
and Director, Mobile Commerce
and New Product Development
(2000-2003). In addition to her
senior executive positions, Tsega
has served as Vice Chair of SES
SA, and Non-Executive Director of
Hygeia Nigeria Limited (2009-2015),
ISON Group (2013-2018) and Sonae
SA (2015-2019).
Other current appointments
Founding Director, Satya Capital
Limited; Non-Executive Director,
Airtel Africa plc.
Committee membership
Audit
Nomination
Risk
Cressida Hogg CBE
Senior Independent
Director and Chair of the
Remuneration Committee
Appointed to the Board in
March 2019.
Skills, knowledge
and contribution
— Significant board and executive
level experience combined with
a strong corporate background in
infrastructure, private equity and
capital markets
— Strong Chair experience and
competency in embedding
corporate governance values
— Specialist knowledge in mergers
and acquisitions, financial
services regulation and pensions.
Experience
Cressida spent nearly 20 years with
3i Group plc and was one of the
co-founders of 3i’s infrastructure
business in 2005, before becoming
Managing Partner in 2009. During
this time, Cressida advised on all
of 3i’s infrastructure transactions.
She was also Global Head of
Infrastructure at Canada Pension
Plan Investment Board (2014-2018).
In addition to her senior executive
positions, Cressida served as a
Non-Executive Director of
Associated British Ports Holdings
Limited and a Non-Executive
Director of Anglian Water Group.
Other current appointments
Chair, Land Securities Group PLC
(until 16 May 2023); Chair-designate
and Non-Executive Director, BAE
Systems plc (becoming Chair in
May 2023); Non-Executive Director,
Troy Asset Management Ltd.
Committee membership
Remuneration (Chair)
Nomination
Scott Guthrie*
Non-Executive Director
Appointed to the Board in
February 2023.
Skills, knowledge
and contribution
— Market-leading experience in
cloud infrastructure and data &
analytics
— A deep and valuable
understanding of the technology
market
— Specialist in digital transformation.
Experience
Scott has 25 years’ experience
leading large technology teams at
Microsoft, and has been Executive
Vice President of Microsoft’s Cloud
and AI division since 2014. He is
responsible for Microsoft’s Cloud
Platform, Data and AI solutions,
Operating Systems, Business
Applications, Development Tools,
and Industry Solutions. The products
and services his team delivers
include Microsoft Azure, Dynamics
365, Power BI, SQL Server, Nuance,
GitHub, Visual Studio and the core
Windows operating system. Scott
was previously Corporate Vice
President of Microsoft Azure
(2011-2014), Corporate Vice
President of Microsoft’s Developer
Division (2008-2011), General
Manager Microsoft Developer
Division (2005-2008).
Other current appointments
Executive Vice President,
Microsoft Cloud and AI Group.
Committee membership
Nomination
93 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Board of Directors continued
Douglas Steenland
Non-Executive Director
Appointed to the Board in
January 2021.
Skills, knowledge
and contribution
— Extensive Chair and executive
experience across a range of
listed companies
— Background as a legal
practitioner, bringing expertise
in corporate law and finance
— Detailed understanding of
international business, financial
services and insurance.
Experience
Douglas is the former President
(2001-2004) and Chief Executive
Officer (2004-2008) of Northwest
Airlines Corporation. Prior to this,
he held a number of executive
positions at the company including
Executive Vice President, Chief
Corporate Officer, Senior Vice
President and General Counsel.
Previously, he was a senior partner
at Washington, D.C. law firm Verner,
Liipfert, Bernhard, McPherson and
Hand and worked in the Office of
the General Counsel of the US
Department of Transportation.
Douglas was Chairman of the
Air Transport Association (2008-
2009), after serving as a Director
(2005-2008).
Other current appointments
Senior Adviser, Blackstone
Private Equity Group; Director,
American International Group
Inc.; Director, Hilton Worldwide
Holdings Inc.; Director, American
Airlines Group, Inc.
Committee membership
Nomination
Dr Val Rahmani
Independent
Non-Executive Director
Appointed to the Board in
December 2017.
Skills, knowledge
and contribution
— Significant expertise and
knowledge of technology and
technical risk management
— Deep understanding of digital
transformation, innovation,
sales and marketing
— Extensive listed director
experience accompanied
by expert corporate
governance knowledge.
Experience
Val worked for IBM for almost
30 years, and was Chief Executive
Officer of cyber security start-up,
Damballa Inc., for four years.
Her past career also included
Non-Executive Director positions
at Aberdeen Asset Management
plc and Teradici Corporation.
Val previously ran the Innovation
Panel for Standard Life Aberdeen
and holds a Doctorate of Philosophy
in Chemistry from the University
of Oxford.
Other current appointments
Non-Executive Director,
RenaissanceRe Holdings Limited;
Non-Executive Director, CTG Inc;
Non-Executive Director, Elliott
Opportunity II SPAC; Non-Executive
Director of Entrust.
Committee membership
Nomination
Remuneration
Risk
Ashok Vaswani
Independent
Non-Executive Director
Appointed to the Board in
June 2021.
Skills, knowledge
and contribution
— Extensive experience in, and
understanding of, banking and
the financial services industry
— Deep knowledge and
comprehension of technology,
risk management, and wealth
management
— Expertise in data & analytics and
capital markets.
Experience
Ashok held a number of senior roles
within Barclays Group, including:
Chief Digital Strategy Officer at
Barclays plc (2021-2022); CEO,
Global Consumer Banking &
Payments (2019-2021); CEO, Barclays
UK (2016-2019); CEO, Personal and
Corporate Banking (2014-2016);
CEO, Retail and Business Banking
(2012-2014); CEO, UK Retail and
Business Banking (2011-2012);
CEO, Africa (2010-2011); and CEO
of Barclaycard Europe (2010).
Prior to joining Barclays, Ashok was
a Partner at Brysam Global Partners
LLC (2007-2009), a private equity
firm specialising in consumer
financial services in emerging
markets. From 1987 to 2007, Ashok
held a number of senior roles within
Citigroup Inc. Currently, Ashok
serves as the President of Pagaya,
a FinTech based in New York.
He is responsible for helping the
company grow and scale.
Other current appointments
Non-Executive Director, the Forward
Institute; Non-Executive Director,
S P Jain Institute of Management, UK
Committee membership
Audit
Nomination
Risk
William Vereker
Independent
Non-Executive Director
Appointed to the Board in
October 2022.
Skills, knowledge
and contribution
— Highly experienced banker,
including experience in
executive roles
— Significant knowledge
and experience of capital
markets, post trade and
investment banking
— Deep knowledge of financial
services and regulatory and
government relations.
Experience
William began his career at Morgan
Stanley and held a variety of
investment banking roles with a
focus on the energy and utility
sectors, which culminated with him
being MD & Head of European
Utilities (2001-2005). He also held
a number of senior executive roles
in the investment banking sector
with Lehman Brothers (2005-2008),
Nomura (2009-2013), and UBS
(2013-2018). William’s time at UBS
saw him serve as Global Head of
Investment Banking from 2016 to
2018. William served as the Prime
Minister’s Business Envoy (2018-
2020), before becoming Vice Chair
of the EMEA Investment Bank at
JP Morgan.
Other current appointments
Chairman, Santander UK; Member,
UK Investment Council; Member,
Advisory Board, Celonis GmbH; and
Chair, Advisory Board of Gonville
and Caius College, Cambridge.
Committee membership
Nomination
Remuneration
Risk
London Stock Exchange Group plc
Annual Report 2022
94
Board responsibilities
The LSEG Board is collectively responsible for the long-term,
sustainable success of the Company, the delivery of sustainable
value to its shareholders and contributing to wider society.
The Board:
— Provides leadership of the Company and is responsible for setting
the strategy and maintaining high standards of governance
— Leads the development of the Company’s culture, values,
and behaviours
— Oversees the execution of the Group’s strategy and holds executive
management to account for its delivery
— Ensures necessary resources are in place for the Group to be able
to meet its objectives and measures performance against these.
This includes the establishment of a framework of prudent and
effective controls, which enable risk to be assessed and managed
— Reviews and holds management to account for financial and
business performance
— Ensures that its responsibilities to shareholders and stakeholders
are met, including through effective engagement. This includes
having workforce policies and practices that are consistent with
the Company’s values and support the Company’s long-term
sustainable success
In carrying out their duties, the Directors act in accordance with all
relevant and applicable legislative and regulatory rules. In particular,
they take into account Directors’ duties contained in the Companies Act
2006 (the “Act”) and will consider the factors listed in Section 172 of the
Act and any other relevant factors.
LSEG’s Section 172(1) statement for the year ended 31 December 2022,
including details of certain Board decisions taken during the year, can
be found on pages 70 to 73 of the Strategic Report.
The Directors have full access to the advice and services of the
Group Company Secretary, who is responsible for advising on
corporate governance matters.
Board Committees
The Board has delegated certain responsibilities to four Board
Committees: the Audit, Nomination, Remuneration, and Risk Committees.
Full details of the Committees’ responsibilities are set out in individual
terms of reference which are available on the corporate website
and the work undertaken by each Committee during the financial year is
detailed within the respective Committee reports on pages 102 to 116.
Board composition
As at the date of this report, the Board is composed of 14 members: the Chairman, seven independent Non-Executive Directors, four Non-Executive
Directors (the Shareholder-appointed Directors
1
and the Director appointed by Microsoft
2
), and two Executive Directors. Six of the Directors are
women; two of the Directors are from a minority ethnic background; and two senior positions are held by female Directors (Senior Independent
Director and Chief Financial Officer). The Board Diversity Policy, which is reviewed annually, is available on the corporate website https://www.lseg.
com/en/about-us/corporate-governance
Board and Committee meetings
The table shows the number of scheduled and ad-hoc meetings attended against the number of meetings each Director was eligible to attend.
Director Board Audit Risk Nomination Remuneration
Don Robert 8/8 2/2 4/4
David Schwimmer 8/8
Anna Manz 8/8
Dominic Blakemore 7/8 4/4 4/4 2/2
Martin Brand 8/8 1/2
Erin Brown 8/8 2/2
Kathleen DeRose 8/8 4/4 4/4 2/2
Tsega Gebreyes 8/8 1/1 4/4 2/2 2/2
Cressida Hogg 8/8 2/2 4/4
Valerie Rahmani 8/8 4/4 2/2 4/4
Douglas Steenland 7/8 2/2
Ashok Vaswani 8/8 4/4 4/4 2/2
William Vereker 3/3 1/1 1/2 2/2
Directors who left during the year
Jacques Aigrain 2/2 1/1 1/1
Dominic Blakemore was unable to attend an ad-hoc Board meeting in November 2022 due to a pre-existing commitment.
Martin Brand was unable to attend the Nomination Committee meeting in November 2022 due to illness.
Douglas Steenland was unable to attend the Board meeting in April 2022 due to a pre-existing commitment.
William Vereker, who joined the Board in October 2022, did not attend the Nomination Committee meeting in December 2022 due to a
pre-existing commitment.
Corporate governance report
1 Directors appointed under the Relationship Agreement York Parent Limited (which is owned by Thomson Reuters Corporation and a consortium of certain investment funds managed by
Blackstone Group Inc.), York Holdings II Limited, York Holdings III Limited (each of which are wholly-owned subsidiaries of York Parent Limited) and BCP York Holdings (Delaware) L.P.
(which is a holding vehicle for the consortium of investment funds managed by Blackstone Group Inc.).
2 Appointed under the strategic initiatives agreement with Microsoft Corporation.
95 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Attendance at Board meetings
When Directors were not able to attend meetings, they received
and reviewed the relevant meeting papers. Where they had comments
or concerns on the matters to be discussed, they provided these to
the Chair of the Board or Committee in advance of the meeting.
The Chair of the Board engaged with Directors between Board
meetings to discuss business and strategic issues. The Chair met
with the Non-Executive Directors, without the Executive Directors
being present, at the end of every scheduled Board meeting.
Comprehensive Board and Committee papers, comprising an
agenda and formal reports and briefing papers are sent to Directors
in advance of each meeting. Directors are also updated with written
and verbal reports, from senior executives and external advisers
during the meeting.
Stakeholder engagement
The Board seeks to understand the interests, needs and concerns of
shareholders and other key stakeholders (including customers, the
workforce and regulators) to enable the Company to pursue long-term
sustainable success. For more information on how we engage
with our stakeholders as well as how the Board has discharged its
duties under Section 172 of the Companies Act, please see pages
70 to 73 of the Strategic Report.
Relations with shareholders
We believe that regular and ongoing engagement with our key
stakeholders and, in particular, our shareholders is central to good
corporate governance. The Group’s Investor Relations (IR) function,
reporting to the Chief Financial Officer, manages a shareholder
engagement programme throughout the year. In 2022, we welcomed
our new Head of Investor Relations, Peregrine Riviere, to the Group,
bringing over 20 years’ IR experience across a wide range of industries.
The Chair, Senior Independent Director and Chairs of each Board
Committee are available to engage with major investors, typically to
discuss corporate governance matters. In 2022, the Chair engaged
with shareholders on matters including sustainability, remuneration and
Board composition, as well as performance against the Company’s
strategy. The Chair of the Remuneration Committee consulted with
major shareholders and proxy voting agencies to understand their
views on the proposed approach for our Remuneration Policy and
key executive remuneration decisions. Further details and the outcome
of this engagement are included within the Directors’ Remuneration
Report from page 113.
Senior management and the IR team engage with investors to discuss
strategy, performance, sustainability and other matters. We saw a strong
return to in-person engagement in 2022. Senior executive management
and the IR team took part in 12 conferences this year, with 10 of those
held in person across the US, London and Continental Europe, hosted
by banks or industry organisations. Across the year, we held over 450
engagements with institutional equity and debt investors, primarily from
the UK and USA but with increasing interest from countries such as
Canada and Australia as we look to broaden our outreach.
As well as expanding our in-person conference schedule following two
years of Covid restrictions, we also ran a number of roadshows with
executive management both internationally and in the UK, stepping up
our efforts to explain our investment case and strategy to a wider range
of prospective global investors. We achieved broad coverage of our
existing register, meeting with over 80% of our active shareholder base.
Through our external adviser, Makinson Cowell, we ran a
comprehensive investor perception study. As part of the study,
Makinson Cowell engaged with a broad range of investors and touched
on a wide variety of topics including LSEG’s disclosure around strategy,
financial performance and targets, as well as the general tone and level
of insight of our communication with investors. Feedback was broadly
positive and investors recognised the growth characteristics and
opportunities of our investment case. However, while our investor
education events were almost universally regarded as helpful, investors
still felt that LSEG could do more to address the perceived complexity
of the Group. To this end, investors expressed a desire for more deep
dives into the various businesses that make up the Group and to hear
more often from divisional management. In terms of shareholder
engagement, the LSEG executive team and IR team were broadly seen
as accessible and helpful but some shareholders highlighted a lack of
communication outside of the UK. In particular, it was suggested that
LSEG should step up its involvement at sector conferences in the
US, as well as proactive engagement with investors in North America
more broadly.
The Board receives a report on IR matters at each of its scheduled
meetings, including feedback from investors, market expectations
of financial performance and updates on share register composition.
Sell-side analyst research notes on LSEG are regularly circulated
through the business, including to the Board and senior executives. The
Group’s corporate brokers also provide the Board with advice on market
sentiment, input on market communications and share register analysis.
In addition to information on financial and operational performance, the
Group engages with shareholders and relevant shareholder advisory
agencies on environmental, social and governance (ESG) matters. The
Group produces an annual Sustainability Report that details its approach
to ESG matters: www.lseg.com/investor-relations/sustainability.
Our AGM provides the opportunity for all shareholders to meet and
to put questions to the Board of Directors. We were delighted that we
were able to return to a physical AGM in 2022, held at Butchers’ Hall.
The IR section of the Group’s website (www.lseg.com/investor-relations)
is a primary source of regularly updated information about the Group.
All financial reports and statements, regulatory news service
announcements and disclosures, presentations and other relevant
documents are available on the website, together with a list of analysts
producing research on the Company and a summary of analysts’
forecasts of performance. Recognising that joining our preliminary and
interim results conference calls is not always possible, recordings of
these calls are accessible to all shareholders via the Group website.
Corporate governance report continued
London Stock Exchange Group plc
Annual Report 2022
96
Workforce engagement
The Board believes that having a diverse workforce makes us more
dynamic, fosters innovation and boosts performance. The Board
continues to support the goals for senior leadership set by management
which include goals for ethnic diversity and gender diversity. The Board
regularly tracks progress against these through D&I reporting. Further
information on D&I can be found in our culture section on page 60.
Information on workforce engagement can be found in the stakeholder
engagement section on page 66. The Board believes that the direct and
indirect engagement it undertakes with the workforce, as well as the
range of engagement activities that it has undertaken during the year,
as described in the stakeholder engagement section, are effective and
have facilitated meaningful, two-way dialogue between the Board and
employees. The forms of engagement undertaken during the year have
enabled the Board to hear from a broad range of our workforce both
across our regions and at different levels of seniority and role type,
given the size and global footprint of the Group.
Board independence
The Board has evaluated the independence of all the Non-Executive
Directors. In assessing each Director, the Board considers whether
there are relationships or circumstances which are likely to affect or
could appear to affect a Director’s judgement.
Scott Guthrie was appointed to the Board as a Non-Executive Director
with effect from 1 February 2023. Scott represents Microsoft Corporation
and was appointed in connection with the strategic partnership
(for further information please see pages 7 and 19). Martin Brand,
Erin Brown and Douglas Steenland were appointed to the Board
as Non-Executive Directors in 2021. Martin and Douglas represent
Blackstone and Erin represents Thomson Reuters. In accordance
with the terms of the Relationship Agreement, Erin will step down from
the Board on 17 March 2023. Blackstone and Thomson Reuters are
each considered to be significant shareholders of LSEG. The Board
agreed that Martin, Douglas, Erin and Scott would not be considered
independent under the Code given their relationships with Blackstone,
Thomson Reuters and Microsoft. They are not members of the
Audit, Remuneration or Risk Committees. The Board has evaluated the
independence of the other Non-Executive Directors and concluded
that each are independent in character and judgement. The Chair
was independent on appointment.
In line with the Code, at least half the Board, excluding the Chair,
are independent Non-Executive Directors. All Directors are subject
to annual re-election at the Company’s AGM.
Matters considered by the Board
Each of the regular meetings includes a wide-ranging report from the
Chief Executive Officer and reports from the Chief Financial Officer
on the Group’s financial performance and from the Chief Operating
Officer on the continued progress of the Refinitiv integration programme
and transformation programme, and operations. Reports from the
Committee Chairs and updates on major projects were also provided
at each Board meeting.
During the year, the key matters considered by the Board included
the following:
Customer
— Customer matters, including meetings with customers and key
account executives during the Board visit to New York
— Reviews of updates on customer metrics and key customer initiatives.
— Reviews of new products and services, including the Fundamental
Review of the Trading Book and the Yield Book for fixed income
analytics, and approved acquisitions that would deliver additional
customer benefits.
Strategy, execution and integration
— Regular updates on progress against the strategic objectives,
capital expenditure and investment projects and key projects
and programmes.
— Regular updates on the Refinitiv integration, including in relation
to achieving the stated targets and synergies, customer matters,
people and culture, transformation and technology.
— Approval of M&A transactions, including MayStreet, TORA,
Global Data Consortium and Acadia, and the divestment of BETA.
Subsequently, the Board agreed to use the proceeds of the
sale of BETA to return £750 million to shareholders via a share
buyback programme.
— Annual Board strategy day at which the Group’s strategy was
considered and approved.
— Review and approval of the strategic partnership with Microsoft for
next-generation data & analytics and cloud infrastructure.
Sustainability
— Review and approval of the sustainability strategy.
— Consideration and agreement of a climate-related resolution that
was put to shareholders at the 2022 AGM.
— Considered and challenged updates on sustainability matters and
the Group’s position on sustainability as well as progress achieved
against strategy.
— Review and approval of the annual Sustainability Report, Climate
Transition Plan, TCFD Report, and the Modern Slavery and Human
Trafficking Statement.
People and culture
— Regular updates on employee welfare, including future ways of
working, return to the office, the situation in Sri Lanka and the
Ukraine/Russia conflict.
— Reports from Directors on their engagement with colleagues
across the Group. The Board requested management to take action
in response to the feedback from colleagues. Further information
can be found in the stakeholder engagement section on pages 66
and 67.
— Discussion of the results of the annual LSEG Engage survey. The
Board endorsed the actions proposed by management in response
to the feedback from the workforce.
Corporate governance report continued
97 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Finance, investor relations and capital
— Review and detailed examination of the Group’s financial
performance.
— Approval of the annual budget and three-year strategic plan,
with particular focus on capital allocation and investment in
technology as well as other strategic priorities.
— Updates from the Investor Relations team on views from
shareholders on all aspects of the business.
— Proposal of the 2021 final dividend of 70 pence per share, which
was subsequently approved by shareholders on 27 April 2022.
The Board also approved the 2022 interim dividend of 31.7 pence
per share which was paid to shareholders on 20 September 2022.
— Approval of a share buyback programme to purchase voting ordinary
shares with an aggregate value of up to £750 million.
Risk management and internal controls
— Regular updates from the Chief Risk Officer on key risk management
and internal control matters, and discussion of key risks and,
where applicable, risk reduction activities.
— Review and approval of the Group’s Risk Appetite Statements and
the Policy Governance Framework, which sets the requirements for
all policies within the Group.
— Updates on technology and operational resilience.
— Updates at each Board meeting from the Chairs of the Risk and Audit
Committees on matters considered by these Committees. All Board
members have access to the materials provided to these Committees.
Board training and deep dives
The Board continued its practice of holding deep dives on key topics.
In 2022, it participated in a number of sessions relating to the strategic
partnership with Microsoft, a number of business and strategy-related
briefings during the Board visit to New York and deep dives on all three
divisions as part of the Board strategy offsite. It also held sessions on
data strategy and technology risk. Ahead of the publication of the 2022
Annual Report, Board members were invited to a training session on
climate and sustainability reporting.
Chairs’ Forum
The Chairs’ Forum is composed of the Chairs of the Group’s principal
regulated subsidiaries and the Group Chair, with the Group CEO
being invited to meetings on a regular basis. The Forum provides
opportunities for relevant subsidiary Chairs from across the Group to
engage on common themes and topics of interest. During the year,
this included: strategic matters; Board effectiveness and succession
planning; customers, people, and regulatory matters; Group financial
performance and investor relations; cloud migration strategy,
technology, and transformation programmes; and risk management
and operational resilience.
Board Effectiveness and Leadership
2022 Effectiveness Review
A Board effectiveness review is carried out annually in line with the UK
Corporate Governance Code (the Code), with a review being externally
facilitated every three years. In 2022, the Board engaged Jan Hall of
No 4 to facilitate this review. Jan facilitated the 2020 review in advance
of the acquisition of Refinitiv. The Board invited Jan back to undertake a
further review in 2022 to evaluate how the Board was performing
following the acquisition. Jan Hall is not currently engaged in any
other work on behalf of the Company.
Jan interviewed each of the Directors using agreed discussion
guidelines as the basis for each conversation. She sought the views
of Directors on:
— boardroom dynamics
— integration and performance delivery
— risk management
— strategy and ambition
— Board knowledge and the executives
— culture, purpose and values
— sustainability matters, and
— succession planning
The outputs of the evaluation were reported to, and considered by,
the Board and actions and focus areas for the Board and its Committees
to undertake in 2023 were agreed.
The results of the review will also be used to assist the Board
in its future development, its Committees, and its individual Directors.
Results
Overall, the review found that the Board and its Committees are
performing well and are effective. Board members agreed that good
progress had been achieved since the Refinitiv acquisition and they
were positive about the Board’s performance and effectiveness.
The review identified a number of positive attributes including:
— Board dynamics: how well the Board works together; the Chair’s
leadership of the Board; current Board composition; and interactions
between NEDs and the Executive Committee
— Board Committees: their overall effectiveness; the performance by
each of the Committee Chairs; how each Committee member is able
to contribute; and quality of discussions
— Board support and management of meetings: Board governance and
Board support was positively rated, including the Chair’s management
of Board meetings
— Risk management: positive views on risk management and oversight
of risk matters
The results indicated that the Board considers that it has the
appropriate balance of skills, experience, independence and
knowledge to enable it and its Committees to discharge their duties
and responsibilities effectively.
Corporate governance report continued
London Stock Exchange Group plc
Annual Report 2022
98
Next steps
The Board agreed that areas of focus for 2023 should be:
— Board knowledge: Board members provided valuable insight
regarding the areas where it would be beneficial to spend more
time and/or gain further understanding, including further teach-ins
on each Division in the Group, moving to the cloud, and acquisitions
— Board, executives and deeper relationships: desire from
the Board to further deepen Board relationships with the
Executive Committee
— Board composition and succession planning: Board members
provided views and suggested priorities in terms of
future composition
— Stakeholders: identification of further opportunities to engage
with shareholders, including their views on LSEG and growth; and
customers, including a deeper understanding of customer needs
and the data that is most valuable to them.
The results of the effectiveness reviews of the Board’s Committees
were positive about the management and composition of the
committees as well as the quality of the information received.
Areas for focus are summarised in the next column.
Committee 2023 areas of focus
Audit Committee
— Training on climate-related and sustainability financial disclosures
and corporate reporting
Nomination Committee
— Continued focus on Board and Executive Committee succession
— Continued focus on ensuring future changes to the Board are
appropriately managed to facilitate an orderly refreshing of the
Board and avoid the possibility of several Directors stepping
down in quick succession
— Continue to ensure there is a diverse talent pipeline
Remuneration Committee
— Simplification and further improvements to the quality of the
information received
Risk Committee
— Continued focus on sustainability and climate-related risks
— Continued focus on cyber risks, move to the cloud and
technology risks
2021 Effectiveness Review
The 2021 Effectiveness Review identified areas where the Board considered focus would be needed during 2022. These are summarised below,
together with the resulting actions taken in 2022.
Area Description Summary of actions taken
Future
Board
composition
Ensuring the Board contains the appropriate
mix of skills and experience
— Appointment of William Vereker and Scott Guthrie; their skills and experiences
include understanding the markets in which LSEG competes and technological
expertise, respectively
Stakeholder
oversight
Continue to seek additional opportunities
for the Board to be provided with the views
of shareholders and customers
— Regular updates on shareholder engagement and views
— Makinson Cowell investor perception study
— Customer briefings and a customer meeting with a leading global asset manager
as part of Board visit to New York
— Board engagement/conversations with employees on a regional basis
Board
organisation
Continue to allocate Board time for training
and deep dives in particular on the Data &
Analytics division
— Deep dives throughout the year on various projects, including ad hoc meetings
to review the strategic partnership with Microsoft
Strategic
oversight
Continue to increase the Board’s focus on the
external influences and environment impacting
strategy, including in relation to customers,
competitors, sustainability, other emerging
external influences, and risks
— These matters were discussed at the Board strategy offsite
— The integration of the Refinitiv business has been a standing agenda item at
each of the scheduled Board meetings in 2022
— Competitor update provided to Board in Q2 2022
— Various deep dives and business briefings during Board visit to New York
People
and talent
Ensure continued focus on executive
succession planning
— Stronger engagement with executives throughout the year, including a practice
of inviting an Executive Committee member to attend and participate in each
Board meeting
Conflicts of interest
The Company’s Articles of Association allow the Board to authorise
conflicts of interest that may arise and to impose such limits or
conditions as it thinks fit. The Group has established procedures
whereby actual and potential conflicts of interest are regularly reviewed,
appropriate authorisation is sought prior to the appointment of any
new Director, and new conflicts are addressed appropriately.
The decision to authorise a conflict of interest can only be made by
non-conflicted Directors and, in making such decisions, the Directors
must act in a way they consider, in good faith, would be most likely to
promote the Company’s success.
Indemnities
Directors have the benefit of indemnity arrangements from the Company
in respect of liabilities incurred as a result of their office and execution
of their powers, duties and responsibilities. The Company maintained a
Directors’ and Officers’ liability insurance policy throughout the year.
This policy covers the Directors for any such liabilities in respect of
which they are not indemnified by the Company and, to the extent
to which it has indemnified the Directors, also covers the Company.
Neither the Company’s indemnity nor insurance provides cover for
a Director in the event that the Director is proved to have acted
fraudulently or dishonestly.
Corporate governance report continued
99 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Risk Management and Internal Control
The Board is responsible for ensuring the Group’s risk management
framework and internal control system is maintained and remains
effective. The internal control system ensures the quality and integrity
of internal and external financial reporting as well as operational, legal
and regulatory compliance. It prescribes the extent of the principal risks
the Group is willing to take to achieve its long-term strategy.
The system of internal controls is designed to facilitate the management
of the Group and its businesses within the Board’s risk appetite rather
than eliminate the risk of failure to achieve the Group’s objectives,
and can only provide reasonable, but not absolute, assurance against
material misstatements. The Board remains committed to operating
within a strong internal control system, with a view to continuously
maturing, embedding, and optimising enhanced risk management
throughout the Group.
The Board delegates some of its responsibilities to the Audit Committee
and Risk Committee.
The Audit Committee regularly works alongside the Risk Committee to
monitor the adequacy and effectiveness of the Company’s internal
control systems and risk management systems. The Audit Committee
reports regularly to the Board on its activities. In 2022, the Audit
Committee reviewed the Group’s proposals to comply with the UK
Government’s Corporate Governance and Audit reforms and advised
on the Group’s principal risks, in relation to its financial position during
the reporting period. Further details on the activities of the Audit
Committee, can be found on pages 105 to 110.
The Risk Committee assists the Board in fulfilling its responsibilities
by advising on risk strategy and overseeing the development,
implementation, and maintenance of the Group’s Enterprise Risk
Management Framework (ERMF) and the Group Risk Appetite statement.
The Risk Committee reports regularly to the Board on its activities.
Further details on the activities of the Risk Committee can be found
on pages 111 to 112.
A summary of some of the Group’s risk management and internal control
procedures are listed below:
Enterprise Risk Management Framework
The Board annually approves the Group’s ERMF. The ERMF sets out a
standard approach for managing risk across the Group. It ensures that
all risks are adequately understood and managed across all levels of
the Group. Further details on the ERMF can be found in the principal
risks and uncertainties section from page 74.
Risk Appetite Statement
The Risk Committee approved the Group Risk Appetite statement which
outlines the key concepts of risk appetite and risk tolerance that the
Group will accept in pursuit of its strategic objectives. It is determined in
line with the Group’s strategy. The Group Risk Appetite statement allows
management to understand the potential risks associated with strategic
and operational decisions, assess whether the risk return on capital is
acceptable, and put in place mitigating actions to reduce risks to
acceptable levels. It maintains the correct balance between risks and
rewards, thus ensuring the Group remains more resilient by taking better
informed decisions.
Financial Control Framework
LSEG has established a Financial Control Framework (FCF) that sets
out to develop and maintain a robust financial control environment, that
mitigates the risk of material financial misstatement, and helps protect
the Group against financial fraud. The FCF seeks to enhance and align
the control environment within the Group and will be of pivotal
importance in ensuring that the Group is compliant with the potential
future requirements of the UK Government’s Audit and Corporate
Governance reform. The FCF aims to ensure clear links between the
Group’s financial reporting risks and the associated processes and
controls, making sure these are tested and appropriately documented.
The FCF is also focused on ensuring the right culture and training is in
place to support a risk-first mindset. The Audit Committee receives
regular updates on the progress being made to enhance the FCF.
Financial Reporting Controls
The Group’s financial reporting process is facilitated using accounting
policies and reporting formats, and is supported by guidance issued
to all reporting entities within the Group, in advance of each reporting
period end. Management is responsible for the maintenance of the
control environment for financial reporting and ensuring policies and
procedures exist around the maintenance of records. The submission
of financial reports from each reporting entity is subject to a rigorous
review. Management must provide assurance regarding the reliability
and accuracy of the Group’s financial reports. The Audit Committee
reviews the application of the Group’s accounting policies as well as
significant accounting judgements and estimates. It also reviews the
externally reported interim and full-year results and satisfies itself that
these are fair, balanced and understandable.
Internal Audit
The Board, together with the Audit Committee, is responsible for
ensuring the independence and effectiveness of the Internal Audit
function. Internal Audit’s primary function is to provide independent and
objective assurance to the Board, the Audit Committee and executive
management on the adequacy and effectiveness of the Group’s system
of internal controls. The Internal Audit function provides opinion and
challenge on the control environment, and provides assurance over
the Group’s ERMF which supports managing risks to within appetite
and achieving the Group’s long-term strategic objectives. Throughout
2022, the Internal Audit function performed a programme of assurance
over key risks applicable to the Group as well as audits required
by regulation. Thereby, Internal Audit assured the adequacy and
effectiveness of the Group’s framework of governance, risk
management and controls. To ensure independence, the Internal
Audit function sits within the third line of defence in the Group’s risk
control structure and has no operational responsibilities for the legal
entities or processes which it reviews.
The independence of the Internal Audit function from executive
management is ensured through the following measures:
— The Chief Internal Auditor reports directly to the Chair of the
Audit Committee and has direct access to the Chair of the Board.
For administrative matters she has a secondary reporting line to
the Chief Executive Officer (CEO)
— The Chair of the Audit Committee and CEO jointly assess the
performance of the Chief Internal Auditor
— The Audit Committee approves the Internal Audit Charter and
annual budget
Further details on the Internal Audit function can be found in the
internal audit charter which is available on the Group’s website at
https://www.lseg.com/en/about-us/corporate-governance
Corporate governance report continued
London Stock Exchange Group plc
Annual Report 2022
100
Policy Governance Framework
The Group is committed to operating within a strong control
environment. LSEG has a Policy Governance Framework (PGF) which
details the internal governance for all Group policies. The PGF outlines
the development, maintenance, implementation, and compliance of
all Group policies. It details how various risks in Group policies are
addressed and ensures all Group policies comply with the PGF. During
2022, a review of the PGF was completed, to ensure it remained in line
with best practice. The updated PGF was approved by the Board and
Risk Committee.
Management Structure/Delegation of Authority
The Group operates a matrix structure designed to optimise resource
allocation and organisational capacity. Subject to the Schedule of
Matters Reserved for the Board, the Board has delegated the day-to-day
running of the Group to the CEO. The CEO is supported by the Group
Executive Committee (ExCo), which is designed to ensure open
challenge and support effective decision-making. Each ExCo member
is accountable for a key operating division, business area or function.
The ExCo meets regularly to assist the CEO in exercising his authority
with material matters which have strategic, cross-business area or
Group-wide implications. Delegation from the Board requires ExCo
members to maintain responsibility and sustain a control environment
that is appropriate to their division, business area or function.
The ExCo has established sub-committees, the Financial, Investment &
Capital Committee (FICC) and the Executive Risk Committee (ERC). The
remit of the FICC is wide ranging and includes reviewing the Group’s
financial reporting process, reviewing the financial and legal implications
of Group contracts, approving changes to the Group’s corporate
structure, an annual review of the Group’s overall tax governance
policy and monitoring of the Group’s intragroup lending arrangements.
The ERC oversees matters such as risk culture, risk profile oversight,
risk policy oversight, risk appetite and risk disclosures and reporting.
The Board is satisfied that the operation and effectiveness of the
Group’s system of internal controls throughout 2022 and until the date
of approval of the Annual Report, are sufficiently robust. A thorough
assessment of the principal risks facing the Group, including those that
would threaten its business model, future performance, and liquidity,
have been carried out during the year. Necessary actions have been
or are being taken to remedy any control issues identified during these
reviews. The Board concluded that the Group’s risk management
arrangements are adequate to provide assurance that the risk
management systems put in place are suitable with regard to the
Group’s risk profile and long-term strategic objectives. The Board
will continue to consider further enhancements to its risk management
and internal control system, to ensure it complies with regulatory and
legal developments and changes to the external environment.
Further information
Further detail on the Group’s risk management and an overview of the
principal risks and uncertainties (including a summary of emerging risks)
of the Group is provided on pages 74 to 84.
Corporate governance report continued
101 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Throughout the financial year ended 31 December 2022 and to the date of this report, London Stock Exchange Group plc has complied with all
principles of the Code, and complied with all provisions of the Code, except for provision 20. Provision 20 of the Code states that companies should
generally use open advertising and/or an external search consultancy for the appointment of the Chair and Non-Executive Directors. Scott Guthrie
was appointed in connection with the strategic partnership between Microsoft and LSEG. For further detail on appointments to the Board see the
report of the Nomination Committee on page 102.
The Code is publicly available at the website of the UK Financial Reporting Council at www.frc.org.uk. Details of how the principles of the Code
have been applied can be found throughout this Corporate Governance Report, the Strategic Report, and the Committee reports. The following
table outlines where narrative on the principles is positioned throughout the Annual Report:
Section Heading
Page
Number
1. Board leadership and company purpose
A. Leadership, long-term sustainable success, generating value for shareholders and
contributing to wider society Corporate governance report 94
B. Company purpose, values, and strategy Our purpose and strategy 30-35, 94
C. Resources and prudent and effective controls Corporate governance report 94, 99
D. Effective engagement with stakeholders Board engagement with stakeholders 64-69
E. Workforce policies and practices Our culture 60-63
2. Division of responsibilities
F. Leadership of the Board Corporate governance report 94, 95
G. Board composition and clear division of responsibilities Corporate governance report 94, 96
H. Role and time commitment of non-executive directors Corporate governance report 103
I. Policies, processes, information, time and resources, and support of the Company Secretary Corporate governance report 94, 97
3. Composition, succession, and evaluation
J. Board appointment process and effective succession planning Report of the Nomination Committee 102, 103
K. Board and committee skills, experience and knowledge Report of the Nomination Committee 102
L. Annual board and individual director evaluation Corporate governance report 97, 98
4. Audit, risk, and internal control
M. Independence and effectiveness of internal and external audit function Report of the Audit Committee 108
N. Fair, balanced and understandable assessment of company’s position and prospects Report of the Audit Committee 85, 147
O. Procedures to manage risk, oversee internal control framework and determine nature
and extent of principal risks
Principal risks and uncertainties,
Corporate governance report
74-84,
99, 100
5. Remuneration
P. Remuneration policies and practices Report of the Remuneration Committee 113, 119
Q. Procedure for developing policy on executive, director, and senior management remuneration Report of the Remuneration Committee 119
R. Independent judgement and discretion in remuneration outcomes Report of the Remuneration Committee 113-115
Complying with the provisions
of the Code
London Stock Exchange Group plc
Annual Report 2022
Don Robert
Chair of the Nomination Committee
Key areas of focus for the
Committee in the year were
Board composition, succession
planning and the appointments
of William Vereker and Scott
Guthrie to the Board.
This report describes the work of the Committee.
2022 Priorities
The priorities set by the Committee at the start of the year were:
1. Continue to keep Executive Committee succession planning
under review;
2. Ensure that the balance of Board skills is appropriate to lead
the Group; and
3. Support the Group’s aim for increased diversity.
Composition and meetings
The Committee’s membership is composed of all of the Non-Executive
Directors. Structuring the membership in this way enables Non-
Executive Directors to participate in all discussions relating to Board
composition and succession planning, reflecting the importance placed
by LSEG and the Code on these areas. The names and biographies of
the Non-Executive Directors who sit on this Committee can be found
on pages 90 to 93 of this report.
The Group Company Secretary is the Secretary to the Committee and
attends all meetings. The Group Chief Executive Officer, Chief People
Officer and external advisers attend where requested by the Committee.
Committee purpose and responsibilities
The Nomination Committee is responsible for monitoring the balance of
skills, knowledge, and experience as well as the diversity of the Board.
It is also responsible for making recommendations of new appointments
to the Board and overseeing Board and senior management succession
planning. Further details on the responsibilities of the Nomination
Committee can be found in the Committee’s terms of reference
which are reviewed annually and available on the Group’s website at:
https://www.lseg.com/en/about-us/corporate-governance
The Committee met twice during the year and, in addition, Committee
members also met with director and senior management candidates.
I am pleased to confirm that the Committee’s priorities have been met,
as described in this report.
Key activities in the year
Board succession planning and Board appointments
During the year, the Committee reviewed the structure, size and
composition of the Board and its Committees, to ensure critical skills and
experience were refreshed. In carrying out its review, the Committee
took account of recent and likely future Board changes, Board expertise,
diversity and tenure. This review helped the Committee to identify Board
succession requirements.
Board appointments
Appointments to the Board are subject to a formal, rigorous, and
transparent procedure described below:
New Board appointments
The Board recognises the need to regularly refresh the balance of
skills, tenure and diversity on the Board. Jacques Aigrain stepped
down from the Board following the Annual General Meeting in April
2022, having served almost nine years on the Board. Following his
departure, the Board sought to find a candidate with financial expertise,
strong experience in capital markets and investments, and knowledge
of the international landscape within which the Company operates.
In accordance with the terms of the Relationship Agreement, Erin Brown,
representative of Thomson Reuters, will step down from the Board on
17 March 2023.
Report of the
Nomination Committee
102
London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
103
The Committee reviewed and approved an outline brief and role
specification, and appointed MWM Consulting, an external search
consultancy, which is a signatory to the Enhanced Voluntary Code of
Conduct for executive search firms, to assist in the search for a new
independent Non-Executive Director. The search firm was specifically
instructed to produce a diverse list of candidates for consideration.
Shortlisted candidates were then interviewed by several Committee
members and the Group CEO. Having interviewed the shortlisted
candidates, the Nomination Committee recommended, and the
Board approved, the appointment of William Vereker to the Board,
with effect from 3 October 2022. William joined the joined the
Nomination, Remuneration and Risk Committees.
William has significant experience in capital markets, investment,
strategy, and M&A, having worked in senior roles for UBS, Nomura,
Lehman Brothers and Morgan Stanley. William’s biography can be
found on page 93.
On 12 December 2022, the Company announced a 10-year strategic
partnership with Microsoft. As part of the partnership, it was agreed
that Scott Guthrie, Microsoft’s Executive Vice President, Cloud and
AI Group, would be appointed to the Board as a Non-Executive Director.
Scott joined the Board on 1 February 2023. Scott brings a wealth of
experience in technology, gained over a 25-year career at Microsoft,
which will help the Company navigate its journey to the cloud and with
other technological advances. Scott’s appointment will also strengthen
the partnership between the Company and Microsoft, which, from 30
January 2023, holds a 4.2% equity stake in the Company. A shortlist
of proposed candidates were interviewed by the Chairman. Based
on Scott’s skills, experience and track record as a senior leader at
Microsoft, the Nomination Committee made a recommendation to the
Board for Scott’s appointment, which was subsequently approved.
Executive Committee succession planning
During the year, the Committee, with the Group Chief Executive Officer,
discussed the succession plans for the CEO and the Executive
Committee including ensuring there was the appropriate mix of skills,
experience and diversity, as well as seeking to ensure a pipeline of
talent for executive succession. As described in the Executive
management team section on pages 8 and 9, Andrea Remyn Stone
stepped down from her role as Group Head, Data & Analytics in June.
David Schwimmer agreed to lead the Data & Analytics division until a
successor is identified.
In October 2022, it was announced that Tim Jones, Chief People
Officer, would leave the Group in Q1 2023. Erica Bourne has been
appointed as Chief People Officer with effect from January 2023.
Erica joins us from Burberry Group where she spent the last four years
leading the People function.
The Group Executive Committee is formed of individuals from a diverse
range of backgrounds. 40% of the Executive Committee members are
female, and the Group is committed to seeking broader diversity in our
leadership with the aim of having more representation from different
ethnic and other backgrounds. The Group committed to ethnic diversity
representation at 20% by the end of 2023 and 25% by the end of 2025
for senior leadership.
The names and biographies for the Group Executive Committee can be
found on page 9 of this report.
Time commitment
The Committee reviews the time commitments of the Directors and
approves any significant external appointments being undertaken by
the Directors. During the year, the Committee reviewed the additional
external appointments of myself, Kathleen DeRose and Cressida
Hogg. The Committee and/or the Board agreed that the proposed
appointments at Keywords Studios plc, Experian plc and BAE Systems
plc, respectively, would not create any material conflict of interest, and
all Directors had confirmed that they would have sufficient time to
undertake these new roles in addition to existing commitments.
Board effectiveness
The results of the 2022 Board effectiveness review are described on
pages 97. Ensuring the skills and experience on the Board were of the
appropriate mix was a focus for 2022, and this is reflected in the work
of the Nomination Committee. This year’s results and agreed areas of
focus for the Board are described on pages 97 and 98. The Board
will ensure that these focus areas are acted on to further improve
Board performance.
Diversity & Inclusion
The Board’s membership reflects a wide range of skills and business
experience, drawn from a number of industries, which is critical for
bringing both the expertise required and to enable different
perspectives to be brought to Board discussions. The combination of
these factors means that the Board benefits from a diverse range of
competencies, perspectives, and thoughts, providing an ability to
challenge on strategic issues and a dynamic environment for
decision-making.
This year, the Board reviewed and approved an updated Board
Diversity Policy which outlines the importance of diversity of gender,
social and ethnic backgrounds, and of cognitive and personal strengths
to the Board. The Policy is available on the Group website at https://
www.lseg.com/en/about-us/corporate-governance. At the end of 2022,
female representation on the Board was over 40%. The Board is also
pleased to confirm that it has met the Parker Review recommendations,
and includes two directors from minority ethnic backgrounds. Our CFO
and Senior Independent Director, who were appointed into those roles
in November 2020 and August 2021, respectively, are both women.
The Board will continue to seek to ensure that these goals are met in
the longer term.
Report of the Nomination Committee report continued
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104
Appointments and succession plans are based on merit and objective
criteria. Other than appointments covered under the Relationship
Agreement and the partnership with Microsoft, the Company uses
external search consultancies when making appointments to key
positions. These firms are required to provide a diverse list of
candidates for senior roles. In particular, the Board’s succession
and appointment approach aims to secure balanced and diverse
shortlists for new appointments.
The Group was an early signatory of HM Treasury’s Women in
Finance Charter in the UK and sought to meet the stretch goal of
reaching 40% female representation in our senior leadership population
by the end of 2022, which we have met. We also set ourselves a goal
of 20% of senior leaders from racial and ethnic diversity groups by the
end of 2023, and 25% by the end of 2025, which we are making
progress towards.
In 2022, we expanded the population measured by diversity goals to
the next level of leadership which is defined as our Group Directors.
We are working towards 40% women in Group Director roles by the
end of 2027 and 25% underrepresented groups in Group Director roles
by the end of 2027. In 2023, we are working on providing more clarity
around our ethnicity disclosures to ensure our goals are representative
of our growing employee and customer base and are useful measures
of our progress.
LSEG is a Valuable 500 Iconic Leader company, a collective of 500
CEOs and their companies, innovating together for disability inclusion.
For further information on senior leadership gender and ethnicity
representation please see our culture section on page 60.
2023 areas of focus
The priorities set by the Committee for 2023 are:
1. Continue to ensure a diverse talent pipeline
2. Review succession plans for Non-Executive Directors to ensure
that future changes are appropriately managed to avoid several
Directors stepping down in quick succession
3. Continue to keep Executive Committee succession planning
under review
Committee effectiveness
The Committee’s effectiveness was assessed as part of the 2022 Board
and Committee effectiveness review, facilitated externally by Jan Hall
of No 4. Further details can be found in the Governance section of this
report on page 97. The result of the review was that the Committee is
performing well and operating effectively.
Board appointments: use of external search consultants
An external search consultancy, MWM Consulting, supported the Board
on the appointment of William Vereker. MWM Consulting does not have
any additional connection with LSEG. The Company did not use an
external search consultancy for the appointment of Scott Guthrie as he
is a representative of Microsoft Corporation.
Don Robert
Chair
14 March 2023
Goal achieved for women in senior leadership roles 2022
40%
Report of the Nomination Committee report continued
London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Dominic Blakemore
Chair of the Audit Committee
This year the Committee
led a comprehensive external
audit tender process, reviewed
the progress on further
strengthening the Internal Audit
function and assessed the
Group’s preparation for the UK’s
upcoming Audit and Corporate
Governance reform
Committee role and responsibilities
The Audit Committee assists the Board in overseeing and monitoring
financial reporting (including climate-related financial disclosures),
internal controls systems and risk management systems.
The key responsibilities of the Committee are:
— Monitoring the integrity of the financial statements
— Reviewing significant financial reporting matters and
accounting policies
— Assessing the effectiveness of the Group’s internal control and
risk management systems (along with the Risk Committee)
— Monitoring and reviewing the effectiveness of the Group’s Internal
Audit function, including its scope of work and findings, and
ensuring that it has adequate resources and appropriate access
to information to perform its duties effectively and independently
from executive management
— Overseeing the relationship with the external auditor, including
monitoring their objectivity and independence, approving the annual
audit plan and reviewing external audit findings
— Approving the external audit fees, monitoring non-audit fees paid to
the external auditor and ensuring that the external audit is put out to
tender on a periodic basis
Further details on the functions and responsibilities of the Committee
can be found in the Committee’s terms of reference which are reviewed
annually and are available from the Group Company Secretary or in the
corporate governance section of the Group’s website at: www.lseg.com/
en/about-us/corporate-governance.
This report considers how the Committee has fulfilled its responsibilities
during the year.
Committee membership and attendance
The Committee comprises four (2021: four) independent Non-Executive
Directors. Tsega Gebreyes was appointed as a Committee member
on 3 October 2022, whilst Jacques Aigrain left the Committee and the
Board on 27 April 2022. All other Committee members have been in
place for the full year. There were four meetings of the Committee
during the year.
The skills and experience of each Committee member are provided in
the Board of Directors section on pages 90 to 93. The UK Corporate
Governance Code (the Code) requires that at least one member of the
Committee should have recent and relevant financial experience and
that members shall have competence relevant to the sector in which the
company operates. The Committee members have a wide range of
experience. The Chair of the Committee, Dominic Blakemore, is a
qualified chartered accountant with a career in a variety of senior
finance roles. The Chairs of the Audit and Risk Committees each sit
on both Committees, which makes sure that issues relevant to both
Committees are identified and managed.
The Committee’s effectiveness was assessed as part of the 2022
Board effectiveness review. More details on the Committee’s
effectiveness review can be found in the Governance section of this
report on pages 97 and 98.
Report of the
Audit Committee
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Report of the Audit Committee report continued
The Group Chair, Group Chief Executive Officer, Group Chief Financial
Officer, Group Financial Controller, Group Chief Risk Officer, Group Chief
Internal Auditor, and representatives of the external auditor, EY LLP (EY),
are all regular attendees at Committee meetings. Other members of
management may also be invited to present specific matters. The Group
Company Secretary is the Secretary to the Committee.
In addition to formal meetings, the Chair of the Committee and some
Committee members met with senior management during the year.
The Chair of the Committee also meets separately with the external
auditor, as required, ahead of each meeting.
Activities during the year
Below we set out the main work undertaken by the Audit
Committee covering:
1. Financial reporting
2. Internal controls, internal audit and risk management
3. Oversight of the external auditor
4. Other activities in the year
1. Financial reporting
Significant accounting judgements, estimates and assumptions and
matters related to the financial statements
The Committee reviewed, discussed, and approved the half-year
and full-year financial results, significant accounting judgements and
estimates, and the adequacy of disclosures. These are set out below,
the first four of which are also identified as key audit matters by the
external auditor.
Matter considered How the Committee addressed the matter
Acquisitions of GDC, MayStreet, TORA and Quantile
During 2022, the Group completed four material acquisitions. This required
the valuation of acquired tangible and intangible assets, including customer
relationships, trade names and goodwill. The fair value of acquired
intangible assets and resulting goodwill recognised on acquisition are
subject to significant estimates of:
— Future performance of the acquired business (e.g. forecast revenue,
expected revenue attrition, forecast operating margin)
— Any contributory assets charges
— Rate of return required to determine an appropriate discount rate
(in order to calculate the net present value of the assets acquired)
The Committee reviewed the acquisition accounting for each material
acquisition, including:
— Determination of the consideration paid
— Assessment of arrangements for any contingent payments
— Identification and valuation of acquired net assets with a particular focus
on acquired intangible assets
— Assessment of the resulting goodwill
— Alignment of accounting policies to LSEG
The Committee satisfied itself that goodwill and purchased intangibles had
been recognised appropriately.
See note 12 to the financial statements on pages 186 to 189.
Impairment assessment of goodwill and acquired intangibles
The Group carries significant amounts of goodwill and acquired intangible
assets on its balance sheet. In line with IAS 36 Impairment of Assets,
these are assessed for impairment:
— Annually for goodwill allocated to the Group’s cash-generating
units (CGUs)
— When there are indicators of impairment of acquired intangible assets
Impairment tests are based on value-in-use calculations which require
significant estimates over:
— Future performance
— Growth rates
— Discount rates
The Committee considered the approach and methodology to performing
the detailed annual goodwill impairment assessment as well as the indicators
of impairment of other purchased intangible assets. This included reviewing
key assumptions:
— Cash flow expectations
— Short- and long-term growth rates
— Discount rates used for the Group’s cost of capital
Given the significant changes in inflation and interest rates during the year,
the Committee was particularly focused on the growth rate assumptions
and the discount rates used and approved a revised methodology for
considering the growth profile of the CGUs. The Committee also
recommended the inclusion of additional sensitivity analysis in the
Annual Report and Accounts.
See note 14 to the financial statements on pages 191 to 195 for details of the
impairment review.
Capitalisation and subsequent impairment of internally
developed software
The Group continues to develop and capitalise significant levels of
software. The capitalisation of software development costs involves
management judgement against criteria set in IAS 38 Intangible Assets.
The Committee reviewed the methodology used to capitalise software
development costs and satisfied itself that it was adequate and in conformity
with IFRS.
The Committee also considered possible indicators of impairment for
significant internally developed software. The Group recognised an
£11 million impairment charge in relation to software assets.
Revenue recognition
The Group generates revenue from a variety of sources that are material
in size and volume. Judgements are applied to the timing of revenue
recognition and year-end revenue accruals, particularly across Refinitiv
subscription revenues, Capital Markets trading fees and FTSE Russell
revenue accruals.
The Committee was satisfied that sufficient analysis had been performed
in this area to conclude that revenue has been recognised appropriately
and that there is no evidence that any manipulation of revenues has
taken place.
The Committee also reviewed the significance of judgements applied and
assessed any necessary disclosure requirements. It was concluded that
no judgement on revenue recognition required individual disclosure in the
Annual Report and Accounts.
107 London Stock Exchange Group plc
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GOVERNANCE
Matter considered How the Committee addressed the matter
Disposal of BETA
On 1 July 2022, the Group sold BETA for a total cash consideration of
$1.1 billion (£0.9 billion), realising a profit on disposal of £0.5 billion.
The calculated gain on disposal is dependent on the identification and
measurement of the net assets disposed.
In addition, BETA was deemed to be a discontinued operation as it
represented a separate major line of business. Its results have therefore
been excluded from the continuing results of the Group.
The Committee considered and endorsed the treatment of BETA as a
discontinued operation within the Group’s results. In addition, the Committee
reviewed the calculation of the gain on disposal.
See note 13 to the financial statements on pages 189 to 191.
Uncertain tax positions
The Group is subject to taxation in the many countries in which it
operates. There are five main ongoing tax assessments for which the
Group has used guidance under IFRIC 23 Uncertainty over Income Tax
Treatments to determine the possible outcomes, and any related
obligations, and to assign a probability to each of those outcomes:
— EU State Aid
— US Internal Revenue Service (IRS) Audit
— Russian tax audit
— Valuation of certain Refinitiv intellectual property
— Diverted Profits Tax to Thomson Reuters
The Committee reviewed the main areas at each Committee meeting
with a particular focus on the in-year developments below.
— EU State Aid: The Committee discussed the Group’s appeal to the
EU Court of Justice to set aside the EU General Court’s judgement in
June 2022 in respect of petitions to annul the EU Commission’s findings
in 2019 that the UK had breached EU State Aid rules with regards to
its CFC exemption known as the Finance Company Partial Exemption.
— IRS Audit: The Committee has assessed the financial reporting
implications of the Group’s ongoing discussions with the IRS in relation
to the funding structure within its US subsidiaries.
— Russian tax audit: The Committee discussed the audit by the Russian
Tax Authorities for the period 2018-2020, which could result in
additional taxes being paid locally.
The Audit Committee determined that the provisions and disclosure for
these matters are appropriate.
See note 8 to the financial statements on pages 179 to 182 for details of
the uncertain tax positions.
Non-underlying items/alternative performance measures
The Group separately identifies results before non-underlying items
(these are referred to as “adjusted”). The Group uses its judgement to
classify items as non-underlying (see note 6 to the financial statements).
The Committee discussed and agreed on the classification of non-
underlying items in the financial statements for the year, which the
Committee acknowledges is a significant judgement in the financial
statements. In particular, the Committee discussed the nature and
amounts of:
— Transaction costs
— Integration costs
— Restructuring costs
— Amortisation of purchased intangibles, mainly linked to the acquisition
of Refinitiv in 2021
— Gain on and costs associated with the disposal of BETA
The Committee discussed the quality of earnings in relation to the Group’s
adjusted operating profit.
The Committee approved a policy change for an increase in the materiality
threshold for non-underlying items, to be enacted for 2023.
See note 6 to the financial statements on pages 177 and 178.
2. Internal controls, internal audit and risk management
The Committee continued to exercise disciplined oversight of the
effectiveness of the Group’s internal controls and Internal Audit
function, in line with principles of the Code. It fulfilled its responsibilities
by reviewing and discussing regular reports from management,
the external auditor and the Internal Audit function including:
— Reports on compliance with the Code – internal controls
(including whistleblowing)
— Reports on the Group’s plan to comply with the UK Government’s
Audit and Corporate Governance reform
— Two progress updates on the programme to create a single
financial control framework
— Quarterly updates on internal audit delivery
— Regular updates on improvements to the Internal Audit function
— An annual report on the effectiveness of the Internal Audit function
at the first Committee meeting of the year
— The external audit management letter from EY. The letter highlighted
areas for improvement which were noted by the Committee for
follow-up
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Report of the Audit Committee report continued
During the year, the Committee received an update on the Internal
Audit function, which included:
— The development of a refreshed target operating model to reflect
the enlarged business and global footprint. The Committee endorsed
the approach for building out the global audit function
— Internal Audit’s balanced scorecard
— The Results of Quality Assurance activities undertaken during
the year
Impact of acquisitions and disposals on the risk landscape
As a result of the acquisitions and disposals throughout the year,
the internal audit universe was updated to reflect the changed
organisation. As part of annual planning, an inherent risk assessment
was undertaken which, alongside regulatory requirements for
internal audit work, guided the audit plan for 2022 and, similarly, the
plan for 2023. Management is undertaking significant work to ensure
that the risk landscape is fully understood and that appropriate
controls are in place to mitigate risk to within the firm’s stated risk
appetite over time. This work will be supported by the Risk function
and by Internal Audit, both of whom are building out resources to
support the necessary oversight and assurance.
As regards the work of Internal Audit, the Committee:
— Approved changes to the audit plan throughout the year and
confirmed its support for the coverage model that provides the
independent assurance plan
— Approved the 2023 internal audit plan, internal audit budget and
resources for the Internal Audit function
— Reviewed the annual Internal Audit Opinion as well as themes/root
cause analysis arising from audit work performed
— Satisfied itself that management is closing actions within
reasonable timeframes
— Noted Internal Audit’s consideration of fraud risk in the annual
work programme
— Received an update on the enhancements being made to the
Speak-Up and whistleblowing protocols
The Committee undertook its annual review of, and approved,
the Internal Audit Charter.
The Internal Audit External Quality Assessment in February 2022,
performed by Deloitte LLP, concluded that LSEG Internal Audit
demonstrates general conformance (the highest rating) with relevant
standards and other criteria. The Assessment noted that there are areas
upon which Internal Audit should continue to focus. The Internal Audit
function developed an action plan to address these improvement
points. Actions are being completed in line with anticipated timescales.
The Committee obtained additional comfort by meeting with the Group
Chief Internal Auditor at each Committee meeting without executive
management present.
The activities of the Committee relating to internal controls enabled it to
satisfy itself that the Internal Audit function is independent, objective
and adequately staffed to perform its duties. In addition, the Committee
assessed the effectiveness of the Internal Audit function throughout the
year using qualitative and quantitative indicators including:
— Completeness of the audit plan
— Results of Quality Assurance activity over audit work (updated at least
once a year)
— Quality of the audit reports and the issues raised
— Root cause insights on the issues raised and feedback from executive
management on specific audits
— Key performance indicators such as the distribution of audit
ratings, percentage of past due actions and percentage of
self-identified issues
The Committee concluded that the Internal Audit function is both
independent and effective, in line with principle M of the Code.
In addition, the Committee (in conjunction with the Risk Committee)
relied on this assurance process throughout the year to recommend
to the Board that it could report to shareholders on the effectiveness
of the Group’s internal control system and risk management systems.
This assurance satisfies principle O of the Code. The Board statement
can be found on page 99.
3. Oversight of the external auditor
The Committee approved the EY audit plan, the methodology used,
the scope of the audit, the risks, and areas of focus as well as the
materiality threshold for the Group and the threshold for reporting
unadjusted differences.
The Committee assessed the effectiveness of the external audit
process including the independence and quality of the Group’s external
auditor (EY) throughout the year in accordance with principle M of the
Code. The Committee relied on its own judgement supported by the
following evidence:
— A report from management on its own evaluation of the effectiveness
of the external auditor
— Reports from EY on the status of their 2022 plan and the results of
their work, as well as EY’s own assessment of their independence.
The external auditor’s reports were discussed at each Committee
meeting and their views and opinions used to challenge decisions
by the Group
— The separate meetings held with EY at each Committee meeting
without management being present
— The FRC’s 2021/22 Audit Quality Inspection results
In considering the independence of the external auditor, the Committee
was made aware of three non-audit tax advisory services which were
provided to certain entities within the Group by Deloitte USA, which
audited one of the Group’s subsidiaries. It was concluded that these
services were prohibited under the FRC’s Ethical Standard. EY placed
reliance on the work performed by this component audit firm.
The Committee reviewed the services provided and the additional
audit procedures performed by EY and concluded that the provision
of the services did not call into question the independence of the work
performed by the auditors. Appropriate safeguards were in place to
ensure that individuals who performed the services were not part of the
audit teams. Additional reviews of the component auditors’ work did not
identify any other areas concerning the independence of the audit.
Based on all evidence presented, the Committee satisfied itself that the
external audit has been conducted independently and effectively with
the appropriate rigour and level of testing.
EY were appointed as the Group’s external auditor in 2014. The lead
audit partner and other key partners identified are required to rotate
every five years. Other partners are required to rotate every seven
years. In light of the additional scale and complexity of the Group
following the acquisition of Refinitiv, Simon Michaelson was appointed
as lead audit partner during the year.
109 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Audit tender
Legislation requires that public companies undertake a tender
process for external audit services every ten years. EY were
appointed as our auditors in 2014, meaning we have to undertake a
tender process ahead of our 2024 financial year. We decided to do
this in the first half of 2022 to provide enough time for an orderly
transition in the event we changed auditor.
The audit tender process was led by the Audit Committee Chair,
supported by a steering committee made up of Audit Committee
members and senior management. As well as consulting FRC and
other guidance, we asked our main institutional shareholders for
input and held discussions with companies that had gone through
an audit tender themselves.
Six firms were invited to participate, of which two were audit firms
outside of the ‘Big Four’. Three of the six firms declined to participate
and one further firm was deselected early in the process. The formal
process included:
— An extensive selection process (including obtaining references)
for the proposed Lead Audit Partners
— More than 40 meetings between the firms and management
— A number of meetings with, and formal presentations to, the
Audit Committee
— An assessment of the FRC’s Annual Audit Quality Inspection Results
— A scorecard across a range of criteria with results from more than
20 individuals
Firms were assessed over a number of areas including:
— Depth and breadth of capabilities
— Understanding of business and audit risks
— Audit quality
— Culture and people development
— Independence
Having considered the scoring criteria, key factors, input and
observations from the Selection Committee and the presentations
themselves, the Audit Committee recommended to the Board that
Deloitte LLP be appointed as the Group’s external auditor for the
financial period ending 31 December 2024. This will be subject to
shareholder approval and confirmation that Deloitte can satisfactorily
demonstrate its independence controls, particularly in light of the
issue mentioned above. For the year ending 31 December 2023,
the Committee has recommended to the Board that a resolution
for the reappointment of EY as the Group’s external auditor be
proposed to shareholders at the AGM in April 2023.
Report on external auditor’s fees and safeguards on
non-audit services
The Committee has a policy governing the engagement of the
external auditor to provide non-audit services, which is reviewed
on an annual basis.
The policy prohibits certain activities from being undertaken by the
external auditor such as: accounting/bookkeeping services; internal
auditing; certain tax and payroll services; executive recruitment;
remuneration services; and more generally any work which could
compromise their independence. The policy also places restrictions
on the employment of former employees of the external auditor.
Recognising that the external auditor may be best placed to undertake
certain work, the policy permits the provision of certain audit-related
services and certain non-audit services. During the year the policy was
amended to allow approval for any audit and non-audit services below
a £100k threshold to be delegated to the Group Chief Financial Officer.
Any such approvals are then reported to the Audit Committee at the
next meeting.
The Committee fully complied with the policy in the year. It reviewed
each of the appointments on their merits and considered management’s
assessment of:
— The threats to independence and objectivity resulting from the
provision of such services
— Whether other audit firms could undertake the work
— Whether there were any conflicts of interest for EY
— The quantum of non-audit fees in the context of the overall audit fee
A breakdown of audit and non-audit service fees paid and payable to
the external auditor for the year ended 31 December 2022 is provided
below and in note 29 to the financial statements.
Year ended 31 December
2022
£m
2021
£m
Services
Audit of parent and consolidated financial
statements 6 7
Audit of subsidiary companies 7 6
Non-audit services 1 1
Total 14 14
EY LLP provided non-audit services of £0.9 million; 7% of total fees
(2021: £1.2 million; 8% of total fees). This comprised of audit-related
assurance services of £0.7 million (2021: £0.8 million) and other
non-audit services of £0.2 million (2021: £0.4 million).
In each case, the Committee concluded that the appointment of EY
to perform certain services would not impair their independence and
represented the most effective, secure, and efficient way of obtaining
the necessary advice and services.
The Committee has complied with the relevant parts of the Competition
and Markets Authority Final Order on the statutory audit market for the
year ended 31 December 2022.
Report of the Audit Committee report continued
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110
4. Other matters
Going concern and long-term financial viability statement
The Directors are required to assess whether it is appropriate to
prepare the financial statements on a going concern basis and, in
accordance with the Code, provide a statement on the Group’s viability.
At its meeting in February 2023, the Committee reviewed the Group’s
forecasts and projections, taking into account reasonably possible
changes in trading performance. It confirmed that the going concern
basis in preparing the financial statements continues to be appropriate.
See page 147 of the Statement of Directors’ responsibilities for the
going concern statement. At the same meeting, the Committee also
considered the Group’s long-term viability with reference to the Group’s
current position and prospects, three-year business plan, risk appetite
and the expected impact of severe but plausible downside scenarios
on the business. See page 85 of the Strategic Report for the financial
viability statement.
Fair, balanced, and understandable (FBU) reporting
In line with principle N of the Code, the Committee satisfied itself
that the Annual Report is fair, balanced and understandable and has
presented its conclusions to the Board. The Committee assessed drafts
of the Annual Report including the financial statements and discussed
with management the process undertaken to ensure that the relevant
requirements were met. This process included:
— Independent reviews of the entire report by people not directly
involved in preparing the report
— Extensive review and verification processes by the appropriate
departments and senior managers to ensure the accuracy of
the content
— Consideration of the balance of disclosure between positive and
negative points on the Group’s performance in the year
See page 147 of the Statement of Directors’ responsibilities for the
fair, balanced and understandable statement.
Audit and Corporate Governance reform
The Committee received a number of updates on how the Group is
preparing for the UK Government’s Audit and Corporate Governance
reform. This included an assessment of the current financial control
landscape and the steps to be taken to make sure that the Group
develops a framework that is in line with leading companies.
The Committee reviewed the plans which include:
— Completing a fraud risk assessment
— Establishing governance and ownership of the Group’s Audit and
Assurance Policy
— The Group’s enterprise risk management framework and Operational
Resilience programmes
— A comprehensive financial risk assessment together with Design
Effectiveness Assessments of key financial processes and controls
— Steps being taken to improve control training and risk-awareness
Sustainability and Climate Risk reporting
During the year, the Committee discussed the Group’s disclosure
requirements regarding sustainability and climate change. The
Committee also reviewed the broader landscape for climate risk
reporting and the Group’s plans for ensuring it remains compliant with
future changes, including the amendments to the Companies Act 2006
that will be required for the financial year ended 31 December 2023.
Whistleblowing investigations
The Group’s whistleblowing policy provides a method of addressing
concerns while at the same time offering whistleblowers protection from
victimisation, harassment or disciplinary proceedings. During the year,
the Committee continued to closely monitor the effectiveness and
independence of the Speak-Up and whistleblowing arrangements of
the Group.
Areas of focus in 2023
— Assessing the Group’s readiness to comply with the UK Government’s
Audit and Corporate Governance reform and climate-related
disclosure requirements
— Reviewing the Group’s plan for implementing a leading Financial
Control Framework
— Receiving early and continuous understanding of the impact of the
Group’s acquisitions and disposals on financial and tax accounting,
and ensuring that the transactions are accurately represented in the
Group’s annual report and accounts
— Monitoring the Group’s uncertain tax positions
— Continuing to assess the impact of developments in accounting standards
— Receiving assurance that the internal control and risk management
environment remains robust
— Supporting the build-out of the Internal Audit function to enable
timely execution of the annual audit plan
Dominic Blakemore
Chair of the Audit Committee
14 March 2023
Report of the Audit Committee report continued
London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Kathleen DeRose
Chair of the Risk Committee
Risk management is
fundamental to the successful
execution of our strategy
and to the resilience of our
operations. The Group
continues to support its key
markets and deliver stable and
resilient services that meet our
clients’ needs. The Group’s
risk culture, objectives, appetite,
governance and operations are
well established, underpinning
the whole organisation.
2022 priorities
In 2022, the Risk Committee continued to progress the established
vision for the risk culture of the Group, and assessed the risk profile
against the Group’s risk appetite, as well as performing targeted reviews
of the Group’s key risks. This included:
— Reviewing emerging geopolitical risks, challenging scenario analysis
and progress on remediations.
— Providing oversight on high focus topics such as cyber security,
platform security, technology risk and operational resilience.
— Continuing to promote risk awareness and transparency through
oversight of enhanced assessment and reporting.
— Reviewing and challenging all risks across the Group, including
review of key incidents and remediation activities.
— Providing oversight on the embedding of Enterprise Risk
Management Framework (ERMF) components.
Composition and meetings
The Committee comprises six independent Non-Executive Directors.
The skills and experience of each Committee member are provided in
the Board of Directors section on pages 90 to 93. Five of the six
Committee members have been in place for more than a year. William
Vereker was appointed as a Committee member on 3rd October 2022.
The Group Chair, Group Chief Executive, Group Chief Financial Officer,
Group Chief Risk Officer (CRO), and Group Chief Internal Auditor are all
standing attendees at Committee meetings. A member of the Company
Secretariat is the Secretary to the Committee. In addition to the standing
attendees, various other members of management are invited to
present specific matters relevant to the Committee’s remit.
The Board is satisfied that each member of the Committee has the skills
and experience necessary for the Committee to effectively discharge its
responsibilities. The Chairs of the Audit and Risk Committees each sit
on both Committees, which ensures appropriate identification and
management of issues relevant to both Committees.
During 2022, the Risk Committee held four regular meetings. In the
ordinary course of business, the Committee regularly reviews the
Group’s risk profile, risk appetite, and emerging risks. The CRO also
provides regular updates to the Chair throughout the year.
Purpose, responsibility, and terms of reference
The Committee has a role overseeing and advising the Board in relation
to current and potential future risk exposures and risk profile; and in
overseeing the effectiveness of risk management frameworks. The
Committee reviews the risk profile of the Group, and its divisions,
on a regular basis and comments on the adequacy of the processes
in place to identify, manage, mitigate, and report on key risks. It advises
the Board on the Group’s overall risk appetite, tolerance, and strategy,
and reviews the adequacy of the Enterprise Risk Management
Framework and its application to decision-making.
The Committee sets the criteria for the accurate and timely reporting of
material risks including regular reports on compliance for each regulated
entity. As part of this mandate, the Committee also regularly reviews
best practices for Enterprise Risk Management.
Further details on the functions and responsibilities of the Risk
Committee can be found in the Committee’s terms of reference which
are reviewed annually and available from the Group Company Secretary,
or in the corporate governance section of the Group’s website at:
www.lseg.com/en/about-us/corporate-governance.
Report of the
Risk Committee
111
London Stock Exchange Group plc
Annual Report 2022
112
Summary of the key areas of focus
During the year, the Committee focused on programmes to embed the
Group risk management framework. The Committee paid particular
attention to ensure that key activities supported the vision of the Group
Risk function and enabled the fulfilment of the 2022 Group Strategic
Objectives. This included embedding of the operational resilience
framework, improving the technology environment and the ongoing
development of the Group’s risk culture and the framework for
identifying and managing sustainability-related risks. Given the focus
on Data & Analytics and Technology Risk, two deep dive sessions
were held where executives updated the Risk Committee:
— Management highlighted the key risk considerations within the
Data & Analytics business, focusing on the structural changes
needed to address foundational management and oversight of
wider operating plans.
— Management presented the Technology risk profile of the Group,
detailing the progress in the last 12 months and prioritisation of the
remediation activities.
In addition to the review and monitoring of the Group’s risk profile,
the Risk Committee’s priorities are:
— Continue to oversee the embedding of the Enterprise Risk
Management Framework across the Group and a strong risk culture.
— Continue to review and challenge the identification, management and
mitigation of risks across the Group.
— Oversight of existing and new emerging risks through the geopolitical
forecast and their impact on LSEG.
— Continue to provide oversight on developing and enhancing cyber
security and operational resilience.
Activities of the Committee
The Committee establishes formal agendas covering all responsibilities
delineated in the Committee’s terms of reference. During the year, the
Committee discharged these responsibilities with the following activities:
— Provided robust reviews of principal risks and of emerging risks with
a focus in 2022 on:
— Review and challenge of management’s assessment of the Group’s
risk profile, across both financial and non-financial risk, as well as
management’s mitigating actions.
— Review and challenge of the Group’s financial and operational
resilience, including the impact on the Group as a result of the
Ukraine/Russia conflict and enhancements to the Group’s
technology resilience.
— Monitoring of the cyber security framework and enhancement
programmes with a focus on the risk event management approach
across the Group.
— Using key risk indicators to monitor whether risks are being
managed within risk appetite.
— Overseeing the adequacy of Group financial resources and
monitoring of exposure limits.
— Reviewing detailed reports of the risk profiles of the Group’s
material businesses.
— Review and challenge of the Sustainability Risk Framework and
key risks.
— Monitored compliance with the Group risk management procedures
as described in the section on internal controls on page 99
which included:
— Reviewing regulatory compliance reports and the actions in place
to ensure ongoing compliance.
— Reviewing the adequacy of the Group’s Business Continuity
Management plans including read across and lessons
learned exercises.
— Reviewing and recommending to the Board the Group
Risk Appetite, including stress tests, and challenging the
scenario results.
Risk management function
The CRO leads and oversees all aspects of risk management for the
Group. He reports to the Chief Executive Officer, and also, to ensure
independence, to the Chair of the Risk Committee. The Committee
approves the CRO’s remit and ensures that the CRO has the
independence and resources necessary to perform his duty. Group
management consults with the Committee on the appointment and
dismissal of the Chief Risk Officer.
The Committee meets with the CRO without the presence of executive
management at each Committee meeting.
2023 priorities
In 2023, the Committee’s priorities include:
— Continued embedding of the Group’s Operational Resilience Programme.
— Continued review and monitoring of potential impacts from
macroeconomic and geopolitical events on the Group’s strategy
and business model.
— Enhancing further the approach to sustainability-related risks and
associated risk processes.
— Continued focus on technology remediation and enhancement of
the Cyber Security Framework.
Committee effectiveness
The Committee’s effectiveness was assessed as part of the 2022
Board and Committee effectiveness review. Further details can be
found in the Governance section of this report on pages 97 and 98.
The result of the review was that the Committee is performing well
and operating effectively.
Kathleen DeRose
Chair of the Risk Committee
14 March 2023
Report of the Risk Committee
London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Contents
Chair’s statement pages 114 to 116
Remuneration at a glance pages 117 to 118
Remuneration Policy Report pages 119 to 126
Annual Report on Remuneration pages 127 to 141
Remuneration Committee members (as at 31 December 2022)
Meeting attendance
Cressida Hogg 4/4
Dr. Val Rahmani 4/4
Don Robert 4/4
William Vereker (appointed on 3 October 2022) 2/2
Purpose, responsibility and terms of reference
The Remuneration Committee is appointed by the Board and comprises
the Chair and three independent Non-Executive Directors. The
Committee’s remit includes the remuneration of the Chair of the
Group, Executive Directors and senior management, as well as
overseeing arrangements for all of our people.
Details of the Committee’s remit and activities are set out in this Report.
The Committee has written terms of reference which are available from
the Group Company Secretary or in the corporate governance section
of our website at https://www.lseg.com/en/sustainability-strategy.
Areas of focus
The Committee focused on the following areas during a busy year:
2023 Remuneration Policy review
2022 remuneration outcomes and awards, including 2022 bonus,
vesting of 2020 LTIP awards and granting of 2022 LTIP awards
Remuneration approach for 2023, including the approach to 2023
bonus and 2023 LTIP awards, and review of Executive Director
salaries and Non-Executive Director fees
Succession planning
Pay Equity Study of all LSEG’s c.24,000 employees across 65 countries
Cressida Hogg
Chair of the Remuneration Committee
Our remuneration
arrangements provide strong
alignment between executive
pay and shareholders’ long-
term interests and continue
to conform to evolving
best practice in corporate
governance. We will continue
to ensure our policy focuses
on securing, retaining and
rewarding the best talent in
a competitive global market.
Directors’ Remuneration
Report
Our Pay Equity Report can be found at:
www.lseg.com/en/sustainability-
strategy/disclosures-and-reports
113
London Stock Exchange Group plc
Annual Report 2022
114
Directors’ Remuneration Report continued
On behalf of the Board, I am pleased to present the Directors’
Remuneration Report for the financial year ended 31 December 2022,
which includes our Remuneration Policy Report and the Annual Report
on Remuneration.
Remuneration Policy
LSEG’s Remuneration Policy was approved by shareholders at
the 2020 AGM and is therefore up for renewal at the 2023 AGM.
During the year, the Committee undertook a comprehensive review
of the policy. Overall, we believe the policy is operating well and as
intended, providing strong alignment between executive remuneration
and shareholders’ long-term interests, and continues to conform to
evolving best practice in corporate governance.
LSEG completed the acquisition of Refinitiv in January 2021 and
continues to exceed the three-year targets we set out at the time of
the announcement. We are delivering at the top of the 5-7% income
growth target range (excluding the impact of the Ukraine/Russia conflict);
our revenue synergies target has been raised from initial guidance;
we are delivering ahead of schedule on cost synergies; and adjusted
EPS rose by 16.7%. We have also recently announced a new strategic
partnership with Microsoft to develop LSEG’s data infrastructure using
the Microsoft Cloud and to jointly develop new products and services
for data and analytics. The deal significantly accelerates our strategy
towards becoming the world’s leading financial markets infrastructure,
data and analytics provider.
As we approach the end of the integration period for Refinitiv, and in
light of the very early stage of the strategic partnership, the Committee
has decided to retain the existing policy for a further year and present
a new policy to shareholders in 2024. During 2023, the Committee will
continue to review our executive remuneration arrangements to ensure
they remain fit for purpose and aligned to our strategic direction. This
policy will continue to focus on securing, retaining and rewarding the
best talent in a competitive global market.
We engaged with our major shareholders and advisory bodies to
gain their views and are grateful for the valuable feedback provided,
as they understood the rationale for the Committee’s approach.
ESG considerations
Our executives are incentivised to drive progress towards our
ESG goals through achievement of our Group Strategic Objectives,
comprising 40% of the annual bonus pool. For 2022, we introduced
a greater level of focus on ESG in our strategic objectives, with one
objective solely dedicated to sustainability. In addition, we have
enhanced the disclosure around our performance outturn against
strategic objectives.
Currently, given the nature of our business, we believe that progress
towards our ESG goals is best delivered through the achievement of
multiple strategic objectives that can be set annually according to
business priorities. The Committee therefore believes that including
ESG metrics within our annual bonus scheme is the most appropriate
approach at this time and aligned to our strategic ambition. We will
continue to review our ESG metrics and how we measure progress
against these within our remuneration framework to ensure they are
quantifiable and remain aligned to our strategy.
Performance in the year
In 2022, LSEG delivered a strong financial performance, with
continued revenue growth across our businesses despite an uncertain
macroeconomic environment and geopolitical turmoil. We continue to
successfully execute on our multi-year integration of Refinitiv, which is
proving transformational for the Group, and are well positioned for
further growth.
Highlights:
— Delivered 6.6% income growth
1
(excluding Ukraine/Russia conflict
impact) on a constant currency basis.
— Adjusted EPS rose by 16.7% reflecting the Group’s strong
cash generation.
— Delivered cost synergies ahead of schedule, with £297 million
run-rate achieved by the end of 2022, exceeding target of
£250 million.
— Delivered run-rate revenue synergies of £68 million by the end
of 2022, exceeding stated forecasts of £40-60 million.
— Commenced a new strategic partnership with Microsoft which
significantly accelerates our strategy.
— Completed the acquisitions of GDC, MayStreet and TORA within
our D&A division, and Quantile within our Post Trade division.
— LSEG became the first global exchange group to publish its own
Climate Transition Plan, which received the backing of 99% of our
shareholders at our 2022 AGM.
— Launched London Stock Exchange’s Voluntary Carbon Market,
a market innovation which will scale capital flows into climate change
mitigation and adaptation projects which create carbon credits.
2022 bonus outcomes for Executive Directors
Executive Directors are eligible to receive an annual bonus based on
meeting or exceeding bonus targets that are set at the beginning of the
year, looking at the Group’s financial performance, strategic objectives
and their personal contribution.
The Committee also receives input from the Risk Committee with regard
to performance related to risk culture (awareness, transparency and
accountability) when assessing remuneration decisions.
For FY2022 our Group AOP financial target was met and we have
outperformed against our strategic objectives. Examples of significant
achievements included exceeding our targets for growth and synergies
and the delivery of our 40% women in senior leadership target by end
of 2022.
As a result of the Group’s strong performance and the individual
contribution of the Executive Directors, the Committee determined that
the Executive Directors will be awarded bonuses of between 62% and
64% of their maximum opportunity.
Impact of the Refinitiv transaction on in-flight 2020 LTIP awards
Given the materiality of the Refinitiv acquisition and its impact on the
Group’s underlying financial metrics, it was necessary to reconsider the
calculation of the AEPS portion of the 2020 LTIP award. The Committee
believes that performance for in-flight LTIP awards should be measured
on a ‘like-for-like’ basis pre and post transaction and as such, it was
considered necessary to adjust the AEPS target ranges. To accomplish
this, the calculated actual AEPS growth was adjusted such that the
impact on earnings of the acquisition of Refinitiv and the disposal of
Borsa Italiana did not inappropriately affect the vesting.
STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE
1 Pro-forma total income excluding recoveries, constant currency growth rate excluding the deferred revenue adjustment.
115 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
To reflect the Committee’s higher expectations regarding the future
growth profile of the combined entity, the revised AEPS target for
the 2020 LTIP combines a 6% to 12% CAGR range for the one year
pre-acquisition with an increased range of 8% to 18% CAGR for the
two years post-acquisition.
No changes have been made to the TSR targets.
2020 LTIP award outcomes
The AEPS element of the LTIP awards made in 2020 will vest at 100%
and the TSR element will vest at 56%. These vesting outcomes reflect
the delivery of significant value and reflects AEPS growth of 11% year on
year and 19% CAGR over the three-year performance period; and 4.3%
annualised TSR performance representing 4th decile performance
relative to the UK FTSE 100 peer group.
The Committee reviewed LSEG’s share price performance in
determining the extent to which the 2020 LTIP award should vest
and concluded that no windfall gains had occurred. At the time of
the grant of the 2020 LTIP award our share price had returned to
pre-pandemic levels.
Discretion in relation to incentive outcomes
The incentive outcomes above are reflective of overall Group financial
and strategic performance, and the Committee determined that no
discretion should be exercised to adjust the formulaic outcomes.
In determining these outcomes, the Committee considered whether
to adjust for the adverse financial impact of the Ukraine/Russia conflict
in 2022. However, the diverse nature of LSEG’s business, the strong
performance demonstrated across our divisions throughout the year
and revenue recovery initiatives have mitigated much of the income
loss. No discretion has therefore been exercised.
LTIP awards to be made in 2023
The Committee has given careful attention to the AEPS element of the
2023 grant (60%) and, considering internal and external forecasts, has
set the AEPS target at 6% to 11.5% CAGR, or 39% growth over the 3-year
performance period. Given the materially higher AEPS baseline and
considerable growth in the size of the Group, growth in AEPS CAGR will
now deliver far more value to investors than previous targets based on
a lower baseline. To achieve threshold vesting, in the region of £500m
additional AOP would be required, incremental to 2022. To achieve
maximum vesting, in excess of £1 billion of incremental AOP would be
required, equivalent to incremental income in the region of £2.6 billion,
relative to 2022.
For the TSR element (40%), the relative performance targets will
continue to range from median to upper quartile versus the UK FTSE
100 Index.
Salary review for Executive Directors
During the year, the Committee conducted its annual review of the base
salary levels of our Executive Directors.
Since Anna Manz joined the company in 2020, she has not received a
salary increase. Last year, despite strong performance, we determined
not to award an increase as Anna was only in the second year of her
role. However, we signalled in our Directors’ Remuneration Report
in 2022, that we would commit to keeping her salary and total
compensation under review alongside the continued success of the
company and the delivery of goals related to the Refinitiv transaction.
Anna joined LSEG from a CFO role at a smaller company at an
appropriate salary. Since she joined, LSEG has become a significantly
larger, more international and complex business. The Refinitiv
transaction completed in January 2021 and transformed the company
in terms of global breadth, complexity, business diversification and size,
and Anna has been key to the delivery of synergies ahead of schedule.
LSEG has also continued to grow with the acquisitions of GDC,
MayStreet, TORA and Quantile in 2022. This growth and transformation
of the business has greatly increased the scope, responsibilities and
complexity of the CFO role. In addition, Anna has been critical to the
commencement of the strategic partnership with Microsoft and will
continue to play a pivotal role in how this collaboration accelerates
LSEG’s growth and transformation plans.
She is now in her third year in the role and has consistently
demonstrated strong performance and has made a meaningful impact
at LSEG. Anna is a fully established and critical member of the
management team and the Group has demonstrated strong revenue
growth and a robust financial position.
Following a recent benchmarking exercise, it was clear to the
Committee that Anna’s salary and total compensation was significantly
lower than her peers in the FTSE 30 and was below the lower quartile.
The Board and Committee have a responsibility to retain the very best
talent and are committed to pay equity; such a significant gap to market
was considered inequitable.
Given the size, scope and complexity of the role, her strong
performance and development since joining the Group, and the relative
market positioning, the Committee has decided to award a 15% salary
increase to £750,000, effective 1 January 2023. This is the first salary
increase Anna has received since joining. Even after this increase,
Anna’s salary and total compensation will continue to be positioned
below the median of the FTSE 30.
The Committee is mindful of the sensitivity to large increases in
executive base pay levels, particularly in the context of current
cost-of-living pressures and average salary increases across the wider
workforce (9.15% cumulative for FY21-23 in the UK). However, we believe
the implementation of the increase for the CFO is appropriate for the
reasons described above. The Committee considered whether to
commit to keeping the CFO’s new salary unchanged for a certain time
period but determined that it would be imprudent in light of the current
uncertain macroeconomic climate and positioning relative to peers.
Shareholders were consulted on the proposed increase and were
broadly supportive given the underlying rationale.
No changes are proposed to the salary of the CEO. This will continue to
be reviewed.
Operation of 2023 bonus
The FY2023 Group bonus pool will continue to be determined based
on performance measures weighted 60% AOP and 40% strategic
deliverables, including key Group initiatives as well as personal and
divisional objectives. A high proportion of our strategic objectives
continue to be linked to ESG.
50% of any bonus payment for Executive Directors will be paid in
March 2024. The remaining 50% will be deferred into shares for a
period of three years.
Directors’ Remuneration Report continued
London Stock Exchange Group plc
Annual Report 2022
116
Directors’ Remuneration Report continued
Wider workforce considerations
As a global company with significant numbers of staff across
Europe, North America, and Asia, we have been mindful of inflationary
pressures and the rising cost of living in many jurisdictions and have
looked at how we can support our people. For Sri Lanka, Turkey, and
Argentina in particular, these macroeconomic conditions have been
exceptional. In these jurisdictions it was felt important to make several
interventions to address these challenges, including exceptional
off-cycle salary increases.
In our 2023 annual salary review we have targeted our salary spend
so there are higher average increases for the most junior colleagues.
The aggregate salary increase for all our Group Executives (3.2%) is less
than that of the wider workforce (4.15% in the UK). Additionally, strong
business performance has enabled the payment of an annual bonus for
the 2022 performance year with over 76% of employees participating in
the bonus plan.
During the year, 30% of eligible employees across 22 countries also
participated in our employee share ownership plans, offering people
around the globe the opportunity to invest and share in the Group’s
future success. No SharePurchase cycle has yet completed but 647
employees across 7 countries were able to benefit from Sharesave
maturities in 2022 including share price appreciation of 84%, reflecting
the Group’s performance over the previous three years.
LSEG is also a Living Wage accredited employer and a range of benefits
are provided to support employee wellbeing, including: access to a 24/7
Employee Assistance Programme, financial education tools and advice,
pension and health insurance provision.
Summary of key executive remuneration decisions
Role Chief
Executive
Officer
Chief
Financial
Officer
Name David
Schwimmer
Anna Manz
Previous salary (with effect
from 1 April 2022)
£1,000,000 £650,000
Annual salary (with effect
from 1 January 2023)
£1,000,000 £750,000
Bonus for financial year
ending 31 December 2022
% of salary 143% of
salary
123% of
salary
% of maximum 64% 62%
£ total amount £1,433,250 £802,100
Of which 50% is
deferred
1
£716,625 £401,050
Max. annual bonus opportunity
(% of salary)
225% 200%
2023 LTIP award
(subject to performance)
300% of
salary
300% of
salary
Notes:
1 Executive Directors must compulsorily defer 50% of bonus into shares for a period of
three years.
Committee effectiveness
The Committee’s effectiveness was assessed as part of the 2022
Board and Committee effectiveness review, facilitated externally.
Further details can be found in the Governance section of this report
on pages 97 and 98. The result of the review was that the Committee
is performing well and operating effectively.
Concluding remarks
The intent of this statement and the wider Director’s Remuneration
Report is to explain the Group’s approach to remuneration, which
takes into account best practice and market trends in the financial
services sector and wider market while continuing to support the
commercial needs of the Group and the interests of shareholders
and of all other stakeholders.
The Remuneration Committee continues to place great importance
on ensuring that there is a clear link between pay and performance,
including a focus on culture and adherence to the Group’s risk
framework, and that our remuneration outcomes are reflective of
this wider context.
I would like to thank my fellow Committee members and all internal and
external stakeholders who have provided valuable input during this year
for the Group. We look forward to your support of our current proposals
at the forthcoming AGM.
Cressida Hogg
Chair of the Remuneration Committee
14 March 2023
This report has been prepared in accordance with Schedule 8 to
The Large and Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008 (as amended), and the relevant sections of
the Listing Rules.
STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE CONTINUED
117 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Remuneration Report continued
Alignment of executive remuneration with the wider workforce
The Committee has responsibility for overseeing arrangements for all of our people and reviews broader workforce policies and practices in order
to support decisions on executive pay. Our single aligned global reward framework was developed to help unify our Group and is based on the
following principles: (i) Performance-led; (ii) Competitive; (iii) Transparent and Equitable; and (iv) Inclusive and Consistent.
Executive
Directors
Group
Executives
Group
Leaders
Group
Directors
Wider
Workforce
Salary/fees Salaries are normally reviewed annually by taking into account a range of factors.
Reflective of individual roles, job-related knowledge, skills, commensurate experience, and the wider market.
Benefits A market aligned benefits plan is offered in each key country in which we operate. For the UK, a flexible benefits
plan is offered, in which individuals have certain core benefits (such as private medical, life assurance and
income protection) together with a cash allowance which can be spent on elective benefits (such as additional
medical, life or dental cover).
Pension Colleagues receive an annual pension allowance, invested in the Company’s defined contribution plan or
taken as a cash allowance. Pension contributions for Executive Directors are in line with the wider workforce.
Annual
bonus
Annual performance-related bonus based on Group, divisional (where applicable) and personal performance
against goals.
Deferral 50% into shares for a period of three years. 50% into shares
if the award is more
than £150,000.
Vesting in equal
tranches over
three years.
Share
incentive
plans
LTIP awards are granted to senior leaders who have the ability to
significantly influence the long-term performance of the Group.
Subject to stretching performance targets over three years.
Eligible for Restricted
Share Awards
aligned with
long-term company
performance and
shareholder interests.
Vesting in equal
tranches over
three years.
Holding
period
Additional two-year
holding period
post-vesting applies
to Executive
Directors.
Shareholding requirement Minimum
shareholding
requirement (MSR) of
4x base salary for the
CEO and 3x base
salary for the CFO, to
be built up within five
years of appointment.
Executive Directors
are also required to
hold the lower of their
actual shareholding
and 100% of their
MSR for two years
post-departure.
Minimum
shareholding
requirement of 2x
base salary for the
Group Executive
team, to be built up
within five years of
appointment.
Malus and clawback Awards are subject to malus and clawback provisions (e.g. in cases of material misstatement. gross misconduct,
misbehaviour or material failure of risk management) with judgement applied by the Committee.
LSEG
Employee Share Plan
Our Employee Share Plans offer employees around the globe the opportunity to invest and share in the Group’s
future success. All permanent UK employees are eligible to participate in the Sharesave plan. There is also a
SharePurchase Plan, which is designed to provide share options to employees who are not based in the UK.
REMUNERATION AT A GLANCE
London Stock Exchange Group plc
Annual Report 2022
118
Directors’ Remuneration Report continued
Elements of remuneration
Fixed vs performance based
The majority of the remuneration package of our executives is performance-based and subject to stretching performance targets.
2022 remuneration outcomes
FY2022 Group Bonus Pool Outcome
Performance measure Threshold Target Maximum Weighting Outcome achieved
Group AOP £2,299m £2,503m £2,937m 60% 30%
Actual: £2,503m
Strategic Objectives 10% 20% 40% 40% 31%
Actual: 31%
Total 100% 61%
Group AOP is measured using budget exchange rates on a constant currency basis.
2020 LTIP Award Outcomes
Performance measure Threshold Maximum Weighting Outcome achieved
Average adjusted
EPS growth
7.3% 16% 60% 60%
Actual: 19%
Relative
TSR growth
Median ranking Upper quartile ranking 40% 22%
Actual: Ranked 40th
Total 100% 82%
* Illustrative example based on ‘Maximum’ scenario of the application of the remuneration policy shown on page 126.
Operation of 2023 incentive plans and alignment to strategy
The performance measures used in our incentives are directly aligned to the Group’s KPIs and strategic priorities.
Fixed 19%
1 Salary, pension and benefits
Performance-based 81%
2 Annual Bonus (of which 50% deferred into shares) 35%
3 LTIP 46%
Chief Executive Officer
1
2
3
1 Based on Group Adjusted Operating Profit (AOP) performance 60%
2 Based on Group Strategic Objectives 40%
FY2023 Group Bonus Pool
AOP is a key profitability measure for the Group and continues to
be the main financial measure for annual bonus plan purposes.
The non-financial element is focused on the delivery of key strategic
objectives, including ESG goals.
1
2
1 Based on average adjusted EPS growth 60%
2 Based on relative TSR growth 40%
2023 LTIP
The AEPS and TSR measures used for the LTIP are well aligned to our
strategy of driving growth and delivering shareholder value over the
longer term and ensure a balance of absolute and relative measures.
1
2
Fixed 19%
1 Salary, pension and benefits
Performance-based 81%
2 Annual Bonus (of which 50% deferred into shares) 32%
3 LTIP 49%
Chief Financial Officer
1
2
3
REMUNERATION AT A GLANCE CONTINUED
119 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Remuneration Report continued
Our Remuneration Policy was last subject to a binding shareholder vote
at the 2020 AGM and was passed with 96.2% support. The current
policy has provided strong alignment between executive remuneration
and shareholders’ long-term interests and continues to conform to
evolving best practice in corporate governance.
LSEG completed the acquisition of Refinitiv in January 2021 and
continues to exceed the three-year targets we set out at the time of
the announcement. We have also recently announced a new strategic
partnership with Microsoft which significantly accelerates our strategy
towards becoming the world’s leading financial markets infrastructure,
data and analytics provider. As we are approaching the end of the
integration period for Refinitiv, and in light of the very early stage of our
strategic partnership with Microsoft, we are not proposing any changes
to our policy at this time, save for the minor amendment listed below.
This Remuneration Policy Report therefore represents a rollover of our
existing policy and will be presented for shareholder approval at our
2023 AGM.
During 2023, the Committee will continue to review our executive
remuneration arrangements to ensure they remain fit for purpose and
aligned to our strategic direction with the intention of presenting a new
policy to shareholders at the 2024 AGM.
Remuneration Policy table
The policy is set out in the following table and includes the following
minor change to our existing policy:
— Updates to the treatment of outstanding variable incentives for good
leavers to enable compliance with local law requirements
(including tax law), where necessary.
The Remuneration Policy is designed to support the long-term interests
of the Group. The Group is committed to paying for performance,
rewarding the senior management team only when its goals are
achieved. Each year the remuneration framework and the packages of
the Executive Directors and members of the Executive Committee are
reviewed by the Committee to ensure that they continue to achieve
this objective.
The Committee takes into account multiple reference points when
setting pay including companies in the FTSE 100, the broader Financial
Services sector and other international exchange groups and financial
markets infrastructure companies.
The Committee takes the following areas into account when reviewing
the policy:
— A focus on shareholder value.
— The continued global expansion of the Group.
— The need to attract and retain senior management from the
international finance, data and technology sectors.
— Corporate governance developments.
— Remuneration arrangements for the wider workforce.
— The Group’s intent to be mindful of best practice as expressed by
institutional shareholders and their representative bodies.
— The unique position of the Group at the centre of global
financial markets.
The principles prescribed by the UK Corporate Governance Code are taken into account by the Committee in determining the Remuneration Policy.
Details of how these are addressed are provided below.
Principle How the Committee has addressed the principles
Clarity — The Committee is satisfied that the remuneration arrangements in the policy are transparent, comprising elements that are commonplace
in the market and best practice remuneration provisions.
— The Committee is committed to transparent and constructive engagement with all its stakeholders and consults with major shareholders
and investor bodies to ensure the rationale for any significant changes proposed to the operation of the policy are fully understood and
provide the opportunity for feedback to inform our decision-making process.
Simplicity — The operation of the Annual Bonus and LTIP is well understood by stakeholders and aligned to Company strategy and UK market
best practice.
Risk — The Committee is satisfied that the policy ensures that the risks from excessive rewards and target-based incentive plans are
mitigated by:
— Setting defined limits on the maximum awards which can be earned.
— Requiring the deferral of a substantial proportion of the incentives into shares for a material period of time.
— Aligning the performance conditions of incentives with the strategy and business model of the Company.
— Ensuring the Committee has overriding discretion to depart from formulaic outcomes and the ability to apply malus and clawback
to incentives where appropriate.
— The Committee also receives input from the Risk Committee with regard to performance related to risk culture (awareness, transparency
and accountability) when assessing remuneration decisions.
Predictability — Illustrations of the potential outcomes under the policy are provided on page 126. Defined limits on the maximum awards which can be
earned are also disclosed on pages 121 and 122.
Proportionality — The Company’s performance-based remuneration is clearly linked to the implementation of the Company’s strategy with key KPIs used
as performance measures for incentive plans.
— A robust target-setting process is carried out each year, taking into account internal and external forecasts, to ensure stretching yet
achievable targets are set for incentive plans.
— The Committee also has overriding discretion to adjust incentive outcomes based on a broad set of factors to ensure they fairly and
accurately reflect the Company’s performance over the relevant period and wider circumstances.
Alignment to
culture
— The Group bonus pool assessment will continue to be based on the achievement of financial and strategic goals of the Group, including
cultural and ESG objectives.
— The Committee places great importance on ensuring our pay policies and incentives support the desired culture and behaviours of the
Group. The individual scorecard implemented for our Group Executive team and Executive Directors provides the Committee with
greater structure in determining the bonus of senior management. Within this scorecard there is a greater proportion assessing cultural
objectives and behavioural performance, including 360° feedback, to allow for a stronger emphasis on how the individuals achieved
their targets.
— All awards are discretionary and contingent on the requisite standards of personal behaviours; poor behaviour/risk management could
result in a zero bonus.
REMUNERATION POLICY REPORT
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REMUNERATION POLICY REPORT CONTINUED
The Committee recognises and manages any conflict of interest when receiving views from Executive Directors or senior management on executive
remuneration and no individual is involved in deciding their own remuneration.
Policy table for Executive Directors
Salary Benefits
Purpose and link to strategy
Provides a core element of remuneration which reflects the responsibilities
of the role.
Enables the recruitment and retention of individuals of the calibre required
to execute the Group’s strategy.
Purpose and link to strategy
Provide local market competitive benefits and support the wellbeing of
our people.
Operation
Base salaries are normally reviewed annually by taking into account a
range of factors, including:
— Size and scope of the role.
— Size, complexity and global breadth of the organisation.
— Skills and experience of the individual.
— Market competitiveness/relative positioning.
— Performance of the Group and of the individual.
— Wider market and economic conditions.
— Level of increases being made across the Group.
Operation
A market aligned benefits plan is offered in each key country in which we
operate. For the UK, a flexible benefits plan is offered, in which individuals
have certain core benefits (such as private medical, life assurance and
income protection) together with a taxable cash allowance which can be
spent on elective benefits (such as additional medical, life or dental cover).
Car transportation may also be provided for Executive Directors
where appropriate.
Due to the high profile of the Group, the Committee reserves the right to
provide our executives with the appropriate level of security arrangements
to allow them to perform their duties in the safest possible conditions.
Benefits are reviewed periodically to ensure they remain affordable and
competitive. The Committee retains the discretion to provide reasonable
additional benefits as appropriate – for example, relocation and other
allowances including expatriate assistance, housing and school fees for a
finite period, tax preparation and filing assistance and flights back to the
home country for the Executive and their family. Repatriation costs are met
by the Company if employment is terminated by the Company, other than
for just cause.
Where necessary any benefits may be grossed up for taxes.
Executives are eligible to participate in the Group’s HMRC tax-favoured
Save As You Earn Option Scheme (or international equivalent) on the same
basis as other employees.
Executive Directors are covered by the Directors’ and Officers’ insurance
and indemnification.
Maximum Opportunity
There is no defined maximum salary.
Increases are determined based on the factors described above.
The Committee’s normal approach is to initially consider increases within
the range awarded to other employees. More significant increases may
be awarded in certain circumstances, such as where there is a significant
change in the scale, scope or responsibility of a role, where the organisation
has undergone significant change, development within a role and/or
significant market movement.
The annual base salaries in FY2022 and for FY2023 for each Executive
Director are set out in the Annual Report on Remuneration.
Maximum Opportunity
There is no defined maximum.
Benefits plans are set at (what are in the Committee’s opinion) reasonable
levels in order to be market competitive for their local jurisdiction and are
dependent on individual circumstances.
Participation in the Save As You Earn Option Scheme (or international
equivalent) is capped at the same level as all other participants, which is
determined by the Company within the parameters of applicable legislation.
Performance Measures
n/a
Performance Measures
n/a
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Retirement Benefits Annual Bonus
Purpose and link to strategy
Provide Executive Directors with retirement benefits.
Support recruitment and retention of high-calibre people.
Purpose and link to strategy
Rewards annual performance against stretching financial, strategic and
individual targets aligned to delivery of the Group’s strategy.
Deferral reinforces retention and enhances alignment with shareholders
by encouraging longer-term focus and sustainable performance.
Operation
Provision of annual pension allowance, invested in the Company’s defined
contribution plan or taken as a cash allowance.
In certain jurisdictions, more bespoke pension arrangements may be
provided. In such circumstances, the Committee will give appropriate
consideration to local employment legislation, market practices and the
cost of the arrangement.
Operation
The Group operates a Group-wide bonus pool which is funded based on
the achievement of financial and strategic goals of the Group. Allocations
to individual Executive Directors are made from this pool based on the
Committee’s assessment of their individual performance, taking into account
the Group’s financial and strategic performance and the achievement of any
individual objectives related to their role.
Performance targets are reviewed and set by the Committee at the
beginning of each performance year.
Awards are determined by the Committee after the year end based upon
the actual performance against these targets.
The Committee applies judgement where necessary to ensure approved
pay-out levels are reflective of actual, overall performance and has the
ability to exercise discretion in adjusting the formulaic outcome of incentives
to ensure the outcome is reflective of the performance of the Company and
the individual over the period.
— 50% of the annual bonus will be subject to mandatory deferral, normally
for a period of three years.
— Bonus deferral will be 100% into shares.
— Dividends (or equivalents) may be paid in respect of deferred shares
on vesting.
— Deferred awards are subject to malus provisions as described below.
Paid bonuses and vested awards are subject to clawback as
described below.
Maximum Opportunity
The maximum annual pension contribution/cash allowance for
Executive Directors is 10% of salary (except where determined by local
market practice or where an Executive Director has given notice to retire
at the time this policy takes effect). This is a rate aligned with the wider
workforce in the UK.
Maximum Opportunity
Maximum annual bonus opportunity of 225% of salary for CEO and 200% of
salary for the CFO.
Performance Measures
n/a
Performance Measures
Based on a combination of financial (e.g. adjusted operating profit), strategic
and individual performance targets. Strategic objectives include key targets
and areas of focus, which are set annually, and whilst not an exclusive list,
examples can include customer, culture, efficiency, growth, resilience and
sustainability. These strategic objectives also impact financial results in the
medium term.
The Committee will set the detail and mix of performance measures, targets
and weighting based on the strategic objectives at the start of each year.
At least 50% of the targets relating to the annual bonus pool in any year will
be subject to financial measures.
No bonuses are paid for below threshold performance. The Committee may
award any amount between zero and 100% of the maximum opportunity.
The performance measures are applied in the performance year only.
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REMUNERATION POLICY REPORT CONTINUED
LTIP (Long Term Incentive Plan) 2014 Share ownership
Purpose and link to strategy
Incentivises performance over the longer term through the award of
performance-related shares.
Aligns reward with long-term, sustainable Group performance and a focus
on shareholder value.
Purpose and link to strategy
Ensures alignment with shareholders’ interests.
Operation
— Under the LTIP 2014, which was approved by shareholders at the
2014 AGM, awards of shares (or equivalent) are granted annually subject
to performance conditions.
— Awards normally vest subject to performance targets assessed over a
performance period, normally of at least three financial years, with an
additional holding period of two years. The Committee has discretion to
set different performance periods if it considers them to be appropriate.
— The Committee shall determine the extent to which the performance
measures have been met. The Committee may make adjustments to
performance targets if an event occurs that the Committee determines
that an adjustment is appropriate. The performance targets will be at
least as challenging as the ones originally set.
— The Committee has the ability to exercise discretion in adjusting the
formulaic outcome of incentives to ensure the outcome is reflective of
the performance of the Company and the individual over the period.
— Dividends (or equivalents) may be paid on vesting. Unvested awards are
subject to a malus provision and vested awards are subject to clawback,
as described below.
Operation
Executive Directors are expected to build up their share ownership over a
period of five years. The minimum shareholding requirement is 4x base
salary for the CEO and 3x base salary for other Executive Directors.
Executive Directors are expected to hold 100% of their minimum
shareholding requirement for two years post-departure from LSEG.
In cases where the individual has not had sufficient time to build up their
share ownership to meet the minimum shareholding requirement prior to
their departure from LSEG, the post-employment shareholding requirement
will be based on their actual level of shareholding on departure.
The Committee has discretion to vary or waive part or all of the post-
employment shareholding requirement in exceptional circumstances.
Maximum Opportunity
Although there is a facility for maximum awards of up to 400% of
salary under the plan rules in exceptional cases, it is expected that awards
under this plan will normally be up to 300% of salary.
Maximum Opportunity
N/a
Performance Measures
The Committee determines performance targets each year to ensure that
the targets are stretching and support value creation for shareholders while
remaining motivational for management.
Vesting of awards is subject to achievement of total shareholder return and
other financial performance targets. Any one measure will not exceed two
thirds of the award.
For each performance element, achievement of the threshold performance
level will result in no more than 25% of the maximum award paying
out. For achievement of the maximum performance level, 100% of the
maximum pays out. Normally, there is straight-line vesting between
these points.
Performance Measures
N/a
Notes to the Policy Table
Selection of performance measures
Performance targets are set by the Committee to be both stretching and
achievable, taking into account the Group’s strategic priorities and the
economic landscape.
The performance measures that are used for our annual bonus and
LTIP have been chosen to support the Group’s strategy. For the annual
bonus plan, the Committee continues to believe that it is appropriate
to use a balance between financial targets, strategic objectives and
individual performance objectives.
The Committee considers that the measures to be used for the LTIP,
i.e. TSR and adjusted EPS, are currently the most appropriate measures
of long-term performance for the Group. The Committee reviews the
LTIP measures, weightings and targets on an annual basis, to ensure
their continued suitability and to ensure they are sufficiently stretching
for LSEG.
Malus and clawback provisions
A malus provision applies to awards granted under the 2014 LTIP and to
unvested awards under the Deferred Bonus Plan. This would allow the
Committee in its absolute discretion to determine, at any time prior to
the vesting of an award, to reduce, cancel or impose further conditions
in certain circumstances, including;
(i) where there is a material misstatement or restatement of the results
of the Group in its audited accounts,
(ii) the negligence, fraud or serious misconduct of the individual which
results in significant reputational damage to the Group or which has a
material adverse effect on the financial position of the Group or the
business opportunities of the Group,
(iii) if the individual is a member of a business unit in the Group which
suffers significant reputational damage or material adverse effect on its
financial position or on its business opportunities,
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Directors’ Remuneration Report continued
(iv) where behaviour of the individual is considered to breach the
standards of the Group’s Code of Conduct, or where there is serious
misconduct that has significant reputational consequences for the
Group or a relevant business unit,
(v) where there is a material failure of risk management in the Company
or any member of the Group or a relevant business unit,
(vi) where an error in assessing any performance conditions is
discovered, or
(vii) any other circumstances that the Committee deems to be similar in
nature or effect to those above.
A clawback provision applies to vested awards granted under the
2014 LTIP, vested awards under the Deferred Bonus Plan and annual
bonuses paid previously. This would allow the Committee in its absolute
discretion to claw back from individuals some or all of the vested awards
or paid bonus in certain circumstances, including;
(i) if there is a material misstatement or restatement of the results of the
Group in its audited accounts,
(ii) the negligence, fraud or serious misconduct of the individual which
results in significant reputational damage to the Group or a material
adverse effect on the financial position of the Group or the business
opportunities of the Group,
(iii) if the individual is a member of a business unit in the Group which
suffers significant reputational damage or material adverse effect on
its financial position or on its business opportunities,
(iv) where behaviour of the individual is considered to breach the
standards of the Group’s Code of Conduct, or where there is serious
misconduct that has significant reputational consequences for the Group
or a relevant business unit,
(v) where there is a material failure of risk management in the Company
or any member of the Group or a relevant business unit,
(vi) where an error in assessing any performance conditions is
discovered, or
(vii) any other circumstances that the Committee deems to be similar in
nature or effect to those above.
Clawback will normally apply for a period of 3 years following vesting
of shares/deferred cash bonus and/or payment of bonus, unless the
Committee determines otherwise.
Recruitment policy
When determining the remuneration package for a newly appointed
Executive Director, the Committee would seek to apply the
following principles:
— The package should be market competitive to facilitate the
recruitment of individuals of sufficient calibre required by the Group.
Consistent with the UK Corporate Governance Code, the Committee
would intend to pay no more than it believes is necessary to secure
the required talent.
— The ongoing remuneration package would normally include the key
elements on the same terms as those set out in the policy table for
Executive Directors.
— The maximum level of variable remuneration which may be awarded
on recruitment (excluding any buy-outs referred to below) is 625% of
salary. Incentive awards made in the first year of appointment may be
subject to different performance measures and targets appropriate to
the newly recruited Executive Director.
— Recognising that the Group competes for talent in the FTSE 100 and
globally in the broader financial services, data and technology
sectors, on an exceptional basis, the Committee has the ability to
include other elements of pay which it feels are appropriate taking
into account the specific commercial circumstances (e.g. for an interim
appointment). However, this would remain subject to the limit on
variable remuneration set out above. The rationale for any such
component would be appropriately disclosed.
— In addition, where an individual forfeits arrangements as a result of
appointment, the Committee may offer a buy-out, in such form as the
Committee considers appropriate taking into account all relevant
factors which may include the vehicle, expected value and timing of
forfeited opportunities. Any such buy-out will be limited to the
commercial value of payments and awards forfeited by the individual.
— Where an Executive Director is required to relocate from their home
location to take up their role, the Committee may provide reasonable
relocation assistance and other allowances including expatriate
assistance. Global relocation support (normally for up to five years)
and any associated costs or benefits (including but not limited to
housing, school fees, tax preparation and filing assistance and flights
back to the home country) may also be provided if business needs
require it. Should the Executive’s employment be terminated without
cause by the Group, repatriation costs will be met by the Group.
— In the event that an internal candidate was promoted to the Board,
legacy terms and conditions would normally be honoured, including
pension entitlements and any outstanding incentive awards.
— The remuneration package for a newly appointed Non-Executive
Director would normally be in line with the structure set out in the
policy table for Non-Executive Directors (see page 125).
Service contracts and payments for departing Directors
The Group’s current policy is that Executive Directors’ service
agreements should have notice periods that are no longer than
12 months. The Group may terminate an Executive Director’s service
agreement by making a payment in lieu of notice of a sum equal to
12 months’ salary, pension, flexible benefits allowance, and life and
medical insurance (but excluding bonus and share incentives), plus any
accrued unused holiday entitlement. Consideration will be given to
appropriate mitigation terms to reduce payments in lieu of notice made
on termination in the event of the Executive Director commencing
alternative employment, being appointed as a Non-Executive Director
or providing services pursuant to a consultancy agreement in the
12 months following the Executive Director’s departure.
The Group may pay an Executive Director’s reasonable legal fees for
receiving advice in connection with their employment.
The lawful termination mechanisms described above are without
prejudice to the Group’s ability in appropriate circumstances to
terminate in breach of the notice period referred to above, and thereby
to be liable for damages to the Executive Director. Liquidated damages
clauses are not used.
In the event of termination by the Group, each Executive Director may
have an entitlement to compensation in respect of his statutory rights
under employment protection legislation in the UK and potentially
elsewhere. Directors’ and Officers’ liability insurance and an indemnity
to the fullest extent permitted by the law and the Group’s Articles of
Association are provided to the Executive Directors for the duration of
their employment and for a minimum of 7 years following termination.
The Committee considers that this is consistent with current best
practice and this approach will generally be adopted for new
appointments. Where appropriate and when recruiting non-UK based
Directors, the Committee may agree different terms based on local
legal requirements or market practice.
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REMUNERATION POLICY REPORT CONTINUED
Treatment of variable incentives
Annual bonus
Individuals may be considered for an annual bonus in respect of the
period prior to cessation. Any award would be at the discretion of the
Committee, subject to the Executive Director’s performance and period
of employment.
Deferred Bonus Plan
For good leavers, awards will usually vest at the normal vesting date,
although the Committee may determine that awards vest on cessation
of employment. The award will usually vest in full, or on a pro-rated basis
at the Committee’s discretion. If the vesting of a good leaver’s award(s)
is required to be accelerated due to local law requirements (including
tax law), the Committee would ordinarily impose a post-vesting holding
period on the resulting net-of-tax shares for the balance of the original
vesting period, during which the leaver would not be permitted to sell
or transfer those shares. Good leavers are those who cease to be
an employee of a member of the Group by reason of death, injury,
disability, ill-health, redundancy, the sale of the individual’s employing
business or the transfer of the Company out of the Group, or any other
reason which the Committee decides in its discretion, having regard to a
range of relevant factors including the Executive Director’s performance,
length of service and circumstances of their departure.
Where an individual is not considered to be a good leaver, unvested
awards will lapse. Where an individual is summarily dismissed, all awards
will lapse.
Deferred awards are subject to malus and vested awards are subject to
clawback as detailed above.
Long Term Incentive Plan 2014
For good leavers, awards will normally vest at the normal vesting date
and following the end of the performance period, unless the Committee
determines that awards should vest following cessation of employment.
If the vesting of a good leaver’s award(s) is required to be accelerated
due to local law requirements (including tax law), the Committee would
ordinarily impose a post-vesting holding period on the resulting
net-of-tax shares for the balance of the original vesting period, during
which the leaver would not be permitted to sell or transfer those shares.
Vesting will be subject to performance and unless the Committee
determines otherwise (or that another basis of reduction is appropriate)
pro-rated for time in employment. Good leavers are those who cease to
be an employee of a member of the Group by reason of death, injury,
disability, ill-health, redundancy, and the sale of the individual’s
employing business or transfer of the Company out of the Group, or any
other reason which the Committee decides in its discretion, having
regard to a range of relevant factors including the Executive Director’s
performance, length of service and circumstances of their departure.
Where an individual is not considered to be a good leaver, unvested
awards will lapse.
Unvested awards are subject to malus and vested awards are subject
to clawback as detailed above.
Buy-out awards
If a departing Executive Director holds a buy-out award granted to them
in connection with their appointment, that award will be treated in
accordance with its terms.
Detailed share plan provisions
Share awards are subject to the terms of the relevant plan rules under
which the award has been granted. The Committee may adjust or
amend awards only in accordance with the provisions of the plan rules.
This includes making adjustments to awards to reflect certain corporate
events, including a variation in the Company’s share capital, a demerger
or a special dividend. In change of control circumstances, all LTIP
awards will normally vest on an accelerated basis to the extent that the
performance conditions are satisfied, and, unless the Committee
determines otherwise, subject to time pro-rating. Deferred Bonus
awards will normally vest in full. The Committee may also allow or
require some or all of an award to be exchanged if not yet vested.
Individual terms
David Schwimmer entered into a service agreement with the Group
on 12 April 2018 and was appointed with effect from 1 August 2018.
David Schwimmer’s service agreement may be terminated by either
party giving at least 12 months’ notice. Alternatively, the Group may
terminate the contract by payment in lieu of notice of a sum equal to
12 months’ salary, pension, flexible benefits allowance, life and private
medical insurance (but excluding bonus, share incentives and car
transportation). Any payment in lieu of notice will be paid in equal
monthly instalments from the date of termination of the employment.
Should Mr Schwimmer commence alternative employment, be
appointed as a Non-Executive Director or provide services pursuant
to a consultancy agreement in the relevant period (of 12 months)
following his departure from the Group, the instalments will be reduced
by one-twelfth of the annual remuneration earned from the alternative
employment, directorship or consultancy. Payments of the instalments
may be required to be deferred until six months after termination by
US tax rules applying to Mr Schwimmer. To the extent that any payment
or benefits payable to Mr Schwimmer under his service agreement or
under any bonus or share incentive plan would be subject to US excise
tax, the payments and benefits may be reduced if this would result in
Mr Schwimmer receiving a greater after tax amount than if the benefits
were not reduced. On termination (other than by reason of summary
dismissal) Mr Schwimmer will be eligible to receive a pro-rata bonus for
the year in which his employment is terminated subject to Company and
individual performance.
Anna Manz entered into a service agreement with the Group on
24 June 2020 and was appointed with effect from 21 November 2020.
Anna Manz’s service agreement may be terminated by either party
giving at least 12 months’ notice. Alternatively, the Group may terminate
the contract by payment in lieu of notice of a sum equal to 12 months’
salary, pension, flexible benefits allowance, life and private medical
insurance (but excluding bonus, share incentives and car transportation).
Any payment in lieu of notice will be paid in equal monthly instalments
from the date of termination of the employment. Should Ms Manz
commence alternative employment, be appointed as a Non-Executive
Director or provide services pursuant to a consultancy agreement in
the relevant period (of 12 months) following her departure from the
Group, the instalments will be reduced by one-twelfth of the annual
remuneration earned from the alternative employment, directorship
or consultancy. On termination (other than by reason of summary
dismissal) Ms Manz will be eligible to receive a pro-rata bonus for the
year in which her employment is terminated subject to Company and
individual performance.
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Directors’ Remuneration Report continued
Remuneration policy for wider workforce
The Committee has responsibility for overseeing arrangements for all
of our people and reviews broader workforce policies and practices in
order to support decisions on executive pay.
Paying our people fairly relative to their role, skills, experience and
performance is central to our approach to remuneration, and our reward
framework and policies support us in doing this. Our Group-wide reward
framework establishes a transparent and robust compensation structure,
elements and leverage for each career stage in the organisation,
providing the Committee with oversight of workforce remuneration.
The Committee places great importance on ensuring our pay policies
and incentives support the desired culture and behaviours of the Group.
As detailed in the Annual bonus operation section on page 133, bonus
awards for our Group Executive team as well as our Executive Directors
are determined in accordance with performance against an individual
scorecard. This provides the Committee with greater structure in
determining the bonus of senior management as well as allowing for a
greater focus on culture and behaviours.
The remuneration policy for senior executives and other employees is
determined based on similar principles to Executive Directors. For roles
below the main Board, the exact structure and balance are tailored
based on various factors including the scale, scope or responsibility
of the role, development within the role and/or significant market
movement. The Committee reviews and comments on the salary, bonus
and LTIP awards of the senior executives immediately below Board level
and approves the overall design and distribution of incentive awards
available to all employees, including share-based plans.
The approach in respect of base salary and benefits is generally
consistent across the organisation. Executive Directors’ and other
senior managers’ remuneration includes a greater proportion of
performance-related pay when compared to other employees.
The Committee considers this is essential to differentiate levels of
responsibility and align pay to sustainable long-term performance
and shareholders’ interests.
All employees are eligible to participate in the annual bonus plan which
is subject to similar metrics to those used for the Executive Directors.
Opportunities vary by organisational level. Some sales employees are
eligible to participate in sales compensation plans rather than the annual
bonus plan.
Deferral of a portion of the annual bonus is operated for our Executive
Director, Group Executive and Group Leader populations. 50% of the
annual bonus for our Executive Directors and Group Executives is
deferred into shares for a period of three years. For our Group Leaders,
50% of their annual bonus is deferred if the award is more than
£150,000, vesting in equal tranches over three years. This reinforces the
alignment of the pay of our senior employees with shareholder interests
and the Group’s long-term performance.
The malus provision on unvested awards applies automatically to all
awards granted under the Deferred Bonus Plan and the 2014 LTIP.
The Committee also exercises discretion at each grant date to apply
clawback rules to all awards granted, including participants other than
Executive Directors.
In setting remuneration for Executive Directors, the Committee considers
the overall approach to rewarding employees across the Group taking
into account the scale, scope or responsibility of the role, development
within the role and/or significant market movement.
Salary increases of Executive Directors in percentage terms are normally
in line with those of employees in their local jurisdictions. Engagement
with employees on executive remuneration and how it aligns with wider
Company pay policy is undertaken as part of our employee forums held
in key regional locations.
The Committee receives ongoing regulatory updates and information on
external market practices from its independent external advisers who
provide additional context for decisions.
Consideration of shareholders’ views
The Committee is mindful of shareholder views when setting
and evaluating ongoing remuneration principles and commits to
consulting with shareholders prior to any significant changes to the
remuneration policy.
Policy for Non-Executive Directors
Approach to setting fees Basis of fees Other items
The fees for Non-Executive Directors are set at a level which is considered
appropriate to attract individuals with the necessary experience and ability
to make an important contribution to the Group’s affairs.
The Chair’s fee is determined by the Remuneration Committee, and the
Board is responsible for determining all other Non-Executive Director fees.
Fees are periodically reviewed to ensure they remain appropriate in the
context of: the role scope; company size, complexity and global breadth;
and wider market conditions. The Committee retains the flexibility to
increase, adjust and make one-off payments to Non-Executive Directors
based on their remit.
Fees are set taking into account the level of responsibility of each
Non-Executive Director and fees at other companies of a similar size
and complexity.
The aggregate fees payable to all Non-Executive Directors combined
(excluding the Chair and excluding fees paid for any appointments on
subsidiary boards) are capped as set out in the Group’s Articles of
Association as they may be amended by a resolution of shareholders from
time to time. The current limit on the aggregate fees that are payable is
£1,500,000 per financial year.
Non-Executive Directors receive a
basic annual fee with additional fees
payable for services such as
committee chairmanship.
Certain Non-Executive Directors are
also entitled to receive fees from
subsidiary companies.
The Non-Executive Chair of the
Group receives an all-inclusive
fee for the role.
Fees are neither performance-related
nor pensionable.
Non-Executive Directors are
not eligible to participate in
the annual bonus or LTIP plans
and are not entitled to any
payments on termination.
Non-Executive Directors receive an
allowance for any Board meeting
involving intercontinental travel.
Travel and other appropriate
expenses with associated taxes
(including fees incurred in obtaining
professional advice in the
furtherance of their duties)
incurred in the course of performing
their duties are reimbursed to
Non-Executive Directors.
Non-Executive Directors are
covered by the Directors’ and
Officers’ insurance and
indemnification.
Non-Executive Directors are
required to build up share
ownership of at least 1x basic
annual fees within three years
of appointment.
London Stock Exchange Group plc
Annual Report 2022
126
Directors’ Remuneration Report continued
Non-Executive Directors have letters of appointment with no notice
period except for the Group Chair who has a notice period of 6 months
unless he is not re-elected by shareholders in which case his
appointment will terminate immediately. The Non-Executive Directors’
appointments are for an initial period of 3 years from the date of
appointment and are also subject to re-election by shareholders.
Amendments to the Remuneration Policy Report
The Committee recognises that remuneration arrangements may need
to be amended in order to comply with any new regulations which
become applicable to the Group. The Committee reserves the right to
make changes to the Policy described above in order to comply with
any such regulatory requirements which apply to the Group including
any changes required under the UK Corporate Governance Code or for
regulatory, exchange control, tax or administrative purposes or to take
account of a change in legislation without obtaining shareholder
approval for that amendment. Where this results in a major structural
change, the Committee would expect to present a revised policy to
shareholders for approval at the following AGM.
Illustration of the application of the remuneration policy for
Executive Directors
The chart on the right illustrates how much the current Executive
Directors could receive under four different performance scenarios in
the first year of this policy taking effect i.e. 2023: minimum, mid-range,
maximum and maximum assuming a 50% increase in share price for
LTIP awards during the vesting period. Note that London Stock
Exchange Group plc does not have a stated ‘target’ level for share
awards, so we have assumed 50% of maximum awards to illustrate
a mid-range scenario.
Element of
remuneration Detail of assumptions
Fixed
remuneration
This comprises:
— Base salary with effect from 1 January 2023
— Benefits as they applied on 31 December 2022
and are set out in the single figure table in the
Annual Remuneration Report.
— Pension
Annual Bonus Assumes maximum opportunity of 225% of salary for
CEO and 200% of salary for the CFO
For mid-range scenario: assumes payment of 50% of
the maximum opportunity
For maximum: assumes payment of 100% of the
maximum opportunity
Long Term
Incentive Plan
Assumes maximum opportunity of 300% of salary in
conditional shares
For mid-range scenario: assumes 50% of the
maximum opportunity
For maximum: assumes vesting of 100% of the
maximum opportunity plus a second scenario
assuming a 50% increase in share price during the
performance period
David Schwimmer
Chief Executive Officer
Maximum + share price growth £8,000k
16%
19%
32%
100%
29%
39%
35%
46%
28% 37%
19%
£6,500k
£3,875k
Maximum
Mid-range
Minimum £1,250k
Fixed remuneration
Annual bonus
Long term incentive plan
Share price growth
Anna Manz
Chief Financial Officer
Maximum + share price growth £5,754k
15%
19%
32%
100%
27%
41%
32%
49%
26% 39%
20%
£4,629k
£2,754k
Maximum
Mid-range
Minimum £879k
Fixed remuneration
Annual bonus
Long term incentive plan
Share price growth
Legacy arrangements
The Committee may make any remuneration payments and payments
for loss of office (including exercising any discretions available to it in
connection with such payments) where the terms of the payment were
agreed/granted (i) before the policy came into effect or (ii) at a time
when the relevant individual was not a Director of the Group and, in the
opinion of the Committee, the payment was not in consideration for the
individual becoming a Director of the Group.
REMUNERATION POLICY REPORT CONTINUED
127 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Remuneration Report continued
This section sets out how remuneration arrangements have operated during the past financial year (FY2022), and also provides details on how we
intend to operate our policy during the coming year (FY2023). This report will be put to an advisory vote at the 2023 AGM. The information from this
page 127 to page 141 has been audited where required under the regulations and is indicated as audited where applicable.
Single total figure of remuneration for Executive Directors (audited)
Single total figure of remuneration
David Schwimmer Anna Manz
FY2022
£000 % of total
FY2021
£000 % of total
FY2022
£000 % of total
FY2021
£000 % of total
Fixed remuneration
Salary 1,000 983 650 650
Flexible benefits allowance 15 15 15 15
Benefits 135
3
161
3
39
4
27
Other – – – 453
5
Pay for performance
Annual bonus 1,433 1,625 802 939
Long term incentive – performance
1
1,974 2,325 – –
Long term incentive – share price growth
1
85 1,639
2
– –
Pension 100 98 65 65
Total remuneration of which 4,742 6,847 1,571 2,149
Fixed remuneration 1,250 26% 1,258 18% 769 49% 1,210 56%
Variable remuneration 3,492 74% 5,589 82% 802 51% 939 44%
Notes to the table:
1 The value delivered through performance is calculated as the number of shares forecast to vest in 2023 multiplied by the share price on the date of grant. The value delivered through share
price growth is calculated as the same number of shares multiplied by the difference between the average share price in the last 3 months of the financial year, being £76.66 and the share price
on the date of grant. The Committee does not intend to amend the outcome or make any adjustments in regard to share price growth over the period, on the basis that this reflects our view of
the Group’s underlying performance and returns for shareholders over the performance period.
2 Performance shares vested at 100% on 22 March 2022 at £79.14 per share.
David Schwimmer
3 Benefits include the cash value of private medical, income protection and life assurance plus expatriate allowances and commuting expenses (including car transportation where appropriate) with
associated taxes. The housing component of expatriate allowances ceased on 31 July 2021. The total value of the flight allowance used in respect of 2021 and 2022 was £59,578; this allowance
will cease in 2023. David Schwimmer contributed £500 per month to the SAYE plan throughout 2022; this benefit has been valued based on the 20% discount to market value on the SAYE
option exercise price.
Anna Manz
4 Benefits include the cash value of private medical, income protection and life assurance plus commuting expenses (including car transportation where appropriate) with associated taxes.
Anna Manz contributed £500 per month to the SAYE plan throughout 2022; this benefit has been valued based on the 20% discount to market value on the SAYE option exercise price.
5 As previously disclosed, a one-off payment was made in August 2021 to compensate for the forfeiture of 2020 bonus from previous employer, calculated upon publication of Johnson Matthey’s
2021 Directors’ Remuneration Report. Replicating the structure of the forfeited award, fifty percent was provided as an award over shares under the LSEG Restricted Share Award Plan 2018 on
10 August 2021.
Further notes
6 There were no money or assets reported in any previous financial year that were subject to a recovery of sums paid or withholding during the year.
Payments for loss of office (audited)
No payments were made for loss of office during the year.
Payments to past Directors (audited)
David Warren stepped down as Executive Director on 21 November 2020. Since leaving employment, he received 22,214 shares on vesting of
the 2019 LTIP award on 22 March 2022. This award reflects the 100% vesting outcome, pro-rated to the date of leaving. It remains subject to the
two-year post-vesting holding period, per the terms of the remuneration policy. Further detail can be found in the Long Term Incentive Plan table
on page 140.
ANNUAL REPORT ON REMUNERATION
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128
Directors’ Remuneration Report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
Additional notes to the Single total figure of remuneration (audited)
Fixed pay
Base salary
When reviewing Executive Director salaries, and in line with our
policy, the Committee considers multiple reference points including
companies in the FTSE 100, the broader Financial Services sector
and other international exchange groups. The Committee considers
these reference points remain appropriate in the context of the
enlarged Group.
Benefits
A flexible benefits plan is offered, in which individuals have certain core
benefits (such as private medical, life assurance and income protection)
together with (in the UK) a taxable cash allowance which can be spent
on elective benefits (such as additional medical, life or dental cover).
Where received as a cash supplement, this allowance is not used to
calculate bonus payments or pension contributions.
Benefits are reviewed periodically to ensure they remain affordable
and competitive. Executives are eligible to participate in the Group’s
HMRC tax-favoured SAYE Scheme (or international equivalent). There
has been no change to the provision of benefits during the year and
all arrangements below have previously been disclosed.
David Schwimmer receives a flexible benefits allowance of £15,000
per annum, which is unchanged from last year. In addition, he receives
benefits in kind which include private health care, permanent health
insurance and life assurance arrangements. Mr Schwimmer is also
provided with car transportation where appropriate.
As an expatriate from the US to UK, David Schwimmer receives
the following:
— For the first three years of employment, an annual allowance of
£150,000 in respect of accommodation expenses; this allowance
ceased on 31 July 2021.
— Tax preparation and filing assistance in the US and the UK.
— The Group will meet the costs of repatriating Mr Schwimmer’s
effects back to the US if it terminates his employment other than in
circumstances such as serious misconduct which would justify
summary termination.
— For the first five years of employment, an annual allowance of
up to £50,000 to cover flights between London and the US for
Mr Schwimmer and his family.
David Schwimmer contributes £500 per month into the 2020 SAYE
scheme which will mature in June 2023 with a six-month exercise
window. Anna Manz contributes £500 per month into the 2021 SAYE
scheme which will mature in November 2024 with a six-month
exercise window.
There are no contractual malus or clawback provisions in place in
relation to benefits.
Executive Directors are covered by the Directors’ and Officers’
insurance and indemnification.
Retirement Benefits
In the UK, pension provision for our Executive Directors takes the form
of a non-consolidated cash allowance; only base salary is used to
calculate pension entitlement and no other pension supplements apply.
David Schwimmer and Anna Manz each receive an allowance
equivalent to 10% of base salary as a taxable cash supplement, which is
in line with the wider workforce, ensuring we are compliant with the UK
Corporate Governance Code.
Bonus awarded for FY2022
Executive Directors are eligible to receive an annual bonus based on
meeting or exceeding bonus targets that are set at the beginning of the
year, looking at the Group’s financial performance, strategic objectives
and their personal contribution.
The Committee also receives input from the Risk Committee with regard
to performance related to risk culture (awareness, transparency and
accountability) when assessing remuneration decisions.
The operation of the FY2022 annual bonus is as per last year. The
Group bonus pool continues to be assessed 60% against financial
performance and 40% against strategic objectives. The Committee
considers AOP to be of particular significance for the Group and
believes it should continue to be the main financial measure for annual
bonus plan purposes. As per 2021, the maximum bonus opportunity is
225% of salary for the Chief Executive Officer and 200% of salary for
other Executive Directors.
The Executive Directors’ awards are funded from the Group bonus pool.
For FY2022 the performance of the Executive Directors and Group
Executive team continues to be assessed as part of a scorecard. This
scorecard aligns the bonus assessment with the construct of the Group
bonus pool: 60% against Group AOP; 40% against strategic objectives.
The ‘strategic’ element includes key Group strategic initiatives as well as
personal and divisional objectives.
Further to our commitment to ensure a greater focus on the
development of culture for the Group, the Committee determined that
within this scorecard there should be a greater proportion assessing
behavioural performance, to allow for a stronger emphasis on how the
individuals achieved their targets. A 360° feedback process informs part
of the assessment of the personal element of the scorecard.
129 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Remuneration Report continued
Determination of Bonus for FY2022
The Committee determined the overall Group bonus pool with reference to the 12-month performance period ending 31 December 2022.
The performance measures and targets for the FY2022 Group bonus pool are set out below:
Assessment of strategic objectives
Measure Objective
ESG
alignment Performance against objectives Outcome
Growth
Accelerate growth within and
across Divisions; identify potential
transformational growth opportunities
— Delivered 6.6% income growth
(organic, excluding Russia impact).
— Delivered run-rate revenue synergies of
£68 million by the end of 2022, exceeding
stated forecasts of £40-60 million.
— Strategically targeted investments that will
deliver a more scalable and efficient business
and enhance our customer offering, including
the acquisitions of GDC, MayStreet, TORA
and Quantile.
— Established strategic partnership with Microsoft
which significantly accelerates our strategy to be
the leading global financial markets infrastructure
and data provider.
Above target
Culture
Foster a diverse, inclusive culture
and a sense of pride; connect, create
opportunity, deliver excellence
S — Significant progress made in embedding an
inclusive culture that values a range of
perspectives and embraces diversity of every kind.
— Achieved our target of 40% women in senior
leadership by end of 2022.
— Employee engagement score of 75% defied
the current external trend by increasing 2 points
vs 2021.
— Launched career development framework,
hybrid working and recognition platform.
Above target
Resilience
Drive risk-based decisions, improve
infrastructure and delivery for
long-term resilience, compliance,
sustainable growth
G — Further enhanced risk, resilience and control
frameworks across LSEG.
— Good progress across various cyber
programmes; robust mitigation of cyber risks
from Ukraine/Russia conflict.
— Net debt back within 1.0-2.0x leverage range
as communicated to markets.
— Continuing to improve resilience and work in
partnership with key regulators to address any
regulatory changes.
Target
Performance measure Threshold Target Maximum Weighting Outcome achieved
Group AOP £2,299m £2,503m £2,937m 60% 30%
Actual £2,503m
Strategic Objectives 10% 20% 40% 40% 31%
Details of performance are set out below Actual 31%
Total 100% 61%
1 AOP excludes amortisation of purchased intangibles, non-underlying items.
2 Group AOP is measured using budget foreign exchange rates.
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130
Directors’ Remuneration Report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
Assessment of strategic objectives continued
Measure Objective
ESG
alignment Performance against objectives Outcome
Customer
Deliver an exceptional customer
experience and engagement
through our commitment to open
approach, partnerships and
transparent markets; demonstrate
thought leadership, sustainability,
and innovation in our core customer
and partner value propositions
S — Customer metrics stable and improving and
timely customer-centric migration delivered.
— Investment in automation, self-service & digital
solutions to improve customer satisfaction with
time to resolve customer queries reduced.
— Delivered significant projects relating to Corporate
Sustainability Reporting Directive, US Data Privacy
& Protection Act and EU DORA.
— Demonstrated thought leadership in ecosystem
through focused campaigns on top priority
advocacy objectives; strong investor engagement
on various topics.
Above target
Efficiency
Simplify LSEG’s governance,
technology, operations, processes
and products to enable scalable
sustainable growth; integrate
organisationally, operationally,
and promote learning of our new
business; connect our products,
services, and experts to enable an
improved customer experience
S,G — Delivered cost synergies ahead of schedule with
£297 million run-rate achieved by end of 2022,
exceeding target of £250 million.
— Exceeded in-year and run rate cost synergy
targets at planned cost-to-achieve; demonstrating
strong cost control and efficiency.
— Driven agility and customer-centricity through
implementation of new ‘Ways of Working’,
organisational design and location strategy.
— Strong progress made against objectives to
simplify operations, processes and products.
Above target
Sustainability
Establish LSEG as a strategic enabler
of sustainable economic growth
E,S,G — Our sustainability strategy has launched and is
being embedded. LSEG became the first global
exchange to publish its own Climate Transition
Plan and has set ambitious, science-based targets
to be net zero by 2040.
— Launched the 2022 Green Economy Mark Cohort
including 108 companies and funds, with a
combined market cap of £156 billion.
— £10 billion was raised on the London Stock
Exchange Green Bond segment and £12 billion
was raised on the Sustainable Bond segment.
— Launched London Stock Exchange’s Voluntary
Carbon Market and welcomed Foresight
Sustainable Forestry as the first listed issuer to
be admitted onto the market.
Target
We track 11 core financial and non-financial KPIs that link to our Group Strategic Objectives. More information can be found on pages 12 to 15.
Application of discretion
These incentive outcomes above are reflective of overall Group financial and strategic performance, and the Committee determined that no
discretion should be exercised to adjust the formulaic outcomes.
In determining these outcomes, the Committee considered whether to adjust for the adverse financial impact of the Ukraine/Russia conflict in 2022.
However, the diverse nature of LSEG’s business, the strong performance demonstrated across our divisions throughout the year, and revenue
recovery initiatives have mitigated much of the income loss. No discretion has therefore been exercised.
131 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Remuneration Report continued
Assessment of individual performance
Executive Director Commentary
David Schwimmer,
Chief Executive Officer
— David Schwimmer has led the Group’s strong performance in a challenging macroeconomic and geopolitical environment.
LSEG delivered another year of strong growth and is making excellent progress in realising the benefits of the Refinitiv
transaction. The Group continues to exceed the three-year targets we set out at the time of the announcement of the transaction.
— Under David’s leadership, LSEG has commenced a new long-term strategic partnership with Microsoft for the development of
next-generation data and analytics and cloud infrastructure solutions. This partnership significantly accelerates LSEG’s growth
and transformation plans.
— David has driven the strong progress we have made towards implementation of a number of strategic transformation
programmes to simplify LSEG’s processes and products and enable an improved customer experience. We have also further
enhanced our risk, resilience and control frameworks.
— David has continued to drive LSEG’s leadership role on sustainability through strong engagement with stakeholders and
policymakers, as well as our involvement in initiatives such as the Glasgow Financial Alliance for Net Zero, the Climate Data
Steering Committee and the UK’s Transition Plan Taskforce. We have also developed a number of new propositions to enable
sustainable economic growth, including: our Voluntary Carbon Market, Green Economy Mark and ESG data feeds. In 2022,
LSEG became the first global exchange group to publish its own Climate Transition Plan, which received the backing of 99% of
our shareholders, and has set ambitious, science-based targets to be net zero by 2040.
— David has continued to foster a culture of diversity and inclusion, setting the tone from the top and role modelling the values of
the Group.
— Under David’s direction, LSEG has taken a number of steps to progress our culture goals, including: the launch of our career
development framework, hybrid working model and global recognition platform. Reflecting the strong progress made on LSEG’s
cultural transformation, our employee engagement score defied the current external trend by increasing 2 points from 2021 to
75 points.
— David has also driven progress towards our gender diversity targets for senior leadership with a strong focus on measurement
and accountability across the business and we have met our target of 40% women in senior leadership by end of 2022.
Anna Manz,
Chief Financial Officer
— Anna Manz has played a pivotal role as the Group continues to grow and has led the Group’s strong financial performance in
2022, supporting new growth opportunities while maintaining a focus on cost control and efficiency. LSEG has demonstrated
strong revenue growth across our businesses and a robust financial position.
— Anna has been key to the delivery of the synergy and growth targets announced as part of the Refinitiv acquisition; with further
saving and efficiency opportunities identified. Our synergy programme is ahead of schedule, with £297 million of run-rate cost
synergies and £68 million run rate revenue synergies realised by year-end.
— Anna has been critical to the planning, negotiation, and agreement of the new strategic partnership with Microsoft which
significantly accelerates our strategy towards becoming the world’s leading financial markets infrastructure, data and
analytics provider.
— Anna has also been central to the Group’s capital allocation strategy, M&A activities and strategically targeted investments
that will deliver a more scalable and efficient business and enhance our customer offering, including the acquisitions of GDC,
MayStreet, TORA and Quantile.
— In addition, Anna has overseen the successful completion of the debt refinancing programme and net debt is back within our
1.0-2.0x leverage target range.
Based on the above context and an assessment of individual
performance, the Remuneration Committee awarded bonuses to each
of the Executive Directors as follows:
Role Chief
Executive
Officer
Chief
Financial
Officer
Name David
Schwimmer
Anna Manz
Bonus for
FY2022
% of salary 143% of salary 123% of salary
% of max 64% 62%
£ total amount £1,433,250 £802,100
Of which 50% is deferred £716,625 £401,050
Bonus
Component
Financial Performance (60%) 50% of
maximum
50% of
maximum
Strategic Objectives (20%) 79% of
maximum
79% of
maximum
Personal/Divisional Objectives
(20%)
90% of
maximum
80% of
maximum
Compulsory deferral under Remuneration Policy
Executive Directors must compulsorily defer 50% of their bonus into
shares for a period of 3 years. Dividend equivalents will be paid in
respect of deferred shares on vesting.
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Annual Report 2022
132
Directors’ Remuneration Report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
LTIP Awards granted in March 2019 with a performance period
ending in FY2022
The performance period for the absolute TSR element of the
Performance Share awards ended in March 2022. The awards granted
in 2019 were based on adjusted EPS performance in the three-year
performance period to December 2021, and absolute TSR performance
in the three-year period from grant. Over the performance period,
average adjusted EPS growth was 21% per annum and therefore vested
at 100% for this element. The Company also delivered annualised
absolute TSR performance of 17% in the 3 years to March 2022
and therefore vested at 100% for this element. The vesting price at
22 March 2022 was £79.14. These values are shown in the single
figure table for the financial year ending December 2021.
LTIP Awards granted in April 2020 with a performance period
ending in FY2023
The value shown in the single figure table on page 127 for the financial
year ending December 2022 represents the estimated value of the
2020 awards which will vest in April 2023. The estimated value is based
on the average closing share price in the final 3 months of the financial
year of £76.66; the value will be confirmed in April 2023. The Committee
does not intend to amend the outcome or make any adjustments in
regard to share price growth over the period, on the basis that this
vesting reflects our view of the Group’s underlying performance and
returns for shareholders over the performance period.
As disclosed in the Statement by the Chair of the Remuneration
Committee, given the materiality of the Refinitiv acquisition and its
impact on the Group’s underlying financial metrics, it was necessary
to reconsider the AEPS performance targets of the 2020 LTIP award.
To accomplish this, the calculated actual AEPS growth was adjusted
such that the impact on earnings of the Refinitiv and Borsa Italiana
transactions did not inappropriately affect the vesting.
To reflect the Committee’s higher expectations regarding the future
growth profile of the combined entity, the revised AEPS target for
the 2020 LTIP combines a 6% to 12% CAGR range for the one year
pre-acquisition with an increased range of 8% to 18% CAGR for the
two years post-acquisition.
No change has been made to the TSR targets. The final vesting
outcome (including the actual share price at vesting) following the end
of the performance period will be disclosed in the next Annual Report
on Remuneration covering FY2023.
The performance conditions applying to awards granted in March 2020
are, therefore, as follows:
EPS element (60%) –
average adjusted
EPS growth
TSR element (40%) –
relative TSR growth
Proportion of relevant
element which vests
Less than 7.3% p.a. Less than median 0%
7.3% p.a. Median ranking 25%
16% p.a. or more Upper quartile ranking 100%
Straight-line pro-rating applies between these points
LTIP Awards Granted in FY2022 (audited)
Awards during FY2022 were granted in March under the LTIP and
were made with a value of 300% of salary for David Schwimmer and
Anna Manz.
Role Chief
Executive
Officer
Chief
Financial
Officer
Name David
Schwimmer
Anna Manz
2014
LTIP
(conditional
award)
% of salary 300% of salary 300% of salary
Face value £3,000,000 £1,950,000
Share price
1
£83.60 £83.60
Number of LTIP shares granted 35,885 23,325
Notes:
1 The share price of £83.60 was determined using the closing price (MMQ) on 5 April 2022.
2 TSR is measured over a 2-month trailing average at the start and end of the performance
period and compared to the UK FTSE 100 Index peer group. EPS is measured over the same
performance period, 3 financial years ending 31 December 2024, and compared to the
FY2021 baseline.
The performance conditions applying to awards granted in March 2022
are as follows:
EPS element (60%) –
average adjusted EPS
growth
TSR element (40%) –
relative TSR growth vs.
UK FTSE 100 Index
Proportion of relevant
element which vests
Less than 6.5% p.a. Less than median. 0%
6.5% p.a. Median ranking 25%
12.5% p.a. or more Upper quartile ranking 100%
Straight-line pro-rating applies between these points
Other share plans (SAYE, SharePurchase)
All permanent UK employees, including Executive Directors, are
eligible to participate in the HM Revenue & Customs tax-favoured
Save As You Earn Scheme (SAYE). Under the rules of the SAYE,
participants can save up to £500 each month, for a period of three
years. At the end of the saving period, savings may be used to acquire
ordinary shares by exercising the related option. The options may be
granted at an exercise price which represents a discount of up to 20%
to market value at the date of invitation. No performance conditions
are attached to SAYE options.
There is also a SharePurchase Plan, which is designed to provide
share options to all employees in our Group, including Executive
Directors, who are not based in the UK. SharePurchase allows eligible
employees in 20 countries to purchase up to an equivalent of £500 of
LSEG ordinary shares per month and are then awarded additional
shares which vest after the completion of a three-year plan cycle.
No performance conditions are attached to the award. During 2022
we launched SharePurchase into nine new countries, meaning that this
year 89% of our employees globally were offered the opportunity to
benefit from our success and share in LSEG’s future by participating in
one of our employee share ownership plans.
In 2020 and 2021 respectively, David Schwimmer and Anna Manz
commenced saving the maximum £500 per month under the SAYE,
pertaining to options granted on exactly the same terms as to all other
eligible employees.
These all-employee share plans are a core component of our people
proposition and benefits offering, acting as a modest retention tool with
30% of eligible employees participating globally.
133 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Remuneration Report continued
Implementation of the Remuneration Policy during 2023
(1 January 2023 to 31 December 2023)
Base salary operation:
During the year, the Committee conducted its annual review of the
base salary levels of our Executive Directors.
Since Anna Manz joined the company in 2020, she has not received a
salary increase. Last year, despite strong performance, we determined
not to award an increase as Anna was only in the second year of her
role. However, we signalled in our Directors’ Remuneration Report
in 2022, that we would commit to keeping her salary and total
compensation under review alongside the continued success of the
company and the delivery of goals related to the Refinitiv transaction.
Anna joined LSEG from a CFO role at a smaller company at an
appropriate salary. Since she joined, LSEG has become a significantly
larger, more international and complex business. The Refinitiv
transaction completed in January 2021 and transformed the company in
terms of global breadth, complexity, business diversification and size,
and Anna has been key to the delivery of synergies ahead of schedule.
LSEG has also continued to grow with the acquisitions of GDC,
MayStreet, TORA and Quantile in 2022. This growth and transformation
of the business has greatly increased the scope, responsibilities and
complexity of the CFO role. In addition, Anna has been critical to the
commencement of the strategic partnership with Microsoft and will
continue to play a pivotal role in how this collaboration accelerates
LSEG’s growth and transformation plans.
She is now in her third year in the role and has consistently
demonstrated strong performance and has made a meaningful
impact at LSEG. Anna is a fully established and critical member of
the management team and the Group has demonstrated strong
revenue growth and a robust financial position.
Following a recent benchmarking exercise, it was clear to the
Committee that Anna’s salary and total compensation was significantly
lower than her peers in the FTSE 30 and was below the lower quartile.
The Board and Committee have a responsibility to retain the very best
talent and are committed to pay equity; such a significant gap to market
was considered inequitable.
Given the size, scope and complexity of the role, her strong
performance and development since joining the Group, and the
relative market positioning, the Committee has decided to award a
15% salary increase to £750,000, effective 1 January 2023. This is the
first salary increase Anna has received since joining. Even after this
increase, Anna’s salary and total compensation will continue to be
positioned below the median of the FTSE 30.
The Committee is mindful of the sensitivity to large increases in
executive base pay levels, particularly in the context of current
cost-of-living pressures and average salary increases across the wider
workforce (9.15% cumulative for FY21-23 in the UK). However, we believe
the implementation of the increase for the CFO is appropriate for the
reasons described above. The Committee considered whether to
commit to keeping the CFO’s new salary unchanged for a certain time
period but determined that it would be imprudent in light of the current
uncertain macroeconomic climate and positioning relative to peers.
Shareholders were consulted on the proposed increase and were
broadly supportive given the underlying rationale.
No changes are proposed to the salary of the CEO. This will continue to
be reviewed.
Pension operation:
The CEO and the CFO receive a pension contribution of 10% of salary
which is in line with the wider workforce, ensuring we are compliant with
the UK Corporate Governance Code.
Annual bonus operation:
— As per prior years, for FY2023 the Group bonus pool will be
determined based on performance measures weighted 60%
Group AOP and 40% strategic objectives to be assessed over a
12-month performance period.
— For FY2023, we are maintaining our high level of focus on
sustainability within the assessment of the strategic objectives
element, reflecting our commitment to drive financial stability,
empower economies and enable customers to create
sustainable growth.
— The Executive Directors’ awards are funded from the Group bonus
pool. As per 2022, the performance of the Executive Directors and
Group Executive team is assessed as part of a scorecard. This
scorecard aligns the bonus assessment with the construct of the
Group bonus pool: 60% against Group AOP; 40% against strategic
deliverables. The ‘strategic’ element includes key Group strategic
initiatives as well as personal and divisional objectives.
— Further to our commitment to ensure a greater focus on the
development of culture for the Group, the Committee determined
that within this scorecard there should be a greater proportion
assessing behavioural performance, to allow for a stronger emphasis
on how the individuals achieved their targets. A 360° feedback
process informs part of the assessment of the personal element
of the scorecard.
— The Committee receives input from the Risk Committee with regard to
performance related to risk culture (awareness, transparency and
accountability) when assessing remuneration decisions.
— 50% of any bonus payment for Executive Directors and the Group
Executive team will be paid in March 2023. The remaining 50% will
be deferred into shares for a period of three years.
— Deferred awards are subject to malus and clawback provisions
(e.g. in cases of material misstatement. gross misconduct,
misbehaviour or material failure of risk management) with judgement
applied by the Committee.
— For good leavers, awards will usually vest at the normal vesting date
and in full, unless the Committee determines to scale back the award
based on any factors deemed relevant. Where an individual is
not considered to be a good leaver, unvested awards will lapse.
— The implementation of the scorecard for the Group Executive team
and extension of the bonus deferral scheme below Group Executive
level to the Group Leader population provides greater alignment
with the Executive Directors. In addition, it is in accordance with the
revised UK Corporate Governance Code which calls for remuneration
committees to determine remuneration for ‘senior management’ and
to more closely align incentives with culture.
London Stock Exchange Group plc
Annual Report 2022
134
Directors’ Remuneration Report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
Long Term Incentive Plan:
LTIP awards will be granted in 2023 under our 2014 shareholder-
approved plan in line with our policy. The 2023 LTIP awards will be
subject to a two-year holding period in addition to the three-year
vesting period, resulting in a total five year period from the date of
grant. The Committee approved the use of conditional share awards in
lieu of nil-cost options to deliver performance shares to participants for
awards made from 2021 onwards.
The Committee has given careful consideration to the LTIP target ranges
applicable to the 2023 grant, in particular to ensure that AEPS growth
targets are appropriately stretching taking into account both internal and
external forecasts. For the AEPS element (60%), the performance targets
will range from 6% to 11.5% growth per annum. Given the materially
higher AEPS baseline and considerable growth in the size of the Group,
growth in AEPS CAGR will now deliver far more value to investors than
previous targets based on a lower baseline. To achieve threshold
vesting, in the region of £500m additional AOP would be required,
incremental to 2022. To achieve maximum vesting, in excess of £1bn of
incremental AOP would be required, equivalent to incremental income
in the region of £2.6bn, relative to 2022.
For the TSR element (40%), the relative performance targets will
continue to range from median to upper quartile versus the UK FTSE
100. The Committee continues to review the appropriateness of the UK
FTSE 100 as the comparator group against which to measure relative
TSR. It has concluded that it remains the most appropriate comparator
group as LSEG is a constituent of this group and it represents an index
in which our shareholders may otherwise invest.
Malus and clawback provisions will apply to these awards, allowing
the Committee to reduce subsisting awards or request the refund of
already paid or vested awards in certain circumstances (e.g. material
misstatement, gross misconduct, misbehaviour or material failure in risk
management). The 2023 awards will vest three years after the grant
date, subject to adjusted EPS and relative TSR performance measures,
applicable to the three financial years prior to vest, as follows.
EPS element (60%) –
average adjusted EPS
growth
TSR element (40%) –
relative TSR growth
Proportion of relevant
element which vests
Less than 6% p.a. Less than median 0%
6% p.a. Median ranking 25%
11.5% p.a. or more Upper quartile ranking 100%
Straight-line pro-rating applies between these points
Awards to be made during 2023
Based on the context and an assessment of individual performance,
the Remuneration Committee intends to make grants to each of the
Executive Directors under the 2014 LTIP as set out below.
Role Chief
Executive
Officer
Chief
Financial
Officer
Name David
Schwimmer
Anna Manz
2023
LTIP award
(subject to
performance)
% of salary 300% of salary 300% of salary
Amount £3,000,000 £2,250,000
Shareholding requirements
The minimum shareholding requirement for the CEO is 4x base salary,
for other Executive Directors 3x base salary, and 2x base salary for the
Group Executive team. Executive Directors will also be required to hold
the lower of their actual shareholding and 100% of their MSR for two
years post-departure.
Non-Executive Directors’ fees for 2023
During the year, the Board reviewed Non-Executive Director fees.
Non-Executive Director base fees and Committee Chair fees were last
revised in 2020 and 2016 respectively.
Non-Executive Director fees were not increased at the time of the
Refinitiv transaction, which transformed the Company in terms of
global breadth, complexity, business diversification and size, and
correspondingly increased the time commitment, scope and global
complexity of the Non-Executive Director role. The Investment
Association’s updated Principles of Remuneration notes that Non-
Executive Directors should receive fees that reflect these factors.
The Board has therefore proposed an increase to base fees and
Committee Chair fees, with effect from 1 January 2023.
There are no other changes to fees and the fee schedule for 2023
is as follows:
Fees
With effect
from 1 Jan
2022
With effect
from 1 Jan
2023
Group Chair £625,000 £625,000
Senior Independent Director £150,000 £150,000
Non-Executive Director base fee
(inclusive of Committee memberships) £80,000 £95,000
Audit/Remuneration/Risk Committee Chair £30,000 £40,000
Non-Executive Directors are also required to build up a shareholding
requirement of 1x basic annual fees, to be built up within three years
of appointment.
Non-Executive Directors’ Remuneration
Non-Executive Directors’ remuneration is determined by the Board
and is neither performance-related nor pensionable. The Chair’s fee
is determined by the Remuneration Committee. The fees for Non-
Executive Directors are set at a level which is intended to recognise
the significant responsibilities of Directors and to attract individuals with
the necessary experience and ability to make an important contribution
to the Company’s affairs. Comparisons are made with fees paid at FTSE
30 companies.
A travel allowance of £4,000 per intercontinental trip for Non-Executive
Directors reflects the global nature of the Company’s business and
the additional time commitment required for travel. The Group Chair
will not be eligible for this allowance as he receives an all-inclusive fee
for his role.
Travel and other appropriate expenses with associated taxes (including
fees incurred in obtaining professional advice) incurred in the course
of performing their duties are reimbursed to the Chair and to the
Non-Executive Directors.
The Chair and the Non-Executive Directors do not participate in any of
the Company’s annual bonus or LTIP plans and are not entitled to any
payments on termination.
Certain Non-Executive Directors are entitled to receive fees from
subsidiary companies, details of which are set out below.
135 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Remuneration Report continued
The original date of appointment as Directors of the Company is as follows:
Name
Date
Appointed
Date of letter
of appointment Time to expiry Notice period
Date of
resignation
LSEG Committee
membership/
chairmanship
Other subsidiaries/
committees
Don Robert 01/01/2019 01/01/2022 31/12/2024 6 months Group Chair,
Nomination Chair,
Remuneration
Dr. Val Rahmani 20/12/2017 20/12/2020 19/12/2023 None Risk, Nomination,
Remuneration
Professor
Kathleen DeRose
28/12/2018 28/12/2021 27/12/2024 None Risk Chair, Audit,
Nomination
Cressida Hogg CBE 08/03/2019 08/03/2022 07/03/2025 None SID, Remuneration
Chair, Nomination,
Dominic Blakemore 01/01/2020 20/12/2022 31/12/2025 None Audit Chair,
Nomination, Risk
Tsega Gebreyes 01/06/2021 01/06/2021 31/05/2024 None Audit, Nomination,
Risk
Ashok Vaswani 01/06/2021 01/06/2021 31/05/2024 None Audit, Nomination,
Risk
William Vereker 03/10/2022 03/10/2022 02/10/2025 None Risk, Remuneration,
Nomination
Directors who stood down from the Board during the Year:
Jacques Aigrain 01/05/2013 01/05/2019 None 27/04/2022 Audit, Nomination,
Remuneration
LCH (Remuneration
Committee)
Shareholder directors
Martin Brand 29/01/2021 29/01/2021 Nomination
Erin Brown 29/01/2021 29/01/2021 17/03/2023 Nomination
Douglas Steenland 29/01/2021 29/01/2021 Nomination
Non-Executive Directors’ Remuneration Table (audited)
FY2022
LSEG Fees
£000
FY2022
Other Fees
1
£000
FY2022
Total Fees
£000
FY2022
Taxable
benefits
2
£000
FY2022
Total
£000
FY2021
LSEG Fees
£000
FY2021
Other Fees
1
£000
FY2021
Total Fees
£000
FY2021
Taxable
benefits
2
£000
FY2021
Total
£000
Don Robert 625 – 625 34 659 525 – 525 5 530
Dr. Val Rahmani 80 – 80 50 130 80 – 80 4 84
Professor Kathleen
DeRose 110 – 110 41 151 110 – 110 6 116
Cressida Hogg CBE 150 – 150 23 173 108 – 108 – 108
Dominic Blakemore 110 – 110 16 126 110 – 110 – 110
Tsega Gebreyes
3
80 – 80 24 104 41 – 41 – 41
Ashok Vaswani
3
80 – 80 44 124 41 – 41 – 41
William Vereker
4
20 – 20 – 20 – – – – –
Martin Brand
5
– – – – – – – – – –
Erin Brown
5,6
– – – 43 43 – – – 5 5
Douglas Steenland
5
– – – 23 23 – – – 5 5
Directors who stood down from the Board during the year:
Jacques Aigrain
7
20 – 20 1 21 103 5 108 1 109
Total Non-Executive
Directors’ fees 1,275 – 1,275 299 1,574 1,118 5 1,123 26 1,149
Notes:
1 Other fees relate to subsidiaries and other committees.
2 Taxable benefits relate to any travel allowance payments and travelling expenses, including grossed up taxes where applicable. The 2022 year-on-year increase in benefits costs for our
Non-Executive Directors was due to the level of global travel returning to pre-pandemic levels meaning that increased travel expenses and intercontinental travel fees were incurred.
3 Appointed to the Board on 1 June 2021.
4 Appointed to the Board on 3 October 2022.
5 Shareholder directors appointed to the Board on 29 January 2021, who do not receive a fee for their role.
6 Will step down from the Board on 17 March 2023.
7 Stepped down from the Board on 27 April 2022.
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136
Directors’ Remuneration Report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
Outside appointments
Executive Directors are allowed to accept appointments as Non-
Executive Directors of other companies with the prior approval of the
Chair. Approval will only be given where the appointment does not
represent a conflict of interest with the Company’s activities and where
the wider exposure gained will be beneficial to the development of the
individual. Executive Directors may retain fees to encourage them to
seek out the development opportunities and valuable experience
afforded by these appointments and in recognition of the personal
responsibility executives assume in such roles.
Anna Manz is a Non-Executive Director of ITV plc and is a member
of their Remuneration and Audit and Risk Committees. For FY2022
Anna received fees of £75,796 in connection with this appointment.
Director changes during the year
There have been no Executive Director changes during the year.
Alignment between pay and performance
Total Shareholder Return (TSR) performance
The following graph shows, for the financial period ended 31 December
2022 and for each of the previous ten financial periods, the TSR on a
holding of the Company’s ordinary shares of the same kind and number
as those by reference to which the FTSE 100 is calculated. The TSR
graph represents the value, at 31 December 2022, of £100 invested in
London Stock Exchange Group plc on 31 March 2013, compared with the
value of £100 invested in the FTSE 100 Index over the same period.
As a member of the FTSE 100, we have chosen the FTSE 100 Index as it
is currently the most relevant index for benchmarking our performance
over the ten financial periods.
100
200
300
400
500
600
700
800
Total shareholder return
Mar 13
Mar 14
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
LSEG
FTSE 100
Historic levels of CEO pay
Period ended:
(12 months unless otherwise stated) CEO
CEO Single total figure
of remuneration (£’000)
Annual bonus payout
against maximum
opportunity %
Long-term incentive
vesting rates against
maximum opportunity %
31 December 2022 David Schwimmer 4,742 64% 82%
31 December 2021 David Schwimmer 6,847 72% 100%
31 December 2020 David Schwimmer 6,479 76% 100%
31 December 2019 David Schwimmer 2,456 75% –
3
31 December 2018 David Schwimmer
1
2,153 76% –
3
29 November 2017 Xavier Rolet
2
5,799 79% 100%
31 December 2016 Xavier Rolet 6,880 91% 91%
31 December 2015 Xavier Rolet 6,526 95% 94%
9 months ended 31 December 2014 Xavier Rolet 4,587 89% 50%
31 March 2014 Xavier Rolet 6,383 93% 100%
31 March 2013 Xavier Rolet 6,015 89% 100%
Notes:
1 Appointed as CEO on 1 August 2018 and his data is as per the single total figure of remuneration table for FY2018.
2 Stepped down from the Board on 29 November 2017; data therefore represents 11-month figures.
3 Awards vesting in 2019 and 2020 vested at 89.6% and 100% respectively; these grants were not applicable to David Schwimmer.
CEO to employee pay ratio (audited)
Paying our people fairly relative to their role, skills, experience and
performance is central to our approach to remuneration, and our reward
framework and policies support us in doing this. The Committee
considers pay ratios as a useful reference point to inform pay decisions,
but also takes into account a number of other internal and external
factors when determining executive pay outcomes, including:
— Our reward framework which establishes the compensation structure,
elements and leverage for each career stage in the organisation,
providing the Committee with oversight of workforce remuneration.
— The Group’s financial and strategic performance, including
consideration of risk.
— Each individual’s performance, including conduct and behaviour,
against personal objectives.
— External market surveys.
— Wider context and the views of shareholders and investor bodies.
The table below shows the ratios of the CEO single total figure of
remuneration (as disclosed on page 127) to the total pay and benefits of
UK people at the 25th, 50th and 75th percentile.
Year Method
25th
percentile
pay ratio
50th
percentile
pay ratio
75th
percentile
pay ratio
2022 C 61 40 31
2021 C 97 63 49
2020 C 93 67 49
2019 C 31 21 19
137 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Remuneration Report continued
The Committee has reviewed the ratios and pay data for the individuals
identified at each of the relevant quartiles and believe they are a fair
reflection of the Company’s wider pay policies. The remuneration
received by each of the individuals is in line with our reward framework.
Executive Directors’ and other senior managers’ remuneration include a
greater proportion of performance-related pay when compared to the
identified people. The Committee considers this is essential to
differentiate levels of responsibility and align pay to sustainable
long-term performance and shareholders’ interests. As a significant
proportion of the CEO’s remuneration is linked to performance and
share price over the longer term, it is expected that annual changes in
the pay ratio will be significantly influenced by LTIP outcomes each year
and will fluctuate accordingly.
Notes to the calculation:
— We have chosen to use Option C in the regulations to determine the
pay ratios. The best equivalents for the UK individuals at the 25th,
50th and 75th percentiles were determined using the hourly rate
from our additional gender pay disclosure. This option leverages the
comprehensive analysis we have completed as part of our UK gender
pay gap reporting exercise. It comprises 95% of the UK population
(from the entities with 250 or more employees) and all compensation
awards in the financial year to ensure that the best equivalents
determined are a fair and true representation of workforce pay at the
relevant percentiles. Further information on our additional gender pay
disclosure is provided in our Gender Pay Report which is available at:
www.lseg.com.
— The 2022 total pay and benefits of the identified people was
determined based on data as at 31 December 2022.
— The 2022 total pay and benefits for the 25th, 50th and 75th
percentile people are as follows: £77,423, £119,112, £153,299.
— The 2022 base salary for the 25th, 50th and 75th percentile people
are as follows: £59,892, £85,000, £111,702.
Percentage change in remuneration of all directors and our people
The table below shows the percentage year-on-year change in salary, benefits and annual bonus for each Executive Director and Non-Executive
Director compared to the global average remuneration of our employees. Where appropriate, amounts have been annualised to provide a
like-for-like comparison. The 2020/2021 year-on-year reduction in benefits costs for our Non-Executive Directors was largely due to the decrease in
travel-related expenses during the Covid-19 pandemic. The 2021 year-on-year reduction in the benefits and bonus costs for our employees was
reflective of the newly combined company following the Refinitiv transaction and a change in the geographic mix of our employee population. The
2022 year-on-year increase in benefits costs for our Non-Executive Directors was due to the level of global travel returning to pre-pandemic levels
meaning those based in the US travelled to the UK several times during the year incurring both intercontinental travel fees and travel expenses; a
Board meeting was also held in New York in June.
2022 2021 2020
Salary/fees
Benefits
Annual Bonus
Salary/fees
Benefits
Annual Bonus
Salary/fees
Benefits
Annual Bonus
Executive Directors
1
David Schwimmer 2% -14% -12% 24% -23% 19% 2% -11% 5%
Anna Manz 0% 27% -15%
Non-Executive Directors
2
Don Robert 19% 584% 0% -85% 0% -30%
Dr. Val Rahmani 0% 1093% 0% -73% 7% -67%
Professor Kathleen DeRose
3
0% 640% 38% -44% 7% -74%
Cressida Hogg CBE
4
39% 35% 7% 0%
Dominic Blakemore 0% 9%
Tsega Gebreyes
5
0%
Ashok Vaswani
5
0%
William Vereker
6
Martin Brand
7
Erin Brown
7,8
770%
Douglas Steenland
7
352%
Directors who stood down from the Board during the year:
Jacques Aigrain
9
-26% 8% -6% 5% -99%
Average pay of our employees 14% 17% -15% -29% -37% -47% 3% 10% 4%
Indicates where figures are not applicable
Notes:
1 Calculated using data from the single total figure of remuneration table on page 127.
2 Calculated using data from the Non-Executive Directors’ Remuneration Table on page 135.
3 Kathleen DeRose was appointed as Chair of the Risk Committee on 1 January 2021.
4 Cressida Hogg was appointed as Senior Independent Director on 6 August 2021.
5 Appointed to the Board on 1 June 2021.
6 Appointed to the Board on 3 October 2022.
7 Shareholder directors, who do not receive a fee for their role.
8 Will step down from the Board on 17 March 2023.
9 Jacques Aigrain stepped down from the Board on 27 April 2022.
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Annual Report 2022
138
Directors’ Remuneration Report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
Relative importance of spend on pay
The table below shows the relative FY2022 versus FY2021 expenditure
of the Group on dividends versus total employee costs. These figures
are underpinned by amounts from the notes to the financial statements
at the back of this report.
Year-on-year increases (%) FY2022 FY2021
Annual
Increase
Dividends paid In financial period £567m £426m +33%
Total employee costs £2,053m £1,822m +13%
£m
500
1,000
1,500
2,000
2,500
Relative importance of spend on pay
Total employee costs
2022
*
2021
2022
* Including underlying and non-underlying from continuing operations only
2021
Dividends paid in financial period
+13%
+33%
Statement of Directors’ shareholdings and share interests as at 31 December 2022 (audited)
All Directors are subject to a Minimum Shareholding Requirement (MSR), as set out in the Remuneration Policy. Any Executive Director who
steps down from the Board continues to be subject to an MSR for two years post-employment. Current shareholdings are summarised in the
following table:
Shares held Options/Awards held
Owned
outright
Unvested
and
subject to
performance
conditions
Unvested
and subject
to continued
employment
1
Vested but
not
exercised
Requirement
(% salary/
fee)
Shareholding
as at
31 December
2022
(% salary/
fee)
2,4
Requirement
met
3
Executive Directors
David Schwimmer 61,762 111,018 29.374 – 400 551% Ye s
Anna Manz
5
– 62,656 9,508 – 300 54%
Non-Executive Directors
Don Robert 10,000 – – – 100 114% Ye s
Val Rahmani 1,429 – – – 100 127% Ye s
Kathleen DeRose 1,500 – – – 100 134% Ye s
Cressida Hogg CBE
6
1,150 – – – 100 55%
Dominic Blakemore
7
928 – – – 100 83%
Martin Brand
8
– – – – – N/A N/A
Erin Brown
8,9
– – – – – N/A N/A
Tsega Gebreyes 1,200 – – – 100 107% Ye s
Douglas Steenland
8
– – – – – N/A N/A
Ashok Vaswani
10
– – – – 100 –
William Vereker
11
– – – – 100 –
Directors who stood down from the Board
during the year:
Jacques Aigrain
12
1,400 – – – 100 91% N/A
1 Refers to Deferred Bonus Plan and SAYE.
2 Includes shares held outright plus, on a ‘net of expected taxes’ basis, share options awarded under the DBP that are unvested and subject to continued employment.
3 MSR required to be reached within five years of appointment (percentage of base salary) for Executive Directors and within three years (percentage of basic annual fees) for
Non-Executive Directors.
4 Based on a share price of £71.36 (being the closing share price – MMQ – on 31 December 2022).
5 Has five years from date of appointment on 21 November 2020 to achieve MSR.
6 Cressida Hogg’s base fee and corresponding shareholding requirement increased significantly upon her appointment to Senior Independent Director in April 2021. She will be required to meet
her new shareholding requirement by April 2024.
7 Dominic Blakemore purchased shares in December 2020 to fully meet his shareholding requirement. A subsequent share price reduction has reduced his shareholding below 100%.
8 Not applicable for MSR as are not paid a fee for their service.
9 Will step down from the Board on 17 March 2023.
10 Has three years from date of appointment on 1 June 2021 to achieve MSR.
11 Has three years from date of appointment on 3 October 2022 to achieve MSR.
12 Shareholding as at 27 April 2022.
Note: On 6 March 2023, David Schwimmer exercised a nil-cost option over 9,640 ordinary shares vesting under the Deferred Bonus Plan (“DBP Award”). 4,539 ordinary shares were sold on exercise
of the DBP Award to satisfy taxes, social security and associated dealing costs. There have been no other changes in Directors’ share interests between 31 December 2022 and 14 March 2023.
139 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Remuneration Report continued
Directors’ Interests in Ordinary Shares – Beneficial, Family and any Connected Persons Interests (audited)
Ordinary Shares Held
Options/Awards with
performance conditions
1
Options/Awards
without performance
conditions
2,3
Total Interests
31 Dec
2022
31 Dec
2021
31 Dec
2022
31 Dec
2021
31 Dec
2022
31 Dec
2021
31 Dec
2022
31 Dec
2021
Executive Directors
David Schwimmer 61,762 32,109 111,018 125,219 29,374 25,598 202,154 182,926
Anna Manz
4
– – 62,656 43,093 9,508 3,892 72,164 46,985
Non-Executive Directors
Don Robert 10,000 10,000 – – – – 10,000 10,000
Val Rahmani 1,429 1,429 – – – – 1,429 1,429
Kathleen DeRose 1,500 1,280 – – – – 1,500 1,280
Cressida Hogg CBE 1,150 1,150 – – – – 1,150 1,150
Dominic Blakemore 928 928 – – – – 928 928
Martin Brand – – – – – – – –
Erin Brown
5
– – – – – – – –
Tsega Gebreyes 1,200 1,200 – – – – 1,200 1,200
Douglas Steenland – – – – – – – –
Ashok Vaswani – – – – – – – –
William Vereker – – – – – – – –
Directors who stood down from the Board
during the year:
Jacques Aigrain
6
1,400 1,400 – – – – 1,400 1,400
1 LTIP performance shares are structured as nil-cost options prior to 2021, since 2021 awards were granted as conditional awards.
2 Unvested awards in the Deferred Bonus Plan and share options granted under SAYE.
3 Deferred Bonus Plan shares are structured as nil-cost options, prior to 2021. Since 2021 awards were granted as conditional awards. All subject to continued employment and malus provisions.
4 Award over 3,762 shares which is subject to performance of a previous employer, Johnson Matthey Plc, as previously disclosed forfeited during 2022. Not included in the 2022
outstanding figure.
5 Will step down from the Board on 17 March 2023.
6 Shareholding as at 27 April 2022.
Note: On 6 March 2023, David Schwimmer exercised a nil-cost option over 9,640 ordinary shares vesting under the Deferred Bonus Plan (“DBP Award”). 4,539 ordinary shares were sold on exercise
of the DBP Award to satisfy taxes, social security and associated dealing costs. There have been no other changes in Directors’ share interests between 31 December 2022 and 14 March 2023.
London Stock Exchange Group plc
Annual Report 2022
140
ANNUAL REPORT ON REMUNERATION CONTINUED
Directors’ Remuneration Report continued
Long Term Incentive Plan table
The 2014 Long Term Incentive Plan has one element applicable only to Executive Directors, which is a 2-year holding period post vesting.
Awards of Performance shares are granted in the form of a conditional award since 2021, prior awards were granted as a nil-cost option.
The 2019 awards are dependent on an adjusted EPS growth target for 50% of the award (60% for 2020 awards onwards), with the other 50%
dependent on Absolute TSR performance (40% Relative TSR performance for 2020 awards onwards). Details of performance conditions are set
out on page 132.
The table below sets out the Executive Directors’ Long Term Incentive Plan awards (including the exercise of vested shares in FY2022), as at
31 December 2022:
Number of shares
Date of
award
Price at
award
date £
At start
of year
Award
during
the
year
Vested
during
year
Lapsed
during
year
At end
of year
Vesting
date
Price at
vesting
date £
Value at
vesting
date £
Exercise
date
Price at
exercise
date £
Value at
exercise
date £ Comment
David
Schwimmer
22/03/2019 46.42 50,086 – 50,086 – – 22/03/2022 79.140 3,963,806 30/03/2022 78.6453 3,939,027 FY2022
Actual
22/04/2020 73.50 32,653 – – – 32,653 22/04/2023 76.659 2,058,831 – – – FY2023
Estimate
1
26/03/2021 70.62 42,480 – – – 42,480 26/03/2024 – – – – –
06/04/2022 83.60 – 35,885 – – 35,885 07/04/2025 – – – – –
125,219 35,885 50,086 – 111,018 3,963,806 3,939,027 FY2022
Actual
2,508,831 – FY2023
Estimate
1
Anna Manz 24/11/2020 78.84 11,719 – – – 11,719 26/03/2024 – – – – –
26/03/2021 70.62 27,612 – – – 27,612 26/03/2024 – – – – –
06/04/2022 83.60 – 23,325 – – 23,325 07/04/2025 – – – – –
39,331 23,325 – – 62,656 – –
David
Warren
22/03/2019 46.42 29,620 – 22,214 7,406 – 22/03/2022 79.140 1,758,016 31/03/2022 79.5268 1,766,608 FY2022
Actual
Notes:
1 FY2023 Estimate: Average share price over the period from 1 October 2022 to 31 December 2022 with vesting forecast at 82.25%.
All estimates are shown separately in bold. They will be fully disclosed in next year’s Annual Report on Remuneration.
141 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Remuneration Report continued
Remuneration Committee – meetings
During the financial period ending 31 December 2022, the Committee held four scheduled meetings and discussed the following items:
Routine Non-Routine
February 2022 — FY2021 Performance and Bonus approval
— FY2022 Bonus Design
— FY2022 LTIP grants and anticipated vesting of previous
LTIP and DBP schemes
— FY2021 Directors’ Remuneration Report
— Gender pay reporting and disclosure
— LCH Remuneration Committee proposals
June 2022 — FY2022 Performance and Bonus update
— Governance update, including shareholder feedback
on FY2021 Directors’ Remuneration Report
— Gender pay update
— Reward Framework update
— 2023 Remuneration Policy review
— Succession planning
October 2022 — 2023 Remuneration Policy review
— Pay Equity review
— Incentive design for high performing individuals below
Group Executive level
— Succession planning
November 2022 — FY2022 Performance and Bonus update
— Share plans vesting update
— Remuneration Committee terms of reference review
— Shareholder consultation update
February 2023
Meetings which took place
during FY2023 will be repeated
in next year’s report
— FY2022 Performance and Bonus approval
— FY2023 Bonus considerations
— Performance and determination of CEO and Group
Executive Directors’ remuneration
— FY2023 LTIP grants and anticipated vesting of previous
LTIP and DBP schemes
— FY2022 Directors’ Remuneration Report
— Shareholder consultation feedback
To assist the Committee, the results of market surveys are made available. Where appropriate, the Committee invites the views of the Chief
Executive Officer, Chief Financial Officer, Chief People Officer and the Chief Risk Officer via the Risk Committee. None of these individuals nor the
Chair participated in any discussion relating to their own remuneration.
Statement of shareholder voting
The table below sets out the results of the advisory vote on the Directors’ Remuneration Report at the 2022 AGM and the binding vote on the
Remuneration Policy Report at the 2020 AGM.
Votes for Votes against
Votes cast
Votes
withheldNumber % Number %
Remuneration Policy Report (2020 AGM) 276,299,114 96.21 10,890,666 3.79 287,189,780 122,331
Annual Report on Remuneration (2022 AGM) 440,038,024 97.93 9,282,036 2.07 449,320,060 1,489,942
Advisors
The Remuneration Committee continues to be mindful of recommendations from key stakeholders, including institutional investor bodies.
The Committee consults with major shareholders on any key decisions taken. Willis Towers Watson were appointed as independent remuneration
consultants to the Committee following a competitive tender process in 2020. During the year, Willis Towers Watson received £193,582
(excluding VAT) based on actual time spent for their services to the Committee.
Willis Towers Watson are members of the Remuneration Consultants Group and, as such, voluntarily operate under the code of conduct in
relation to executive remuneration consulting in the UK. The Committee is satisfied that their advice was independent and objective.
Signed on behalf of the Board of Directors
Cressida Hogg
Chair of the Remuneration Committee
14 March 2023
London Stock Exchange Group plc
Annual Report 2022
142
The Directors of the Company are pleased to present their Annual
Report to shareholders, together with the financial statements for the
year ended 31 December 2022 with comparatives for the year ended
31 December 2021.
This report has been prepared in accordance with requirements
outlined within The Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 and forms part of the
management report as required under Disclosure Guidance and
Transparency Rule (DTR) 4. This section, together with the Strategic
Report and other sections of the Annual Report as set out in the
table below, fulfils the requirements of the Directors’ report.
Index to Directors’ Report and other disclosures
AGM 250
Articles of Association 143
Board of Directors 90
Branches 146
Business model 36
Conflicts of interest 98
Directors’ indemnity 98
Directors’ loss of office 127
Dividends 142
Employee engagement 66
Employment information 144
Engagement with suppliers 69
Engagement with stakeholders and Section 172 statement 64
Essential contracts and change of control 145
Financial instruments 212
Going concern 147
Greenhouse gas emission reporting 57
Listing Rule 9.8.4 R cross-reference table 142
Modern slavery 53
Political donations 145
Purchase of own shares 143
Related party transactions 232
Share capital 142
Substantial shareholders 250
Viability statement 85
Remuneration report 113
Information required to be disclosed by LR 9.8.4 R (starting on the
page indicated)
Listing Rule 9.8.4 R cross-reference table
Interest capitalised N/A
Publication of unaudited financial information N/A
Details of long-term incentive schemes N/A
Waiver of emoluments by a director N/A
Waiver of future emoluments by a director N/A
Non pre-emptive issues of equity for cash N/A
Item 7 (in relation to major subsidiary undertakings) N/A
Parent participation in a placing by a listed subsidiary N/A
Contracts of significance 145
Provision of services by a controlling shareholder N/A
Shareholder waivers of dividends 142
Shareholder waivers of future dividends 142
Agreements with controlling shareholders N/A
Strategic Report
LSEG presents a fair review of the Group during the financial year
in the Strategic Report set out on pages 2 to 85, as required by the
Companies Act 2006. The Strategic Report, which includes a review
of the Group’s business areas, a financial review and the principal
risks and uncertainties of the Company, was approved by the
Board on 28 February 2023 and is incorporated into this Directors’
Report by reference.
Results
The Group made a profit before taxation from continuing operations,
before amortisation of purchased intangible assets and non-underlying
items for the year, of £2,568 million (2021: £2,116 million). After taking
into account amortisation of purchased intangible assets and non-
underlying items, the profit of the Group before taxation for the year
from continuing operations was £1,241 million (2021: £894 million).
Profit after taxation from continuing operations for the year was
£979 million (2021: £592 million).
Dividends
The Directors are recommending a final dividend for the year of
75.3 pence (2021: 70.0 pence) per share which is expected to be paid
on 24 May 2023 to shareholders on the register on 21 April 2023.
Together with the interim dividend of 31.7 pence (2021: 25.0 pence)
per share paid on 20 September 2022, this produces a total dividend
for the period of 107.0 pence (2021: 95.0 pence) per share estimated
to amount to £594 million (2021: £529 million). The Group maintains a
progressive dividend policy, with the interim dividend being calculated
as one-third of the prior full-year dividend.
A standard dividend waiver agreement is in place for the employee
benefit trust. Further information can be found in the share capital
notes on page 226.
Share Capital
As at 31 December 2022, the Company had 558,244,024 ordinary
shares made up of: (i) 503,322,303 voting ordinary shares of 6
79/86
pence each (excluding treasury shares) (90.2%), which carry one vote
each; (ii) 51,124,377 limited-voting ordinary shares of 6
79/86
pence each
(9.2%), which carry one-tenth of a vote each; and (iii) 3,797,344 ordinary
shares held in treasury (0.7%). The total number of voting rights in
LSEG on 31 December 2022 was 508,434,741. More information on
the Company’s share capital can be found in note 24 on page 226.
During the year to 31 December 2022, LSEG plc started a share
buyback programme to purchase voting ordinary shares in the Company
with an aggregate value of up to £750 million. This is phased over
multiple tranches over a period of up to 12 months, with the first tranche
having commenced on 5 August 2022 and the second tranche having
commenced on 1 December 2022. Please see page 143 for further
information on the Company’s ongoing share buyback programme.
The Buyback is funded, in large part, using the proceeds of the
divestment of the BETA business which completed on 1 July 2022.
The Company issued 833,174 new ordinary shares during the year.
As at 14 March 2023, the total number of voting rights in the Company
is 507,687,118. The figure 507,687,118 may be used by shareholders
as the denominator for the calculations by which they will determine
if they are required to notify their interest in, or a change to their
interest in, the Company under the FCA’s Disclosure Guidance and
Transparency Rules.
Directors’ Report
143 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Report continued
Share rights
The rights and obligations attached to the Company’s ordinary shares
are set out in the Company’s Articles of Association, copies of which
can be obtained from Companies House in the UK or by writing to the
Group Company Secretary. The rights and obligations attached to the
limited-voting ordinary shares issued in connection with the acquisition
of Refinitiv on 29 January 2021 are available on the LSEG website and
in the Articles of Association.
No shareholder shall be entitled to vote at a general meeting,
either in person or by proxy, in respect of any share held by him or her
unless all monies presently payable by him or her in respect of that
share have been paid. In addition, no shareholder shall be entitled to
vote, either in person or by proxy, if he or she has been served with
a notice under section 793 of the Companies Act 2006 (concerning
interests in those shares) and has failed to supply the Company with
the requisite information.
As a result of the Company’s acquisition of Refinitiv, a Relationship
Agreement is in effect. Further information on the principal terms of
the Relationship Agreement can be found on the LSEG website.
In connection with Microsoft’s acquisition of a 4.2% equity stake in
LSEG, LSEG agreed to a limited variation of the lock-up arrangements
contained in the Relationship Agreement to enable the sale of these
LSEG shares to Microsoft. The amendment to the Relationship
Agreement was entered into on 12 December 2022 with BCP York
Holdings (Delaware) L.P., York Parent Limited, York Holdings II Limited
and York Holdings III Limited, entities owned by certain investment funds
affiliated with Blackstone and by Thomson Reuters, the former Refinitiv
shareholders. The amendment constituted a small related party
transaction under the Listing Rules.
Other than restrictions considered to be standard for a UK listed
company (for example, restrictions on partly paid certificated shares),
there are no limitations on the holding, transfer or voting rights of
ordinary shares in the Company, all of which are governed and
regulated by the Company’s Articles of Association and applicable
legislation and regulation.
The Company is not aware of any other agreements between holders
of shares that may result in restrictions on the transfer of shares or on
voting rights.
Corporate Governance Statement
The Company has complied throughout the year with the principles of
the 2018 UK Corporate Governance Code (the Code), which is publicly
available on the Financial Reporting Council website (www.frc.org.uk).
The Corporate Governance Statement that sets out how the Company
complies with the Code, and which includes a description of the main
features of our internal control and risk management arrangements in
relation to the financial reporting process is set out on pages 99 to 101.
The information required by DTR 7.2 can be found in the Directors’
Report on page 142. Further information regarding the composition
and operation of the Board and its Committees, including the Board
Diversity Policy, can be found on pages 90 to 94.
Articles of Association
The Company’s Articles of Association may only be amended by special
resolution at a general meeting of the shareholders. The Company’s
Articles of Association contain provisions relating to the appointment
and removal of Directors. The Articles of Association are available on
the Company’s website and can also be obtained from Companies
House in the UK.
More information on the Board Appointment process can be
found in the Report of the Nomination Committee on pages 102
to 104 of this report.
Authority to Issue Shares
Subject to the provisions of the Companies Act 2006 and without
prejudice to any rights attached to any existing shares or class of shares,
any share may be issued with such rights or restrictions as the Company
may by ordinary resolution determine or, subject to and in default of
such determination, as the Board shall determine.
Authority to Purchase Shares
The authority for the Company to purchase in the market up to
55,814,730 of its ordinary shares (representing 10% of the issued share
capital of the Company as at the latest practicable date before
publication of the Notice of the Company’s last AGM) granted at the
Company’s last AGM, expires on the date of the forthcoming AGM.
The Company has utilised the authority obtained at the last AGM to
conduct a share buyback programme to purchase voting ordinary
shares with an aggregate value of up to £750 million, as announced
on 5 August 2022. This has been funded, in large part, using the
proceeds of the divestment of the BETA business, announced in March
2022 and which completed on 1 July 2022. The buyback has been
phased over a period of 12 months in multiple tranches with the first
tranche commencing on 5 August 2022 and completing on 5 October
2022 and the second tranche commencing on 1 December 2022 and
due to complete in March 2023. The third tranche is expected to
commence in due course and is expected to end in July 2023.
Given the arrangements entered into with the Consortium Shareholders
(as defined in the Notice of Meeting for the forthcoming AGM) to enable
them to participate in the buyback, as described in further detail in the
announcements made on 5 August 2022 and 7 October 2022, the first
tranche of the buyback constituted a small related party transaction
under the Listing Rules and the second and third tranches of the
buyback constitute or are expected to constitute smaller related
party transactions.
As at 31 December 2022, 3,797,344 voting ordinary shares (nominal
value of 6
79/86
pence) had been purchased by the Company at an
average purchase price of £79.00 per voting ordinary share for the total
consideration of £300 million. These voting ordinary shares are held in
treasury, representing 0.7% of the Company’s issued ordinary share
capital (comprising ordinary shares and limited-voting ordinary shares)
as at 31 December 2022.
A further 2,651,875 voting ordinary shares (nominal value of 6
79/86
pence)
were purchased by the company from 1 January to 14 March 2023 at an
average purchase price of £74.00 per voting ordinary share for the total
consideration of £196 million.
In aggregate, the Company had as at 14 March 2023 purchased
6,449,219 voting ordinary shares (nominal value of 6
79/86
pence)
as part of the share buyback programme for the total consideration
of £496 million. The purchased voting ordinary shares that are held
in treasury represents 0.82% of the company’s issued ordinary share
capital (comprising ordinary shares and limited-voting ordinary shares)
as at 14 March 2023.
Shareholders will be asked to give a similar authority to purchase shares
at the forthcoming AGM. The third and final tranche of the £750 million
share buyback programme announced on 5 August 2022 is expected
to start in due course and is expected to end no later than 24 July 2023
and will therefore utilise this authority.
London Stock Exchange Group plc
Annual Report 2022
144
In addition, shareholders will be asked to approve a special resolution
to give the Company authority to make off-market purchases of shares
from the Consortium Shareholders (as defined in the Notice of Meeting
for the forthcoming AGM), or their nominee(s), the Consortium
Shareholders being entities owned by certain investment funds affiliated
with Blackstone, an affiliate of Canada Pension Plan Investment Board
and an affiliate of GIC Special Investments Pte. Ltd, and by Thomson
Reuters, the former Refinitiv shareholders.
Further details of the proposed resolution and accompanying
explanatory notes can be found in the Notice of Meeting for
the forthcoming AGM, available on the Company’s website
https://www.lseg.com/en/investor-relations/annual-general-meeting.
Authority to Allot Shares
The authority conferred on the Directors at last year’s AGM to
allot shares in the Company up to a maximum nominal amount of
£12,872,002 (representing 33.3% of the issued share capital of the
Company (excluding treasury shares) as at the latest practicable date
before publication of the Notice of the Company’s last AGM) or, in
connection with a pre-emptive offer to existing shareholders by way
of a rights issue, up to a maximum nominal amount of £25,744,003
(representing 66.6% of the issued share capital of the Company
(excluding treasury shares) as at the latest practicable date before
publication of the Notice of the Company’s last AGM), expires on the
date of the forthcoming AGM. Shareholders will be asked to give a
similar authority to allot shares at the forthcoming AGM.
Directors’ Interests
Directors’ interests in the shares of the Company as at 31 December
2022, according to the register maintained under the Companies
Act 2006, are set out in the Directors’ Remuneration Report on
pages 138 to 139. No company in the Group was, during or at the end
of the year, party to any contract of significance in which any Director
was materially interested.
Directors’ Indemnity
Details of qualifying third-party indemnity provisions (as defined by
section 234 of the Companies Act 2006) in force during the course of
the year ended 31 December 2022 can be found on page 98. Such
qualifying third-party indemnity provisions remain in force as at the
date of approving this Directors’ Report.
Employees
Information on the Company’s employees including the Company’s
approach to human rights and diversity, the outcomes relating to the
Company’s employee engagement survey and further examples of
employee engagement can be found in the People and Culture section
starting on page 60. Information on the Group’s share schemes is
provided in the Directors’ Remuneration Report on pages 113 to 141.
The Group welcomes and gives full and fair consideration to
applications for employment from persons with a disability (both visible
and non-visible). Our focus is on providing the right tools to support
both current and future employees to be successful in the workplace.
The Group assists employees who have a disability with training, career
development and progression opportunities and, in a situation where
an existing employee develops a disability, our approach is to provide
continuing support and training wherever possible. Where changes to
working practices or structure affect employees, they are consulted and
given the appropriate assistance.
LSEG is a Valuable 500 Iconic Leader and as such has made a pledge
to ensure we:
— drive towards removing bias related to disability hiring and provide
the necessary tools for people with a disability succeed
— have inclusive hiring and onboarding practices
— make subtitles available for all videos we publish
— create inclusive offices and infrastructure across all our locations,
relying on consistent guidelines
— have a Company-wide leadership pledge and commit to support
disability, and
— improve physical accessibility for existing locations
The LSEG Accessibility Network is committed to ensure that we create
a safe and inclusive environment for our people and continues to work
with the Group to ensure our commitments are well implemented across
all areas of the Group.
All employees are provided with information on matters of concern
to them in their work, through regular briefing meetings and internal
publications. To inform employees of the economic and financial factors
affecting our business, regular updates are posted on our intranet
and engagement events are hosted, such as townhall style meetings
with members of our Executive Committee, providing a briefing
on specific areas of the business. Alongside this, information is
cascaded to employees through people leaders, also boosting
employee engagement.
Sustainability
As a Group, we recognise that we must use resources in ways that
deliver long-term sustainability and profitability for the business and
have regard for its impact on the environment. We also take such
factors into account in developing our products and services.
The Group’s primary direct environmental impact arises from energy
use in our data centres, our offices that host approximately 24,000
colleagues around the world, and from employees travel. The Group
also affects the environment indirectly, from purchased goods and
services from our supply chain and through our products and services.
We are aware of the risks and opportunities for our business arising
from climate change and have developed measures to address them.
We will actively monitor these changes so that we can adapt and
respond as necessary.
Further details of our approach to climate, our targets and progress on
environmental matters, as well as methodology and verification can be
found in Enabling Sustainable Growth on pages 50 to 59.
Research and Development
LSEG undertakes research and development activities that align with
new revenue opportunities in financial services. The research combines
significant domain expertise with modern quantitative, data science and
cloud engineering practices, leading to innovative solutions relevant
to LSEG. The variety of research reflects the range of opportunities
available to LSEG. Technical expertise features prominently in LSEG
research functions, including Quantitative & Data Driven Modelling,
Machine Learning, Deep Learning, Natural Language Processing and
AI Cloud Services. Research also includes significant expertise in
customer experience design and UX.
Directors’ Report continued
145 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Directors’ Report continued
Political Donations
During the year the Group did not make any direct political donations to
EU or non-EU organisations or incur any political expenditure.
It remains the Company’s policy not to make political donations or to
incur political expenditure; however, the application of the relevant
provisions of the Companies Act 2006 is potentially very broad in nature
and, like last year, the Board is seeking shareholder authority to ensure
that the Group does not inadvertently breach these provisions as a
result of the breadth of its business activities, although the Board has
no intention of using this authority. As with previous years the Board is
proposing that shareholders pass a resolution at the forthcoming AGM
to authorise the Group to:
— make political donations to political parties and independent election
candidates not exceeding £100,000 in total
— make political donations to political organisations other than political
parties not exceeding £100,000 in total
— incur political expenditure not exceeding £100,000 in total,
provided that in any event the aggregate amount of any such
donations and expenditure made or incurred by the Group shall
not exceed £100,000
Notwithstanding the Company’s policy not to make political donations,
we recognise the rights of our employees to participate in the political
process. Their rights to do so are governed by the applicable laws in the
countries in which we operate. For example, in the US under the Federal
Election Campaign Act, eligible US employees can establish non-
partisan political action committees known as ‘PACs’ that encourage
voluntary employee participation in the political process. PACs are a
common feature of the US political system and operate independently
of any political party or candidate.
LSEG US Holdco, Inc. operates a PAC for eligible US employees.
Consistent with US law, LSEG US Holdco, Inc. pays for the PAC’s
administrative expenses; providing such support is not considered to
be a political donation or expenditure under US law. In accordance with
the applicable law, contributions from the PAC are funded entirely by
voluntary contributions from eligible employees. All decisions on the
amounts and recipients of contributions are directed by a steering
committee comprising employees eligible to contribute to the PAC.
During the year, no donations were made to political organisations by
the LSEG US Holdco, Inc. employee operated PAC, due to the PAC
being dormant since the beginning of 2021. Looking ahead to 2023,
there are plans to enable donations to be made again.
Significant agreements
The following are significant agreements as at 31 December 2022 to
which the Company is a party that take effect, alter or terminate upon
a change of control of the Company following a takeover bid:
Strategic Initiatives Agreement with Microsoft
As part of the strategic partnership with Microsoft Corporation
(see https://www.lseg.com/en/investor-relations/regulatory-news),
certain subsidiaries of the Company are party to a strategic initiatives
agreement with Microsoft Ltd (the Strategic Initiatives Agreement). Under
the Strategic Initiatives Agreement, the parties have agreed to jointly
pursue strategic initiatives in relation to LSEG’s data architecture,
Workspace solution and analytics capabilities, as well as explore the
development of digital market infrastructure based on cloud technology.
The Strategic Initiatives Agreement includes a provision permitting
Microsoft to terminate the agreement in circumstances where the
Company comes under the control of an entity that Microsoft are
prohibited from dealing with by a sanctioning body, or that is based
in a jurisdiction subject to international sanctions.
Relationship Agreement
The Company is party to a Relationship Agreement with York Parent
Limited (which is owned by Thomson Reuters Corporation and a
consortium of certain investment funds managed by Blackstone Group
Inc.), York Holdings II Limited, York Holdings III Limited (each of which
are wholly-owned subsidiaries of York Parent Limited) and BCP York
Holdings (Delaware) L.P. (which is a holding vehicle for the consortium of
investment funds managed by Blackstone Group Inc.). The Relationship
Agreement governs the relationship between the parties following
completion of the Refinitiv acquisition, including the shareholders’
rights to nominate directors for appointment to the LSEG Board.
The Relationship Agreement would terminate in the event of a change
of control of LSEG that resulted in the shareholders ceasing to hold,
in aggregate, 10% or more of LSEG shares. Further information on
the Relationship Agreement can be found on pages 65-70 of the
shareholder prospectus dated 9 December 2020 which is available
on the LSEG website www.lseg.com/investor-relations.
Thomson Reuters News Agreement
Certain subsidiaries within the Group are party to an agreement
with Reuters News dated 1 October 2018, under which Reuters News
provides, for a 30-year term, various categories of general news
and financial content, alongside certain accompanying intellectual
property licence agreements in relation to the provision of such content
(the Thomson Reuters News Agreement). The Thomson Reuters News
Agreement includes a provision requiring Refinitiv to obtain consent
to assign the agreement pursuant to a change in control in certain
circumstances, a breach of which could potentially lead to a termination
of the agreement.
Facility Agreements
– Amended 2017 Revolving Credit Facility Agreement
On 29 January 2021, at the time of the Refinitiv acquisition, the amended
and restated £1.425 billion syndicated, committed, revolving credit
facility agreement (dated 16 December 2020) came into effect
(the Amended 2017 Facility). The facility provides flexible financing
capacity for the general corporate purposes of the Group and includes
£1.35 billion as backstop support for commercial paper issuances.
– 2020 Credit Facility Agreement
The Company has entered into a syndicated, committed $2 billion and
€500 million term and £1.075 billion revolving credit facility agreement
dated 16 December 2020 (the 2020 Facility), which came into effect
upon the completion of the Refinitiv acquisition. $1.56 billion of the
term loans remain outstanding. The revolving facility offers the Group
additional flexible financing and is available for the general corporate
purposes of the Group.
The revolving facility contains two one-year extension options. These
were exercised in December 2021 and December 2022 respectively,
and consequently the final maturity date of the revolving credit facility
is now 16 December 2027. The maturity of the remaining term loan
remains unchanged at 15 December 2023.
– Terms of Facility Agreements
The terms of the Amended 2017 Facility and the 2020 Facility are
appropriate for an investment grade borrower and each includes
change of control provisions which, if triggered, allow the relevant facility
agent, upon instructions from the majority lenders, to cancel the facility
and declare all outstanding loans under the relevant agreement,
together with accrued interest and all other amounts accrued, due and
payable. As a result of the market shift away from LIBOR rates, these
facilities have transitioned from sterling and US dollar LIBOR reference
rates to SONIA and SOFR rates respectively (including an appropriate
credit adjustment spread) where applicable.
London Stock Exchange Group plc
Annual Report 2022
146
Notes
– Euro Medium-Term Notes
The Company has issued to the wholesale fixed income market
under its Euro Medium Term Notes Programme (the value of which is
£2.5 billion), three €500 million tranches of euro notes due in 2024,
2027 and 2029. The notes contain a ‘redemption upon change of
control’ provision which, if triggered by the combination of a change
of control and, within 120 days thereafter, a credit rating downgrade to
non-investment grade, allows noteholders to exercise their option to
require the Company to redeem the notes and pay any accrued and
unpaid interest due.
– Global Medium-Term Notes
The Company, together with its subsidiaries LSEG Netherlands B.V. and
LSEGA Financing plc, has issued to the wholesale fixed income market
under its Global Medium Term Notes Programme (the value of which is
£10 billion) £500 million of GBP notes due in 2030, three €500 million
tranches of euro notes due in 2025, 2028 and 2033, $500m of USD
notes due in 2024, two $1 billion tranches of USD notes due in 2026
and 2028, $1.25 billion of USD notes due in 2031 and $750 million of
USD notes due in 2041. The notes contain a ‘redemption upon change
of control’ provision which, if triggered by the combination of a change
of control and, within 120 days thereafter, a credit rating downgrade to
non-investment grade, allows noteholders to exercise their option to
require the Company and/or its subsidiaries to redeem the notes and
pay any accrued and unpaid interest due.
The Company issues commercial paper to the debt capital markets
from time to time under its £1 billion Euro Commercial Paper Programme
and $1 billion US Commercial Paper Programme. The programmes
provide flexible financing capacity for the general corporate purposes
of the Group and are backstopped by £1.35 billion of the Amended
2017 Facility. There were no issuances under either programme at
31 December 2022.
Employee Share Plans
The rules of the Company’s employee share plans set out the
consequences of a change of control of the Company on employees’
rights under the plans. Generally, such rights will vest on a change of
control and participants will become entitled to acquire shares in
the Company (although in certain circumstances the Remuneration
Committee has the discretion to defer vesting and to require rights to be
exchanged for equivalent rights over the acquiring company’s shares).
Events since the financial year-end
For further information on events since the reporting date, please see
note 27 on page 231.
Employee Benefit Trust
As at 31 December 2022, the trustee of the London Stock Exchange
Employee Benefit Trust, which is an independent trustee, held 259,129
shares under the terms of the trust for the benefit of employees and
former employees of the Company and its subsidiaries. The trust is a
discretionary trust, and the shares are held to meet employees’
entitlements under the Company’s share plans. Employees have no
voting rights in relation to the unencumbered shares while they are
held in trust. The trustee has full discretion to exercise the voting rights
attached to the unencumbered shares or to abstain from voting. Shares
acquired by employees through the Company’s employee share plans
rank equally with the ordinary shares in issue and have no special rights.
Branches outside the UK
Certain of the Company’s subsidiaries have established branches in a
number of different countries in which they operate.
Financial risk management
The use of financial instruments by the Group and the Group’s financial
risk management have been specifically considered by the Directors,
and relevant disclosures appear in principal risks and uncertainties, on
pages 74 to 84 of this Annual Report, and in the notes to the financial
statements, on pages 166 to 245 of this Annual Report, and in each
case are incorporated by reference into this Directors’ Report.
Directors’ statement as to disclosure of information to auditors
In accordance with Section 418(2) of the Companies Act 2006, the
Directors confirm, in the case of each Director in office at the date
the Directors’ Report is approved as listed on pages 90 to 93, that:
— So far as the Director is aware, there is no relevant audit information
of which the Company’s auditors are unaware; and
— They have taken all the steps that they ought to have taken as a
Director in order to make himself or herself aware of any relevant
audit information and to establish that the Company’s auditors are
aware of that information.
Future developments
The Group’s likely future developments can be found in the Market
Trends and Our Response section of the Annual Report (pages 26 to
29). This section covers financial, technological and societal trends that
are affecting the Group and demonstrates how we are evolving as an
organisation to adapt appropriately going forward.
Auditors
A resolution to reappoint EY LLP as the Company’s auditors will be
proposed at the AGM.
By Order of the Board
Lisa Condron
Group Company Secretary
14 March 2023
Directors’ Report continued
147 London Stock Exchange Group plc
Annual Report 2022
GOVERNANCE
Statement of
Directors’ responsibilities
The Directors are responsible for preparing the Annual Report,
the Directors’ Remuneration Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements
for each financial year. The Directors have prepared the Group and
Company financial statements in accordance with UK-adopted
international accounting standards (IFRSs).
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of the affairs of the Group and the Company and of the
profit or loss for that year.
In preparing those financial statements, the Directors are required to:
— Select suitable accounting policies in accordance with IAS 8:
Accounting Policies, Changes in Accounting Estimates and Errors
and then apply them consistently
— Present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information
— Make judgements and estimates that are reasonable and prudent
— Provide additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to understand
the impact of particular transactions, other events and conditions
on the Group and the Company’s financial position and financial
performance
— In respect of the Group financial statements, state whether
UK-adopted international accounting standards have been followed,
subject to any material departures disclosed and explained in
the financial statements
— In respect of the parent Company financial statements, state whether
UK-adopted international accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements
— Prepare the financial statements on the going concern basis, unless
it is inappropriate to presume that the Group and the Company will
continue in business
The Directors confirm that they have complied with the above
requirements in preparing the financial statements.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group and the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and the Group and to enable them
to ensure that the financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006, other applicable laws
and regulations, including the requirements of the Listing Rules and the
Disclosure Guidance and Transparency Rules. As regards the Group
financial statements, the Directors are also responsible for safeguarding
the assets of the Company and the Group and for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible
for preparing a strategic report, directors’ report, directors’ remuneration
report and corporate governance statement that comply with that
law and those regulations. The Directors are responsible for the
maintenance and integrity of the corporate and financial information on
the Company’s website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
The Group’s business activities, together with the factors likely to affect
its future development, performance and position are set out in the
Overview and Strategic Report sections of the Annual Report on
pages 2 to 85.
In particular, the current economic conditions continue to pose a number
of risks and uncertainties for the Group and these are set out in Principal
Risks and Uncertainties on pages 74 to 84.
The Financial Risk Management objectives and policies of the Group
and the exposure of the Group to capital risk, credit risk, market risk and
liquidity risk are discussed on pages 220 to 225. The Group continues
to meet Group and individual entity capital requirements and day-to-day
liquidity needs through the Group’s cash resources and available
credit facilities.
The combined total of committed facilities and bonds issued at
31 December 2022 was £10,699 million (2021: £10,206 million).
The Directors have reviewed the Group’s forecasts and projections,
taking into account reasonably possible changes in trading
performance, which show that the Group has sufficient financial
resources. On the basis of this review, and after making due enquiries,
the Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the financial statements. The Group’s
business activities, together with the factors likely to affect its future
development, performance and position and its objectives and policies
in managing the financial risks to which it is exposed, and its capital are
set out in the Strategic Report on pages 2 to 85.
Each of the Directors, whose names and functions are set out on
pages 90 to 93 of this Annual Report confirms that, to the best of their
knowledge and belief:
— The Group and the Company financial statements, which have been
prepared in accordance with IFRSs give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company
and the Group taken as a whole
— The report of the Directors contained in the Annual Report, including
the strategic report, includes a fair review of the development and
performance of the business and the position of the Company and
the Group taken as a whole, together with a description of the
principal risks and uncertainties that they face
— They consider that the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Group and the Company’s
performance, business model and strategy
By Order of the Board
Lisa Condron
Group Company Secretary
14 March 2023
Financial Statements
London Stock Exchange Group plc
Annual Report 2022
148
FINANCIAL STATEMENTS
149 London Stock Exchange Group plc
Annual Report 2022
In this section
Independent Auditor’s Report 150
Consolidated income statement 161
Consolidated statement of comprehensive income 162
Balance sheets 163
Cash flow statements 164
Statements of changes in equity 165
Notes to financial statements 166
Key to symbols used in this section
Accounting policy
Significant accounting judgements
London Stock Exchange Group plc
Annual Report 2022
150
Independent Auditor’s Report to the members
of London Stock Exchange Group plc
We have audited the financial statements of London Stock Exchange
Group plc (the parent Company) and its subsidiaries (the Group) for the
year ended 31 December 2022. In our opinion:
— the financial statements give a true and fair view of the state of the
Group’s and of the parent Company’s affairs as at 31 December 2022
and of the Group’s profit for the year then ended;
— the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
— the parent Company financial statements have been properly
prepared in accordance with UK adopted international accounting
standards as applied in accordance with section 408 of the
Companies Act 2006; and
— the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
The financial statements comprise:
Group Parent company
Consolidated balance sheet
as at 31 December 2022
Balance sheet as at 31 December
2022
Consolidated income statement
for the year then ended
Statement of changes in equity
for the year then ended
Consolidated statement of
comprehensive income for the
year then ended
Statement of cash flows for the
year then ended
Consolidated statement of changes
in equity for the year then ended
Related notes 1 to 29 to the
financial statements including
a summary of significant
accounting policies
Consolidated statement of cash
flows for the year then ended
Related notes 1 to 29 to the financial
statements, including a summary
of significant accounting policies
Tables within the Directors’
Remuneration Report identified
as ‘audited’
The financial reporting framework that has been applied in their
preparation is applicable law and UK adopted International Accounting
Standards and as regards the parent Company financial statements,
as applied in accordance with section 408 of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Independence
We are independent of the Group and parent Company in accordance
with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard
as applied to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
During the course of our independence procedures, it was identified
that three non-audit services were provided by Deloitte USA
1
, having
been subcontracted from Deloitte LLP in the UK. These services are
prohibited under the FRC’s Ethical Standard as Deloitte USA are also
the auditor of the Tradeweb Markets Inc. component.
The services provided to the Group related to tax advice to certain
employees in 2021, 2022 and 2023, tax planning advice in 2022 and
tax advice relating to a debt restructuring in 2021. Total fees for these
services were £268,500. These services are no longer being provided.
As a result of the breach, we performed a further review of Deloitte
USA’s audit working papers for key judgments and estimates for both
2021 and 2022. We also discussed with Deloitte USA their approach
to identifying these breaches and assessed the services provided to
conclude on the extent of the breaches.
We considered that the provision of the services did not create a
self-review threat for either 2021 or 2022 as the prohibited services
were not provided to the entity being audited by Deloitte USA,
Tradeweb Markets Inc., and there was therefore no risk of Deloitte
USA reviewing their own work. In addition, EY audited the balances
impacted by the prohibited services performed by Deloitte USA so
there was no risk of EY reviewing our own work. Appropriate safeguards
also existed as the individuals who performed the prohibited services
were not part of the Deloitte USA audit engagement team. We informed
the Audit Committee following identification in February 2023. We
considered this to be a minor breach of the FRC’s Ethical Standard; that
an objective, reasonable and informed third party would not conclude
that our independence was impaired; and that we remain independent
of the Group and the parent Company in conducting the audit.
1 Non-audit services were provided by Deloitte Tax LLP. The component auditor is Deloitte & Touche LLP.
151 London Stock Exchange Group plc
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FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation
of the Directors’ assessment of the Group and parent Company’s
ability to continue to adopt the going concern basis of accounting
for a period of twelve months from the date of signing the financial
statements included:
— Obtaining an understanding of the Directors’ use of the going
concern basis of preparation. This included reviewing their going
concern assessment and associated underlying forecasts and
assumptions and performing inquiries of management and those
charged with governance;
— Assessing the appropriateness of key assumptions made in the
Group’s business plan, together with our valuation specialists, by
comparing them to historical performance and challenging the
achievability of budgeted growth. In assessing the reasonableness
of these key assumptions, we considered planned cost and revenue
synergies, the trading environment, and the current uncertain
geopolitical and economic outlook including the impact of high
inflation and increased interest rates, principal risks and appropriate
mitigating factors. We performed back-testing by comparing the
budget of prior periods to actual results to assess the historical
accuracy of the forecasting process;
— Testing the clerical accuracy of the going concern assessment
including the data used in stress testing;
— Evaluating the reasonableness of adverse forecasts by benchmarking
the stress testing scenario assumptions against external data;
— Evaluating the plausibility of management actions available to mitigate
the impact of the reverse stress test by comparing them to our
understanding of the Group including the ability to refinance debt;
— Evaluating the level of liquidity of the Group to support ongoing
requirements for a period of 12 months from the date of signing the
financial statements; and
— Assessing the appropriateness of the going concern disclosures by
evaluating the consistency with the going concern assessment and
for compliance with the relevant reporting requirements.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group and parent
Company’s ability to continue as a going concern for a period of twelve
months from when the financial statements are authorised for issue.
In relation to the Group and parent Company’s reporting on
how they have applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to in relation to
the Directors’ statement in the financial statements about whether
the Directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of this
report. However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the Group’s ability
to continue as a going concern.
Overview of our audit approach
Audit scope — We performed an audit of the complete financial
information of 8 components, specified audit
procedures on specific balances for a further
11 components and other procedures on the
remaining 126 components.
— The components where we performed full or
specific audit procedures accounted for 93% of
absolute pre-tax profit, 96% of Revenue and 99.9%
of Total assets.
— A component is defined as an entity for which
management prepares component financial information
that is included in the Group financial statements.
Key audit
matters
— Accounting for acquisitions.
— Revenue recognition.
— Impairment of goodwill and purchased
intangible assets.
— Internally developed software capitalisation
and impairment.
Materiality — Overall Group materiality of £61 million which
represents 5% of adjusted pre-tax profit from
continuing operations, calculated by adjusting for
certain non-underlying items relating to gain on
disposal of property, plant and equipment of
£133 million, investment remeasurement gain of
£23m, impairment of associates of £7 million,
finance expenses of £16 million, retention costs of
£35 million and separation costs of £13 million.
London Stock Exchange Group plc
Annual Report 2022
152
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
An overview of the scope of the parent Company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our
allocation of performance materiality determine our audit scope for
each component within the Group. Taken together, this enables us to
form an opinion on the consolidated financial statements. We take
into account size, risk profile, the organisation of the Group and
effectiveness of Group-wide controls, changes in the business
environment and other factors such as recent Internal audit results
when assessing the level of work to be performed at each component.
In assessing the risk of material misstatement to the Group financial
statements and to ensure we had adequate quantitative coverage of
significant accounts in the financial statements, of the 126 reporting
components (2021: 320 reporting components) of the Group, we
selected 19 components.
Full scope components – Of the 19 components selected
(2021: 39 components), we performed an audit of the complete
financial information of 8 components (2021: 12 components) which
were selected based on their size or risk characteristics.
Specific scope components – For the remaining 11 components
(2021: 27 components), we performed audit procedures on specific
accounts within that component which we considered had the potential
for the greatest impact on the significant accounts in the financial
statements either because of the size of these accounts or their
risk profile.
The primary audit team is defined as the EY London audit team
responsible for issuing the opinion on the Group financial statements
and coordinating the Group audit. The component team is defined as an
audit team, who, at the request of the primary audit team, performs work
on the financial information related to a component for the Group audit.
5 of the full scope components and all of the specific scope
components are audited by the primary audit team, with the
remaining 3 full components audited by component teams as
set out in the table below:
Component Headquartered location Scope Auditor
LSEG US Holdco Inc.* United States of America Full EY New York
Tradeweb Markets Inc United States of America Full Deloitte USA
LCH S.A. France Full EY France
* Some specific accounts within LSEG US Holdco Inc. were audited by the primary audit team.
The table below reflects the proportion of the group that is included
within the full scope and specific scope components. The audit scope
of these components may not have included testing of all significant
accounts of the component but will have contributed to the coverage
of significant accounts tested for the Group.
Significant
account
Full scope Specific scope
Other
procedures Total
2022 2021 2022 2021 2022 2021 2022 2021
Group’s
absolute
pre-tax profit 79% 58% 14% 24% 7% 18% 100% 100%
Group’s
revenue 93% 65% 3% 19% 4% 16% 100% 100%
Group’s
total assets 99.8% 99.4% 0.1% 0.4% 0.1% 0.2% 100% 100%
Of the remaining 107 components that together represent 7% of the
Group’s absolute pre-tax profit, none are individually greater than 2%
of the Group’s absolute pre-tax profit. The absolute pre-tax profit has
been used within our assessment, as a result of there being loss making
components within the Group. For these components, we performed
other procedures, including analytical reviews, testing of Group entity
level controls, testing of consolidation journals and intercompany
eliminations, and risk assessment procedures based on the outcome
of internal audit reports and of prior year local statutory audits,
to respond to any potential risks of material misstatement to the
Group financial statements.
Changes from the prior year
In the current year, there has been a decrease in the number of
reporting components, as well as the number of in-scope components
for the Group audit. This is as a result of treating the Refinitiv Data &
Analytics business as one component due to the common processes
and controls. Audit procedures have been designed and updated to
reflect this change in scoping approach.
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FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Involvement with component teams
In establishing our overall approach to the Group audit, we determined
the type of work that needed to be undertaken at each of the
components by us, as the primary audit engagement team, or by
component auditors from other Ernst & Young Global Limited network
firms and Deloitte USA operating under our instruction. For the 3 full
scope components where the work was performed by component
auditors, we determined the appropriate level of involvement to
enable us to determine that sufficient audit evidence had been
obtained as a basis for our opinion on the Group as a whole.
The primary audit team interacted regularly with the component teams
during various stages of the audit and were responsible for the scope
and direction of the audit process. Physical site visits were undertaken
by the Senior Statutory Auditor and other senior members of the primary
audit team during the current year’s audit cycle to the component teams
in United States of America, France and India. These physical site visits
and regular virtual meetings involved discussing and challenging the
audit approach with the component team and any findings arising from
their work, meeting with local management, attending planning and
closing meetings and reviewing relevant audit working papers on risk
areas, through direct access or through the use of shared screen
functionality. This, together with the additional procedures performed
at Group level, gave us appropriate evidence for our opinion on the
Group financial statements and ensured that the Senior Statutory Auditor
exercised appropriate oversight of the principal locations of the Group.
Climate change
Stakeholders are increasingly interested in how climate change will
impact the Group. The Group has determined that the most significant
future impacts from climate change will be from physical risk to
operations and the opportunities and risks associated with market
shifts in the transition to a net zero economy. These are explained in
“Enabling sustainable growth” within the Strategic Report and in the
principal risks and uncertainties, where the Group has also explained
its climate commitments. All of these disclosures form part of the
“Other information,” rather than the audited financial statements.
Our procedures on these unaudited disclosures therefore consisted
solely of considering whether they are materially inconsistent with the
financial statements or our knowledge obtained in the course of the
audit or otherwise appear to be materially misstated, in line with our
responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts
of climate change on the Group’s business and any consequential
material impact on its financial statements.
The Group has explained in note 1.7 its articulation of how climate
change has been reflected in the financial statements. The principal
areas of consideration by management include going concern and
viability and the valuation of assets and liabilities.
Our audit effort in considering the impact of climate change on the
financial statements was focused on evaluating management’s
assessment of the impact of climate risk, both physical and transition
and on ensuring that the effects of emerging climate risks disclosed
have been appropriately reflected by management in reaching their
judgements in relation to the valuation of assets and liabilities. We also
challenged the Directors’ considerations of climate change risks in their
assessment of going concern and viability and associated disclosures.
Based on our work we have not identified the impact of climate change
on the financial statements to be a key audit matter or to impact a key
audit matter.
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154
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts
of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these matters.
Risk Our response to the risk
Key observations
communicated to the
Audit Committee
Accounting for acquisitions
During 2022, the Group completed
the acquisitions of Global Data
Consortium, Inc. (GDC), MayStreet,
Inc. (MayStreet), TORA Holdings, Inc.
(TORA) and Quantile Group Limited
(Quantile), together the ‘acquirees’.
Entity
Net assets
acquired
Goodwill
recognised
GDC £88 million £153 million
MayStreet £45 million £108 million
TORA £85 million £173 million
Quantile £70 million £135 million
There is a complexity in auditing
the accounting for these acquisitions
as there are significant judgements
and assumptions required in the
determination of the fair value
of net assets acquired and the
resulting goodwill.
Refer to the Report of the Audit
Committee; Accounting policies); and
Note 12 of the Financial Statements
The risk has reduced this year given
the lower value of the acquisitions
compared to the Refinitiv acquisition
in the prior year.
— Control assessment: We confirmed our understanding of the business
combinations accounting process including process and controls relevant
to the acquisitions. We held discussions with management to understand
the governance structures and oversight of the accounting for each of
the transactions.
— Technical accounting: Together with our technical accounting specialists,
we reviewed management’s business combinations accounting papers
and management’s assessment of the acquirees’ accounting policies,
understanding the differences with the Group and resulting impact.
— Net assets acquired and resulting goodwill: We verified the completeness
and accuracy of the carrying value of acquired net assets. This included
tests of detail and analytical review procedures over significant balance
sheet accounts at the acquisition date. We also assessed the
reasonableness of the fair values of identifiable assets and liabilities
assumed, and resulting goodwill at each acquisition date with our valuation
specialists. We assessed the appropriateness of intangible asset valuation
models, tested the accuracy and completeness of the key inputs used
and the reasonableness of the key assumptions including discount rates,
royalty rates, attrition rates, contributory asset charge rates, long-term
growth rates and cash flow forecasts. This included developing
independent valuation ranges for net assets acquired for each acquisition.
We involved our Tax specialists to evaluate the appropriateness of deferred
taxes related to the assets acquired and liabilities assumed and to assess
the appropriateness of the tax rate used in relation to each acquisition.
— Disclosure: We assessed the adequacy of the disclosures made in the
financial statements.
We concluded that the fair
value of net assets acquired,
and the resulting goodwill are
reasonable and fall within our
independently developed range
for each transaction.
We are satisfied that the material
acquisitions and the related
disclosures are reasonable and
are in accordance with IFRS 3
‘Business Combinations’.
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FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Risk Our response to the risk
Key observations
communicated to the
Audit Committee
Revenue recognition
The Group reported £7,454 million
of revenue from external customers,
which consisted of £5,259 million
in Data & Analytics, £1,459 million in
Capital Markets and £736 million in
Post Trade.
Auditing revenue recorded is
complex due to the complexity of
the IT systems used in the initiation,
processing and recording of
transactions and the manual
nature of certain revenue streams.
This includes:
— recognising revenue in
accordance with the non-standard
terms present in subscription
revenue agreements in Data &
Analytics; and
— the level of judgement used in
estimating FTSE Russell revenue
accruals presented within fees
receivable based on historic
billing and expected assets
under management (AUM).
Refer to the Report of the
Audit Committee; Accounting
policies; Notes 2 and 3 of the
Financial Statements
The risk has remained consistent
with the prior year.
— Control assessment: We confirmed our understanding of the processes
and controls relevant to the material revenue streams of the Group.
We also evaluated the design effectiveness and tested operating
effectiveness of key controls including IT systems and related IT controls
for certain revenue streams.
— Overall procedures: We evaluated the appropriateness of the revenue
recognition policy in accordance with IFRS 15 ‘Revenue from Contracts
with Customers’. Additionally, we benchmarked the accounting policies
with industry peers to ensure they are in line with industry standards.
We performed cut-off testing to verify that revenue was recognised in
the correct period.
We performed analytical procedures and journal entry testing in order
to identify and test the risk of misstatement arising from management
override of controls.
— Subscription revenue in Data & Analytics: For a sample of significant
contracts, we obtained the executed contract and performed a review of
the contract terms against the requirements of IFRS 15 ‘Revenue from
Contracts with Customers’ and verified the invoices raised and cash
collected as applicable.
We used artificial intelligence looking for discrepancies and anomalies in
contracts to identify potential issues related to the authenticity of contracts
to mitigate the risk of falsified contracts.
— FTSE Russell revenue accruals: We selected a sample of revenue accruals
and obtained appropriate supporting evidence such as tying the basis
for the accrued amounts to third party sources or prior period billings.
We also agreed to invoices raised post year-end and cash collected
where applicable.
We also performed substantive analytical procedures over revenue
accruals recognised across the period, in comparison to total revenue
recognised by month and counterparty to identify outliers on which to
perform further procedures.
For revenue based on AUM, we independently reperformed the revenue
calculation and tested a sample using AUM amounts from supporting
customer agreements, independent third-party sources, where available,
or customer declarations.
We are satisfied that revenue
related to subscription revenue
and FTSE Russell revenue
accruals within the Data &
Analytics business are
reasonable and recorded in
accordance with IFRS 15
‘Revenue from Contracts
with Customers’.
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Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Risk Our response to the risk
Key observations
communicated to the
Audit Committee
Impairment of goodwill and
purchased intangible assets
The Group reported goodwill of
£19,829 million (2021: £17,486 million)
and net purchased intangible
assets of £12,584 million
(2021: £11,920 million).
The complexity in auditing goodwill
and purchased intangible assets
relates to the use of judgement
in the impairment assessment. Both
goodwill and purchased intangible
assets are sensitive to a number
of judgements and estimates; in
particular cash flow forecasts,
long-term growth rates (LTGR),
discount rates, amortisation periods
for purchased intangible assets,
customer retention rates
and royalty rates.
Refer to the Report of the Audit
Committee; Accounting policies; and
Note 14 of the Financial Statements
The risk has increased in the
current year due to the increase
in economic uncertainty linked to
the impact of higher interest rates
on discount rates.
— Control assessment: We confirmed our understanding of the impairment
assessment process and assessed the design effectiveness of
key controls.
— Carrying value of goodwill: For material cash generating units (CGUs),
we examined the cash flow forecasts and tested compliance with the
requirements of IAS 36 ‘Impairment of Assets’.
We tested the clerical accuracy of these forecasts and compared them
to the three-year business plans approved by the Board.
We evaluated the reasonableness of the cash flow forecasts using our
understanding of the CGU and analysing the budgeted growth rates,
its historical growth rates and other relevant market expectations and
developments including changes in inflation and increasing interest rates.
We compared prior periods’ cash flow forecasts to actual results to assess
management’s forecasting accuracy.
We tested the discount rates used by each of the CGUs, as well as the
LTGRs, with involvement of our valuation specialists; we evaluated these
model inputs within each impairment model, by comparing them to a range
of economic and industry forecasts and market data where appropriate,
as well as to other similar companies.
We also performed sensitivity analysis on the key assumptions (including
the model inputs, cash flow forecasts, royalty rates and customer retention
rates) to understand the impact that reasonably possible changes
would have on the overall carrying value of the goodwill and purchased
intangible assets.
— Purchased intangible assets: We evaluated management’s assessment
of impairment indicators by considering internal and external factors
specific to each class of assets and our understanding of the business.
This included performing back-testing of customer retention rates within
specific business lines and the current returns made on intellectual
property. We also assessed the appropriateness of the remaining
amortisation period of purchased intangible assets by considering
management’s business plan and comparing management’s forecasts
against historic data.
— Disclosure: We assessed the adequacy of the relevant disclosures
made in the financial statements, including the completeness of the
sensitivity disclosure.
We are satisfied that the
carrying values of goodwill and
purchased intangible assets
are reasonable and the related
disclosures are compliant with
IAS 36 ‘Impairment of Assets’
and IAS 38 ‘Intangible Assets’.
157 London Stock Exchange Group plc
Annual Report 2022
FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Risk Our response to the risk
Key observations
communicated to the
Audit Committee
Internally developed software
capitalisation and impairment
The Group reported capitalised
internally developed software of
£2,653 million (2021: £2,318 million)
and an impairment charge of
£11 million (2021: £13 million)
Auditing the capitalisation of
expenses to internally developed
software is complex as it involves
management judgement when
making the assessment of
capitalisation against criteria set
out in IAS 38 ‘Intangible Assets’.
This includes identifying when
events or changes in circumstances
indicate that the carrying amounts
may not be recoverable and involves
key judgements and estimates in
the annual impairment assessments.
These include discount rates,
LTGRs, cash flow forecasts and the
amortisation periods for internally
developed software.
Refer to the Report of the Audit
Committee; Accounting policies; and
Note 14 of the Financial Statements
The risk has remained consistent
with the prior year.
— Control assessment: We confirmed our understanding of both the
capitalisation and impairment assessment processes and assessed the
design and operating effectiveness of key controls.
— Additions testing: For a sample of additions, we have agreed amounts
capitalised to supporting documentation to verify whether the costs were
incurred and meet the capitalisation criteria of IAS 38 ‘Intangible Assets’.
— Impairment assessment: To assess the completeness of indicators of
impairment identified by management, we selected a sample of assets,
including those not yet brought into use or projects put on hold, and tested
and challenged management’s assessment of indicators of impairment.
This included analysis against budgeted spend and identifying projects
with no recent spend.
Where an impairment has been recognised, we tested the key assumptions
used within the assessment, such as the discount rates, LTGR and cash
flow forecasts with involvement of our valuation specialists as needed.
We also assessed the sensitivity analysis performed by management and
performed independent additional sensitivity analysis on the impairment
model inputs, to understand the impact that reasonably possible changes
to key assumptions would have on the overall carrying value of the
internally developed software.
— Disclosure: We assessed the adequacy of the disclosures made in the
financial statements.
We are satisfied that the
capitalisation of and carrying
value of internally developed
software and the related
disclosures are reasonable
and compliant with IAS 36
‘Impairment of Assets’
and IAS 38 ‘Intangible Assets’.
London Stock Exchange Group plc
Annual Report 2022
158
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
In the prior year, our auditor’s report included a key audit matter
relating to the risk that the Refinitiv Parent Limited acquisition was
accounted for or disclosed incorrectly; and the risk that the disposal
of the Borsa Italiana Group was accounted for or disclosed incorrectly.
As these were 2021 events, they were removed in 2022.
Our application of materiality
We apply the concept of materiality in planning and performing the
audit, in evaluating the effect of identified misstatements on the audit
and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually
or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the financial statements.
Materiality provides a basis for determining the nature and extent
of our audit procedures.
We determined materiality for the Group to be £61 million
(2021: £68 million), which is 5% (2021: 5%) of adjusted pre-tax
profit from operations, calculated by adjusting for certain non-underlying
items relating to gain on disposal of property, plant and equipment of
£133 million, investment remeasurement gain of £23m, impairment of
associates of £7 million, finance expenses of £16 million, retention
costs of £35 million and separation costs of £13 million. Pre-tax profit
includes pre-tax profit from continuing operations (£1,241 million), as well
as pre-tax profit from discontinued operations to the point of disposal
(£74 million – Note 13.1). In addition, in the current year, the costs
associated to acquisitions have not been adjusted due to the same
scale expected to form part of the Group’s strategy.
We consider the basis of our materiality to be one of the important
considerations for shareholders of the Group in assessing the financial
performance of the Group. It is linked to the key earnings measures
discussed when the Group presents the financial results. In addition,
within non-underlying items, the Group also excludes amortisation of
purchased intangibles to present adjusted operating profit; this amount
is not excluded from our materiality calculation.
Starting basis
— £1,315 million
— Profit before tax from continuing operations (£1,241 million)
and discontinued operations to the point of disposal
(£74 million– Note 13.1)
Adjustments
— £85 million reduction
— Certain non-underlying items relating to gain on disposal of property,
plant and equipment of £133m, investment remeasurement gain of
£23m, impairment of associates of £7m, finance expenses of £16m,
retention costs of £35m and separation costs of £13m.
Materiality
— Materiality of £61 million (5% of materiality basis)
Adjusted basis
— £1,230 million
— Adjusted profit before tax from continuing operations
We determined materiality for the parent Company to be £228 million
(2021: £239 million), which is 1% (2021: 1%) of equity of the parent
Company. However, since the parent Company was a full scope
component, for accounts that were relevant for the Group financial
statements, performance materiality, as defined below, of £26 million
was applied.
During the course of our audit, we reassessed initial materiality
and made adjustments based on the final financial performance
of the Group.
Performance materiality
The application of materiality at the individual account or balance level.
It is set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment
of the Group’s overall control environment, our judgement was that
performance materiality was 75% (2021: 50%) of our planning materiality,
namely £46 million (2021: £34 million). We have set performance
materiality at this percentage due to our understanding of the Group’s
overall control environment and limited number and value of audit
differences which were identified in the prior year audit. Our approach
is designed to have a reasonable probability of ensuring that the total
of uncorrected and undetected misstatements does not exceed our
overall materiality of £61 million (2021: £68 million) for the Group financial
statements as a whole.
Audit work at component locations for the purpose of obtaining
audit coverage over significant financial statement accounts is
undertaken based on a percentage of total performance materiality.
The performance materiality set for each component is based on the
relative scale and risk of the component to the Group as a whole
and our assessment of the risk of misstatement at that component.
In the current year, the range of performance materiality allocated to
components was £10 million to £36 million (2021: £6 million to £7 million).
Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the Audit Committee that we would report to
them all uncorrected audit differences in excess of £3 million
(2021: £3 million), which is set at 5% of planning materiality, as well as
differences below that threshold that, in our view, warranted reporting
on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.
159 London Stock Exchange Group plc
Annual Report 2022
FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Other information
The other information comprises the information included in the annual
report, including the Strategic Report, Governance information and
disclosures (including Board of Directors, Corporate governance,
Complying with the provisions of the Code, Report of the Nomination
Committee, Report of the Audit Committee, Report of Risk Committee,
Directors’ Remuneration Report, Directors’ Report and Statement of
Directors’ responsibilities), other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the
audit, or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a
material misstatement of the other information, we are required to
report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with the Companies
Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
— the information given in the Strategic Report and the Directors’
Report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
— the Strategic Report and the Directors’ Report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the
parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic
Report or the Directors’ Report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
— adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
— the parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
— certain disclosures of Directors’ remuneration specified by law
are not made; or
— we have not received all the information and explanations we
require for our audit
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance
Statement relating to the Group and parent Company’s compliance
with the provisions of the UK Corporate Governance Code specified
for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or
our knowledge obtained during the audit:
— Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified;
— Directors’ explanation as to its assessment of the Group’s prospects,
the period this assessment covers and why the period is appropriate;
— Director’s statement on whether it has a reasonable expectation that
the group will be able to continue in operation and meets its liabilities;
— Directors’ statement on fair, balanced and understandable;
— Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks;
— The section of the annual report that describes the review of
effectiveness of risk management and internal control systems; and
— The section describing the work of the audit committee.
Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement, the
Directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group and parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the parent Company
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
London Stock Exchange Group plc
Annual Report 2022
160
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Explanation as to what extent the audit was considered capable of
detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect irregularities, including fraud. The risk of not
detecting a material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations,
or through collusion. The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection
of fraud rests with both those charged with governance of the Group
and management.
— We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and determined that
the most significant are the UK adopted International Accounting
Standards, the UK Companies Act 2006, UK Corporate Governance
Code 2016, The Financial Conduct Authority’s (FCA) Listing Rules,
other relevant FCA rules and regulations, Financial Services and
Markets Act 2000, European Markets Infrastructure Regulations,
and tax legislation (governed by HM Revenue and Customs).
— The Group operates in multiple countries and locations around the
world which are regulated by the local regulator and is required to
comply with local frameworks.
— We understood how the Group is complying with those frameworks
by making inquiries of senior management, including the Chief
Financial Officer, the Group General Counsel, the Chief Risk Officer,
the Group Head of Compliance, and the Group Head of Internal
Audit. We reviewed significant correspondence between the Group
and regulatory bodies, reviewed minutes of the Board and Risk
Committee and gained an understanding of the Group’s approach to
governance, demonstrated by the Board’s approval of the Group’s
governance framework and the Board’s review of the Group’s risk
management framework and internal control processes.
— Carried out an assessment of matters reported through the
Group’s whistleblowing programmes where these related to the
financial statements.
— We assessed the susceptibility of the Group’s financial statements
to material misstatement, including how fraud might occur by
considering the controls that the Group has established to address
risks identified by the Group, or that otherwise seek to prevent, deter
or detect fraud. We considered performance and incentive plan
targets and their potential to influence management to manage
earnings or influence the perceptions of investors. Our procedures
over our key audit matters and other significant accounting estimates
included challenging management on the assumptions and
judgements made in determining these estimates.
— Identified and tested journal entries, including those posted with
certain descriptions or unusual characteristics, backdated journals
or posted by infrequent and unexpected users.
— Based on this understanding we designed our audit procedures to
identify non-compliance with such laws and regulations. Our
procedures involved inquiries of senior management, legal counsel,
the compliance officer and internal audit, review of significant
correspondence with regulatory bodies, minutes of meetings of the
Board and certain Board committees, the whistleblowing log, and
focused testing, as referred to in the key audit matters section above.
— The Group operates in the exchange, benchmarks and central
clearing counterparty industries which are regulated environments.
As such, the Senior Statutory Auditor reviewed the experience and
expertise of the engagement team to ensure that the team had the
appropriate competence and capabilities, which included the use of
specialists where appropriate.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Other matters we are required to address
— Following the recommendation from the Audit Committee, we were
appointed as auditors of the Group and signed an engagement letter
on 12 June 2014 and were appointed by the Group at the AGM on
16 July 2014, to audit the financial statements for the nine months
period ended 31 December 2014 and subsequent financial periods.
We signed an updated engagement letter on 25 October 2021 to
audit and report on the financial statements of London Stock
Exchange Group Plc and its subsidiaries for the year ended
31 December 2022 and subsequent financial periods.
— The period of total uninterrupted engagement including previous
renewals and reappointments is eight years and nine months,
covering the nine month period ended 31 December 2014 to the
year ended 31 December 2022.
— The audit opinion is consistent with the additional report to the
audit committee.
Use of our report
This report is made solely to the Group’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Group’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone
other than the Group and the Group’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Simon Michaelson (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
14 March 2023
161 London Stock Exchange Group plc
Annual Report 2022
FINANCIAL STATEMENTS
Consolidated income statement
Year ended 31 December Notes
2022 2021 (Re-presented)
1
Underlying
£m
Non-
underlying
£m
Total
£m
Underlying
£m
Non-
underlying
£m
Total
£m
Continuing operations
Revenue 2, 3.1 7 ,454 – 7 ,454 6,297 – 6,297
Net treasury income from CCP clearing business 2, 3.1 255 – 255 207 – 207
Other income 2, 3.1 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, 12.1 – 23 23 – – –
Income from equity investments 16 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, 14, 15 (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 7.2 (271 ) (16 ) (287 ) (212 ) (5 ) (217 )
Net finance costs 6, 7 (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 13.1 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 11.2 258 (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
Earnings per share attributable to equity holders
Continuing operations
Basic earnings per share 9 141.8 p 85.8 p
Diluted earnings per share 9 141. 1 p 85.2 p
Adjusted basic earnings per share 9 317 .8 p 272.4 p
Adjusted diluted earnings per share 9 316. 1 p 270.7 p
Total operations
Basic earnings per share 9 233.8 p 581.7 p
Diluted earnings per share 9 232.5 p 578.1 p
Adjusted basic earnings per share 9 328.4 p 301.4 p
Adjusted diluted earnings per share 9 326.6 p 299.5 p
Dividend per share in respect of the financial year
Dividend per share paid during the year 10 31. 7 p 25.0 p
Dividend per share declared for the year 10 75.3 p 70.0 p
1 The 2021 results have been re-presented to exclude the results of the discontinued operations (see note 13).
London Stock Exchange Group plc
Annual Report 2022
162
Consolidated statement
of comprehensive income
Year ended 31 December Notes
2022
£m
2021
(Re-
presented)
1
£m
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 17.2 (329 ) 101
Gain on equity instruments designated as fair value through other comprehensive income 16.1 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 23 – 22
Gains on cash flow hedges recycled to the income statement 23 (3 ) (2 )
Net (losses)/gains on net investment hedges 23 (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
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 13.1 512 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 11.2 390 139
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 13).
163 London Stock Exchange Group plc
Annual Report 2022
FINANCIAL STATEMENTS
Balance sheet
At 31 December Notes
Group Company
1
2022
£m
2021
£m
2022
£m
2021
£m
Assets
Non-current assets
Intangible assets 14 35,066 31,724 – –
Property, plant and equipment 15 797 832 – –
Investments in subsidiaries 29.2 – – 24,922 24,792
Investments in associates 34 25 1 2
Investments in financial assets 16, 23 394 351 – –
Derivative financial instruments 23 12 2 – –
Other receivables 18 209 202 76 92
Retirement benefit assets 17.3 231 568 – –
Deferred tax assets 8.2 622 508 8 –
Current assets
Trade and other receivables 18 1,364 967 1,296 1,496
Clearing member financial assets 687 ,727 665,031 – –
Clearing member cash and cash equivalents 104, 707 83,795 – –
Clearing member assets 23 792,434 748,826 – –
Investments in financial assets 16, 23 226 – – –
Derivative financial instruments 23 36 25 11 10
Current tax receivable 522 398 – –
Cash and cash equivalents 19, 23 3,209 2,665 77 142
Assets held for sale – 16 – –
Total assets 835, 156 787,109 26,391 26,534
Liabilities
Current liabilities
Trade and other payables 20 2, 143 1,782 1,494 644
Contract liabilities 3.2 257 245 – –
Borrowings 22.1, 23 1,295 – – –
Clearing member financial liabilities 23 792,594 748,644 – –
Derivative financial instruments 23 9 7 – 5
Current tax payable 142 73 – –
Provisions 29 16 – –
Non-current liabilities
Borrowings 22.1, 23 6,856 7,654 1,815 1,740
Other payables 20 1, 182 1,059 188 202
Contract liabilities 3.2 89 101 – –
Derivative financial instruments 23 87 45 84 43
Retirement benefit obligations 17.3 64 85 – –
Deferred tax liabilities 8.2 2,200 1,835 – –
Provisions 58 44 – –
Total liabilities 807 ,005 761,590 3,581 2,634
Net assets 28, 151 25,519 22,810 23,900
Equity
Capital and reserves attributable to the Company’s equity holders
Ordinary share capital 24 39 39 39 39
Share premium 24 978 978 978 978
Retained earnings 3,840 3,816 2,996 4,086
Other reserves 24 21, 139 18,807 18,797 18,797
Total shareholders’ funds 25,996 23,640 22,810 23,900
Non-controlling interests 11.2 2, 155 1,879 – –
Total equity 28, 151 25,519 22,810 23,900
1 The Company recorded a loss for the year of £82 million (2021: profit of £2,554 million). The profit in 2021 reflected additional dividends received as a consequence of the profit on disposal of the
Borsa Italiana group.
London Stock Exchange Group plc
Registered number 5369106
London Stock Exchange Group plc
Annual Report 2022
164
Cash flow statements
Year ended 31 December Notes
Group Company
2022
£m
2021
(Re-
presented)
1
£m
2022
£m
2021
(Re-
presented)
3
£m
Operating activities
Profit/(loss) from continuing operations 979 592 (82) 2,554
Adjustments to reconcile profit to net cash flow:
— Taxation 8.1 262 302 (19) (61)
— Net finance costs 7 176 171 32 74
— Amortisation and impairment of intangible assets 14 1,603 1,289 – –
— Depreciation and impairment of property, plant and equipment 15 290 281 – –
— Profit on disposal of property, plant and equipment (133 ) – – –
— Share based payments 25 158 141 – –
— Foreign exchange losses/(gains) 38 112 113 (163)
— Dividend income 16, 28 (12 ) (22 ) (250) (3,303)
— Impairment of investments in subsidiaries 29.2 – – – 563
— Other movements 121 84 2 10
Working capital changes and movements in other assets and liabilities:
— (Increase)/decrease in receivables, contract and other assets (407 ) 747 12 (16)
— (Decrease)/increase in payables, contract and other liabilities (119 ) (347 ) 123 300
— 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 (69) (42)
Interest received 29 14 1 1
Interest paid (171 ) (152 ) (45) (74)
Net taxes paid (351 ) (390 ) – –
Royalties paid (89 ) (70 ) – –
Net cash flows from continuing operations
2
Net cash flows from discontinued operations 13 37 110 – –
Net cash flows from operating activities 2, 737 2,602 (113) (115)
Investing activities
Purchase of intangible assets 14 (773 ) (542 ) – –
Purchase of property, plant and equipment 15 (193 ) (90 ) – –
Proceeds from disposal of property, plant and equipment 153 – – –
Acquisition of subsidiaries, net of cash acquired 12 (768 ) 762 – –
Proceeds from sale of disposal group, net of cash disposed 13 903 3,592 – –
Investments in financial assets (227 ) (28 ) – –
Dividends received 12 22 250 2,654
Loans made to subsidiary companies
3
Repayment of loans made to subsidiary companies
3
Net cash flows from continuing operations (893 ) 3,716 427 2,238
Net cash flows from discontinued operations 13 (16 ) (32 ) – –
Net cash flows from investing activities (909 ) 3,684 427 2,238
Financing activities
Payment of principal portion of lease liabilities 21 (150 ) (118 ) – –
Proceeds from borrowings 22 – 6,944 – 500
Repayment of borrowings 22 (209 ) (11,614 ) – (586)
Dividends paid to equity holders of the parent 10 (567 ) (426 ) (567) (426)
Dividends paid to non-controlling interests (82 ) (95 ) – –
Repurchase of shares by Parent Company 24 (303 ) – (303) –
Repurchase of shares by subsidiary (Tradeweb) (80 ) (55 ) – –
Additional capital paid to subsidiary companies 29.2 – – (130) (1,600)
Loans received from subsidiary companies – – 617 131
Other financing activities (77 ) 24 (1) 13
Net cash flows from continuing operations (1,468 ) (5,340 ) (384) (1,968)
Net cash flows from discontinued operations 13 – (6 ) – –
Net cash flows from financing activities (1,468 ) (5,346 ) (384) (1,968)
Increase in cash and cash equivalents 360 940 (70) 155
Foreign exchange translation 184 (60 ) 5 (14)
Cash and cash equivalents at 1 January 2,665 1,785 142 1
Cash and cash equivalents at 31 December 19 3,209 2,665 77 142
1 The 2021 results have been re-presented to exclude the results of the discontinued operations (see note 13).
2 The Group’s net cash inflow from continuing operating activities of £2, 700 million (2021: £2,492 million) includes £226 million (2021: £202 million) of expenses related to non-underlying items.
3 For 2021, loans made to subsidiary companies of £672 million and repayment of these loans of £256 million were presented as a financing activity. These have been reclassified to investing
activities in accordance with IAS 7 Statement of Cash Flows. This change has no overall impact on the total movement in cash and cash equivalents in the prior year.
165 London Stock Exchange Group plc
Annual Report 2022
FINANCIAL STATEMENTS
Statement of changes in equity
Group
Year ended 31 December Notes
Attributable to equity holders
Non-
controlling
interests
(Re-
presented)
2
£m
Total
equity
£m
Ordinary
share
capital
£m
Share
premium
£m
Retained
earnings
£m
Other
reserves
1
£m
Total
attributable
to equity
holders
£m
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 24 – 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, 11.2 – – (426 ) – (426 ) (97 ) (523 )
Share-based payments 25 – – 76 – 76 67 143
Tax benefit on share-based payments in
excess of expense recognised 8.1 – – 30 – 30 – 30
Disposal of business 13 – – – – – (65 ) (65 )
Tradeweb share buyback
3
Shares withheld from employee options
exercised (Tradeweb)
4
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 24 – – (503 ) – (503 ) – (503 )
Dividends 10, 11.2 – – (567 ) – (567 ) (80 ) (647 )
Share-based payments 25 – – 99 – 99 63 162
Tax expense on share-based payments
less than expense recognised 8.1 – – (78 ) – (78 ) – (78 )
Purchase of non-controlling interests 11.2 – – 4 – 4 (19 ) (15 )
Tradeweb share buyback
3
Shares withheld from employee options
exercised (Tradeweb)
4
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 24.
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. (Tradeweb)., 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 of Tradeweb’s 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.
Company
Year ended 31 December Notes
Attributable to equity holders
Ordinary
share
capital
£m
Share
premium
£m
Retained
earnings
£m
Other reserves
Total
attributable
to equity
holders
£m
Capital
redemption
reserve
£m
Merger
reserve
£m
1 January 2021 24 971 1,896 514 1,305 4,710
Profit for the year – – 2,554 – – 2,554
Dividends 10 – – (426) – – (426)
Issue of shares 24 – 7 – – – 7
Issue of shares for acquisition of subsidiaries 15 – 2 – 16,978 16,995
Share-based payments 25 – – 60 – – 60
31 December 2021 39 978 4,086 514 18,283 23,900
Loss for the year – – (82) – – (82)
Dividends 10 – – (567) – – (567)
Share buyback 24 – – (503) – – (503)
Share-based payments 25 – – 62 – – 62
31 December 2022 39 978 2,996 514 18,283 22,810
London Stock Exchange Group plc
Annual Report 2022
234
Notes to the financial statements continued
29. Other information continued
235 London Stock Exchange Group plc
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246
Glossary
ADV
Average daily volumes or average daily value traded.
AI
Artificial Intelligence.
AIM
The Group’s market for smaller and growing companies established
in London.
API
Application Programming Interface.
ASV
Annual Subscription Value. A point in time measure of our recurring
book of subscription contracts vs 12 months ago.
BEIS
UK Department for Business, Energy and Industrial Strategy.
BETA
A securities processing system that LSEG divested to Clearlake
Capital Group L.P and Motive Partners in July 2022. BETA previously
sat within the Wealth Solutions business.
Beyond Ratings
LSEG completed the acquisition of Beyond Ratings in 2019.
Beyond Ratings is a provider of ESG data and analytics for fixed
income investors.
Borsa Italiana
(BIt) Borsa Italiana S.p.A., the Italian exchange business. Borsa Italiana
was included in the H1 2021 divestment of the Borsa Italiana Group.
Borsa Italiana Group
Includes Borsa Italiana, CC&G, Monte Titoli, MTS and ELITE.
The Borsa Italiana Group was divested to Euronext N.V. in H1 2021.
Bridge Facility
A syndicated, committed, term facility agreement comprising
$9.325 billion and €3.58 billion. On 16 December 2020, the Bridge
Facility was reduced by an amount of US$2 billion and €500 million,
and drawn at completion of the Refinitiv acquisition. The facility was
partially replaced by long-term finance in April 2021, with the remainder
repaid using the proceeds from the Borsa Italiana Group divestment.
CAGR
Compound annual growth rate.
CCP
Central Counterparty – stands between two parties to a trade to
eliminate counterparty risk by ensuring that settlement takes place.
CC&G
Formerly Cassa di Compensazione e Garanzia S.p.A., now known as
Euronext Clearing. CC&G was divested as part of the Borsa Italiana
Group in H1 2021.
CDSClear
LCH’s over-the-counter credit default swap (CDS) clearing service.
Central Securities Depository (CSD)
An entity that enables securities to be processed, settled and held
in custody.
CFC
Controlled foreign company
Combined Group
Combination of LSEG and Refinitiv following completion of the Refinitiv
acquisition on 29 January 2021.
Company or LSEG or London Stock Exchange Group
London Stock Exchange Group plc and its subsidiaries.
CurveGlobal
An interest rate derivatives venture between LSEG and a number
of major dealer banks together with Cboe. The venture was closed
in January 2022.
Datascope
The Group’s securities data solution that features globally sourced
securities, and delivers end-of-day pricing and intra-day reference data.
Depositary Receipts/Global Depositary Receipts (GDR)
Tradable certificates representing ownership of a number of underlying
shares, mainly for companies in developing or emerging markets.
247 London Stock Exchange Group plc
Annual Report 2022
FINANCIAL STATEMENTS
Glossary continued
Derivatives
Tradable financial instruments whose value is determined by the value
of underlying instruments; this could be equity, an index, a commodity
or any other tradable instrument.
— Exchange traded derivatives (ETD)
Listed derivatives traded on an electronic trading venue such as an
exchange and cleared through a clearing house.
— Over the counter (OTC)
Derivatives are negotiated privately between two parties and may
be cleared through a clearing house.
EBITDA
Earnings before interest, tax, depreciation and amortisation.
ESMA
The European Securities and Markets Authority (ESMA), the EU
securities markets regulator.
Exchange Traded Fund (ETF)
Low-cost and flexible investments that track indices and sectors.
FCA
Financial Conduct Authority, the current regulator of conduct of
providers of financial services in the UK and of UK trading venues
such as Recognised Investment Exchanges (RIEs) and MTFs.
Fintech
Financial technology.
ForexClear
LCH’s over-the-counter foreign exchange clearing service.
FRTB
Fundamental Review of the Trading Book, an international standard
that sets out the rules governing the capital that banks must hold
against market risk exposures.
FTSE Russell
FTSE International Limited and its subsidiaries, the Group subsidiary
that is a leading global provider of index and analytics solutions.
FXall
The Group’s dealer-to-client electronic FX trading and
workflow platform.
FX Matching
The Group’s dealer-to-dealer FX trading venue.
GIACT
The Group’s digital identity and payments verification platform.
Refinitiv acquired GIACT in December 2020 and it was included
in the acquisition of Refinitiv in January 2021.
Green Economy Mark
Mark recognising equity issuers on London Stock Exchange with 50%
or more green revenues.
Group
The Company and its Group undertakings.
Group undertakings
Group undertakings shall be construed in accordance with section 1161
of the Companies Act 2006 and, in relation to the Company.
Hampton-Alexander Review
An independent, business-led initiative established in 2016 to increase
the representation of women in senior leadership positions and on
boards of FTSE 350 Companies.
IPO
Initial Public Offering – the process whereby companies join our
markets and raise capital for the first time.
KYC
‘Know your customer’ screening.
LCH or LCH Group
LCH Group Limited and its subsidiaries, the Group’s 82.6% owned
global clearing and risk management business.
Lipper
Lipper provides global, independent fund performance data in a
precise, granular fund classification system, and includes mutual funds,
closed-end funds (CEFs), exchange-traded funds (ETFs), hedge funds,
domestic retirement funds, pension funds, and insurance products.
LSE
London Stock Exchange plc.
LSEG
London Stock Exchange Group plc.
LSEG Business Services Limited (BSL)
Our shared services company providing a range of technology and
corporate functions Group-wide.
London Stock Exchange Group plc
Annual Report 2022
248
Glossary continued
Main Market
The market for companies which have been admitted to trading on
the London Stock Exchange’s principal market.
Mergent Inc.
LSEG completed the acquisition of Mergent Inc., a provider of business
and financial data on public and private companies, in January 2017
and has been integrated within FTSE Russell.
Monte Titoli
Monte Titoli S.p.A., an Italian Central Securities Depository and
settlement provider. Monte Titoli was divested as part of the Borsa
Italiana Group in H1 2021.
MTS
MTS S.pA. was divested as part of the Borsa Italiana Group in H1 2021.
Multilateral Trading Facility (MTF)
Alternative electronic trading systems as categorised under MiFID.
Non-Executive Director (NED)
A Non-Executive Director (NED) is a member of the Board, who is not
part of the company’s executive management team.
OTC
Over-the-counter trades in financial instruments executed outside a
Regulated Market or MTF – see also Derivatives.
Paris Agreement
A legally binding international treaty on climate change, signed at
the COP21 conference in Paris in 2015
Parker Review
An independent review commissioned in 2017 to consider how to
improve the ethnic and cultural diversity of UK boards.
PrimaryBid
A technology platform which connects retail investors with listed
companies raising capital, of which LSEG is a minority owner.
Primary Market
The listing of securities for the first time via an IPO or introduction
of existing securities.
Prospectus
LSEG published a shareholder prospectus on 9 December 2020,
ahead of the Refinitiv transaction completion and readmission of the
new LSEG to trading on London Stock Exchange’s main market.
PRS
Pricing and Reference Services.
Race to Zero
A UN-led campaign to rally leadership and support from businesses,
cities, regions and investors for a healthy, resilient, zero carbon
recovery. All members are committed to achieving net zero
emissions as soon as possible, and by 2050 at the very latest.
Real-Time Data Access Control System (DACS)
LSEG system which allows customers to manage data entitlement,
usage and reporting across their enterprise.
Refinitiv
Refinitiv, a global provider of financial market data and infrastructure,
was founded in 2018. It became a subsidiary of London Stock Exchange
Group as of 29 January 2021.
Refinitiv transaction/acquisition
The all-share acquisition of Refinitiv by London Stock Exchange Group
plc, completed on 29 January 2021.
Red Flag
The Group’s provider of workflow, data, due diligence and ratings
solutions that help corporate compliance customers to evaluate
money laundering, bribery and corruption, reputational and ESG risk.
Refinitiv acquired Red Flag in October 2020 and it was included in
the acquisition of Refinitiv in January 2021.
Regulated Market
A multilateral system which brings together multiple third party
buying and selling in financial instruments in accordance with rules,
authorised under provisions of MiFID.
Relationship Agreement
The relationship agreement effective 29 January 2021 between the
Company, York Parent Limited, York Holdings II Limited, York Holdings III
Limited and BCP York Holdings (Delaware) L.P. which governs the
relationship between the parties following completion of the Refinitiv
acquisition. Further information on the Relationship Agreement can
be found at pages 65–70 of the shareholder prospectus dated 9
December 2020 and available on the LSEG website.
Repo
Repurchase Agreement – the process of borrowing money by
combining the sale and subsequent repurchase of an asset
cleared through LCH.
RNS
Regulatory News Service, the Group’s Primary Information Provider,
for dissemination of regulatory and non-regulatory news to the market.
249 London Stock Exchange Group plc
Annual Report 2022
FINANCIAL STATEMENTS
Glossary continued
Science Based Targets Initiative (SBTi)
A coalition established in 2015 between the CDP, the United Nations
Global Compact, World Resources Institute and WWF which aims
to enable companies to set emission reduction targets in line with
leading climate science.
Secondary Market
The public market on which securities once issued are traded.
SEDOL
The Group’s securities identification service.
SETS
The electronic order book operated by the London Stock Exchange
for the trading of the most liquid securities.
SSE
Sustainable Stock Exchanges. UN-led initiative to oversee the
application of the Sustainable Development Goals (SDGs), as
agreed upon by the General Assembly within the 2030 Agenda
for Sustainable Development.
Sustainable Bond Market (SBM)
A dedicated segment of London Stock Exchange for social and
sustainable bonds.
SwapAgent
LCH’s service designed to simplify the processing, margining and
settlement of non-cleared derivatives.
SwapClear
LCH’s over-the-counter interest rate swap clearing service.
The Yield Book
The Yield Book provides fixed income analytics that enables market
makers and institutional investors to perform portfolio analysis and
risk management. LSEG acquired The Yield Book in August 2017
and incorporated it within FTSE Russell.
Tick History Data
LSEG’s historical archive of real-time pricing data, covering
OTC and exchange-traded instruments from trading venues and
third-party contributors.
Turquoise
Turquoise Global Holdings Limited, the Group’s 84.2% owned
pan-European MTF equity trading subsidiary, a venture between
the Group and a number of global investment bank clients.
UnaVista
The Group’s web-based matching, reconciliation and data integration
engine that provides matching of post trade data in a simple,
automated process and the Trade Repository approved by ESMA.
Voluntary Carbon Market (VCM)
The Voluntary Carbon Market enables private investors, governments,
non-governmental organisations, and businesses to voluntarily
purchase carbon offsets to offset their emissions.
Workspace
LSEG’s data & analytics workflow solution designed to provide access
to company financial data and economic indicators as well as news,
analytics and productivity tools.
World-Check
The Group’s risk intelligence database designed to assist organisations
in meeting their KYC and third-party due diligence screening obligations.
London Stock Exchange Group plc
Annual Report 2022
250
Shareholder services
Equiniti registrars Shareview services
Shareholders who hold London Stock Exchange Group shares in
certificated form or within an Equiniti Investment Account or ISA
can access Shareview. Shareview is a free service provided by
our registrars, Equiniti. It may be accessed through the internet at:
www.shareview.co.uk.
By creating a Shareview portfolio, shareholders will gain online access
to information about their London Stock Exchange Group shares and
other investments including:
— Direct access to information held for you on the share register
including share movements
— A daily indicative valuation of all investments held in your portfolio
— A range of information and practical help for shareholders
To register at Shareview shareholders will need their shareholder
reference (which can be found on your share certificate) and they
will be asked to select their own personal identification number.
A user ID will then be posted to them.
If shareholders have any problems in registering their portfolio for
the Shareview service, contact Equiniti on 0371 384 2544. For calls
from outside the UK, contact Equiniti on +44 (0)121 415 7047.
Group’s share price service
To obtain share price information for London Stock Exchange Group plc,
see our website at: www.lseg.com.
By clicking on the Investor Relations tab, you will find the Company’s
share price, historical closing prices and volumes and an interactive
share price graph.
Substantial Shareholders
As at 14 March 2023 the Company had been informed of the following
notifiable voting rights in the issued share capital of the Company in
accordance with DTR 5 of the FCA’s Disclosure Guidance and
Transparency Rules:
— BCP York Holdings (Delaware) LP 17.9%
1
— Qatar Investment Authority 7.0%
— BlackRock (Index/BGI) 5.2%
— The Capital Group Companies, Inc. 5.0%
— Lindsell Train Limited 4.4%
— Microsoft Corporation 4.2%
In connection with LSEG’s acquisition of the Refinitiv business, Refinitiv’s
former owners, Thomson Reuters Corporation and a consortium of
certain investment funds managed by Blackstone Group Inc. collectively
hold an approximate 25% stake in LSEG via the entities York Holdings II
Limited, York Holdings III Limited and BCP York Holdings (Delaware) L.P..
Financial calendar (provisional)
— AGM – 27 April 2023
— Q1 Trading Statement (revenues only) – 27 April 2023
— Ex dividend date for final dividend – 20 Apr 2023
— Final dividend record date – 21 Apr 2023
— Final dividend payment – 24 May 2023
— Half year end – 30 June 2023
— Interim Results (for six months ended 30 June 2023) –
03 August 2023
— Q3 Trading Statement (revenues only) – 19 October 2023
— Financial year end 31 December 2023
— Preliminary Results February 2024
Please refer to our website: www.lseg.com/investor-relations and
click on the shareholder services section for up-to-date details.
For Tradeweb reporting dates please refer to their website:
investors.tradeweb.com
2023 AGM
The AGM for the year ended 31 December 2022 will be held on
27 April 2023 at Butchers’ Hall, 87 Bartholomew Close, London,
EC1A 7EB, starting at 10.30 am.
Investor Relations
1 Represents total voting rights held by BCP York Holdings (Delaware) LP, York Holdings II Limited and York Holdings III Limited.
251 London Stock Exchange Group plc
Annual Report 2022
FINANCIAL STATEMENTS
Investor Relations
London Stock Exchange Group plc
10 Paternoster Square
London
EC4M 7LS
For enquiries relating to shareholdings in London Stock
Exchange Group plc:
Shareholder helpline: +44 (0)20 7797 3322. Email: ir@lseg.com
Visit the Investor Relations section of our website for up-to-date
information including the latest share price, announcements,
financial reports and details of analysts and consensus forecasts:
www.lseg.com/investor-relations
Registered office
London Stock Exchange Group plc
10 Paternoster Square
London
EC4M 7LS
Registered company number
London Stock Exchange Group plc: 5369106
Registrar information
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
T +44 (0)371 384 2030 or +44 (0)121 415 7047
Lines open 8:30 to 17:30. Monday to Friday.
www.shareview.co.uk
Independent auditors
Ernst & Young LLP
1 More London Place
London
SE1 2AF
Principal legal adviser
Freshfields Bruckhaus Deringer LLP
65 Fleet Street
London
EC4Y 1HS
T +44 (0)20 7936 4000
Corporate brokers
Citi
33 Canada Square
Canary Wharf
London
E14 5LB
T +44 (0)20 7500 5000
www.citigroup.com
Morgan Stanley
25 Cabot Square
Canary Wharf
London
E14 4QA
T +44 (0)20 7425 8000
www.morganstanley.com
Goldman Sachs
Plumtree Court
25 Shoe Lane
London
EC4A 4AU
T +44 (0)20 7774 1000
www.goldmansachs.com
Investor Relations continued
London Stock Exchange Group plc
Annual Report 2022
AIM, London Stock Exchange,
London Stock Exchange Group,
LSE, the London Stock Exchange
Coat of Arms Device, FTSE
Russell, SEDOL, SETS and
UnaVista, are registered trade
marks of London Stock Exchange
plc. Main Market and the
Green Economy Mark are
un-registered trade mark of
London Stock Exchange plc.
Beyond Ratings is a registered
trade mark of Beyond Ratings.
CDSClear is a registered trade
mark of LCH S.A.
FTSE, FTSE Russell is a registered
trade mark of the London Stock
Exchange Group companies and
is used by FTSE International
Limited under licence.
GIACT is a registered trade
mark of Giact Systems, LLC.
LCH, SwapClear, SwapAgent,
EquityClear, ForexClear and
RepoClear are registered
trade marks of LCH Limited.
LSEG and the LSEG Coat of
Arms is a trade mark of London
Stock Exchange Group plc
MillenniumIT is a registered trade
mark of Millennium Information
Technologies Limited. Refinitiv,
the Refinitiv logo, Refinitiv
Workspace, Lipper, World-Check,
REDI, FXall, Eikon, Red Flag
Group, Scivantage and
Datastream are registered
trademarks of Financial & Risk
Organisation Limited and
Refinitiv US Organization LLC,
as applicable.
Tradeweb is a registered
trade mark of TRADEWEB
MARKETS LLC.
Turquoise is a registered
trade mark of Turquoise
Global Holdings Limited.
The Yield Book and WGBI are
registered trade marks of
The Yield Book, Inc.
252
Disclaimers
Other logos, organisations and
company names referred to
may be the trade marks of
their respective owners.
Designed and produced
by Friend
www.friendstudio.com
Board and Executive Committee
photography by Henrik
Andersen (LSEG) and Nabor
Godoy (www.godoyshots.com).
This report is printed on
Vision Superior which is
made of FSC® certified and
other controlled material.
Printed sustainably in the UK
by Pureprint, a Carbon Neutral
company with FSC® Chain of
custody and an ISO 14001-certified
environmental management
system recycling over 100%
of all dry waste.
AIM, London Stock Exchange, London Stock Exchange Group, LSE, the London Stock
Exchange Coat of Arms Device, FTSE Russell, SEDOL, SETS and UnaVista, are registered
trade marks of London Stock Exchange plc. Main Market and the Green Economy Mark are
un-registered trade mark of London Stock Exchange plc.
Beyond Ratings is a registered trade mark of Beyond Ratings.
CDSClear is a registered trade mark of LCH S.A..
FTSE, FTSE Russell is a registered trade mark of the London Stock Exchange Group
companies and is used by FTSE International Limited under licence.
GIACT is a registered trade mark of Giact Systems, LLC.
LCH, SwapClear, SwapAgent, EquityClear, ForexClear and RepoClear are registered trade
marks of LCH Limited.
LSEG and the LSEG Coat of Arms is a trade mark of London Stock Exchange Group plc
MillenniumIT is a registered trade mark of Millennium Information Technologies Limited.
Refinitiv, the Refinitiv logo, Refinitiv Workspace, Lipper, World-Check, REDI, FXall, Eikon,
Red Flag Group, Scivantage and Datastream are registered trademarks of Financial & Risk
Organisation Limited and Refinitiv US Organization LLC, as applicable.
Tradeweb is a registered trade mark of TRADEWEB MARKETS LLC
Turquoise is a registered trade mark of Turquoise Global Holdings Limited.
The Yield Book and WGBI are registered trade marks of The Yield Book, Inc.
Other logos, organisations and company names referred to may be the trade marks of their
respective owners.
Designed by Superunion, London. www.superunion.com.
Board and Executive Committee photography by Henrik Andersen (LSEG) and Nabor Godoy
(www.godoyshots.com).
This report is printed on Vision Superior which is made of FSC® certified and other
controlled material.
Printed sustainably in the UK by Pureprint, a Carbon Neutral company with FSC® Chain of
custody and an ISO 14001-certified environmental management system recycling over
100% of all dry waste.
London Stock Exchange Group plc
10 Paternoster Square
London EC4M 7LS
Telephone +44 (0)20 7797 1000
Registered in England and Wales
No. 5369106
www.lseg.com