LONDON STOCK EXCHANGE GROUP PLC ANNUAL REPORT 2022 ## Partnering with ## our customers ## at every stage of ## the trade lifecycle. 01 London Stock Exchange Group plc Annual Report 2022 WHO WE ARE LSEG is a leading global financial markets infrastructure and data provider. We play a vital social and economic role in the world's financial system. With our trusted expertise and global scale, we enable the sustainable growth and stability of our customers and their communities. OUR PURPOSE Driving financial stability, empowering economies and enabling customers to create sustainable growth. London Stock Exchange Group plc 10 Paternoster Square London EC4M 7LS Telephone: +44 (0)20 7797 1000 Registered in England and Wales No. 5369106 2022 FINANCIAL HIGHLIGHTS Total income excluding recoveries¹ £7.4bn 2021: £6.6bn² Growth in total income excluding recoveries³,⁴ +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)⁵ +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 Annual Report 2022 STRATEGIC REPORT ## Contents Strategic Report ### GLOBALLY ESSENTIAL: Sign-off for the Strategic Report is provided in the ### SUPPORTING CRITICAL WORKFLOWS WORLDWIDE Directors’ Report on page 142. ### See page 31 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 | MULTI-ASSET CLASS: | Enabling sustainable growth 50 | | --- | --- | | THE BREADTH OF OUR COVERAGE DRIVES VALUE | Our culture: building one LSEG 60 | | See page 32 | 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 ### SEAMLESSLY CONNECTED: Directors’ Report 142 ### CREATING POWERFULLY INNOVATIVE SOLUTIONS Statement of Directors’ responsibilities 147 ### See page 33 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 Further information on London Stock Exchange Group can be found at: www.lseg.com 01 London Stock Exchange Group plc Annual Report 2022 ## LSEG at a glance ### 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. ### OUR CUSTOMERS GLOBAL FOOTPRINT We are dedicated partners to our 1 Revenue by geography customers across the entire trade lifecycle, with an open model and commitment to excellence. 1 3 Customers we serve ## 45,000+ 2 Countries where we operate 1 Americas 40% 2 APAC 15% ## 190 3 EMEA 45% Customers out of the top 100 1 Total income including recoveries global banks by total assets Employees by geography ## 99% 1 Customers out of the top 100 global asset managers by total assets 2 3 ## 75% | Customers out of the | 1 Americas 12% | | --- | --- | | 50 largest corporates | 2 EMEA 32% | | by market capitalisation | 3 APAC 56% | ## 48 ### SUSTAINABLE OFFERING | OUR PEOPLE | LSEG is dedicated to enabling | | --- | --- | | Our 24,000+ strong workforce | sustainable economic growth. | | are based in 65 countries. The | Given our central role in capital | | breadth of our offering requires | markets, our global footprint and | | our people to have a diverse | presence throughout the trade | | range of specialisms, from capital | lifecycle, we are uniquely | | markets to data, technology, | positioned to play a leading | | clearing, risk and beyond. | 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. 02 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT LSEG at a glance continued L O P T I M I T A S A F O R M A N A P I M A N T A L A & L Y T A S K A G I O I T T I A I C I E N P O A T S C R M A N D D E C N N ### THE TRADE LIFECYCLE A T ### We are an integral ### partner for our customers ### across every stage of the ### trade lifecycle, in multiple ### asset classes. C T A N P I E T A Y M L D E P L O Divisions Data & Analytics Capital Markets Post Trade High-value data, analytics, indices, Venues/platforms for access to Clearing, risk management, workflow solutions and data capital through issuance and capital optimisation and management capabilities. secondary market trading for regulatory reporting solutions. equities, fixed income, and foreign exchange (FX). Financial highlights Revenue Revenue Income (excluding recoveries) ## £4,944m £1,459m £991m Data & Analytics 67% Capital Markets 20% Post Trade 13% 1 Growth ## +4.2%, and +5.3% +9.8% +7.5% when excluding the impacts of (including NTI) the Ukraine/Russia conflict 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. | | — Leading dealer-to-client | — Leading global clearing house | | --- | --- | --- | --- | | | — A leading global index | FX platform (FXall) and | with >90% global share of | | | and benchmark provider | leading global interbank | cleared interest rate swap | | | (FTSE Russell). | FX venue (Matching). | notional outstanding. | | | — Leading provider for Know | — Leading fixed income, | | | | Your Customer screening | derivatives and ETF electronic | | | | though World-Check. | trading platform (Tradeweb). | | 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. For more detail on our business model – refer to pages 36-39. 03 London Stock Exchange Group plc Annual Report 2022 ## Chair’s statement | Overview | Governance | | --- | --- | | LSEG has continued to perform | Our Group is built on a strong | | strongly, despite an uncertain | heritage and the Board seeks | | macroeconomic environment, | to operate to high governance | | and is well positioned for further | and ethical standards. Further | | growth. Total income excluding | detail is available in the Board’s | | recoveries was £7.4 billion, up | governance report from page 88. | 1 | 5.7% | on a constant currency | | | --- | --- | --- | | basis, and adjusted earnings | | In October, William Vereker joined | | per share rose by 16.7%. Cash | | the Board as a Non-Executive | | generation remained strong in | | Director bringing a strong track | | 2022. We have continued to | | record in the financial services | | actively deploy capital for select | | sector, including a number | | organic and inorganic investments | | of senior executive roles | | and began a 12-month, £750 | | at global investment banks. | | million share buyback programme. | | His international experience in | | This has been funded, in large | | developing senior relationships, | | part, from the proceeds of the | | managing risk and organisational | | divestment of the BETA business, | | change will benefit the Group as | | which completed on 1 July 2022. | | we look to further capitalise on | the trends shaping our industry. | We continue to successfully | The Board is proposing a final | | | --- | --- | --- | | | dividend of 75.3 pence per | Jacques Aigrain stepped down | | execute on our multi-year | share, representing a total | from the Board in April having | | | dividend of 107 pence per share, | served nine years as a Non- | | | a 12.6% increase. | Executive Director. LSEG has | ## integration of the Refinitiv come a long way since Jacques We continue to execute joined and I would like to thank ## business, whichis proving successfully on our multi-year him for the valuable role he has integration of the Refinitiv played in the Group’s success ## transformational for the Group. business, which is proving both as a director and as Chair transformational for the Group. of the Remuneration Committee. Don Robert We are committed to partnering I am also pleased by his ongoing Chair | with our customers globally to | association with the Group, | | --- | --- | | create valuable solutions. This | having joined the Tradeweb | | will remain a fundamental pillar | board in July 2022. | of our multi-year business strategy to accelerate our growth and I am also pleased to confirm that increase scalability. The Board LSEG continues to meet the is pleased with the delivery recommendations on gender against the stated financial targets and ethnic diversity contained announced at the time of the in both the Hampton-Alexander transaction, including the increase Review and the Parker Review. of our five-year cost synergy The Board seeks to visit one target to at least £400 million international office per year to per annum. engage with colleagues and | In December we were delighted | understand regional business | | --- | --- | | to announce a new long-term | issues. The lifting of Covid-19 | | strategic partnership with | restrictions earlier in the year | | Microsoft for the development of | enabled the Board to travel to | | next-generation data and analytics | New York in June to meet with | | and cloud infrastructure solutions. | colleagues and customers, which | | This partnership will deliver a | was wonderful after two years | | step-change in services for | of limited in-person interaction. | customers across the financial Following the conclusion of a markets value chain. A strong formal tender process for its signal of Microsoft’s commitment Group audit, LSEG announced to the partnership can also be in June that Deloitte LLP would seen in their decision to take be selected to act as its new a 4.2% equity stake in LSEG. auditor and that LSEG’s current On behalf of the Board, I’m auditor, EY, would resign as pleased to welcome Scott Guthrie, auditor of the Group following Microsoft’s Executive Vice completion of the audit for the 1 Pro-forma, constant currency growth, excluding the impact of the deferred revenue President, Cloud and AI Group accounting adjustment. 2022 growth includes the impact of lost revenue as a result of the year ending 31 December 2023. as a Non-Executive Director. Ukraine/Russia conflict. 04 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Chair’s statement continued Sustainability Summary First global exchange group to set its own Climate Transition Plan We are taking a leadership role in LSEG has delivered another year our own approach to sustainability of strong growth. We are seeing and we have set science-based the real benefits of our acquisition carbon emission reduction targets. of Refinitiv and we see significant Our ambition is to be net zero opportunities ahead for long-term ## No.1 by 2040 and we have so far sustainable growth. achieved a cumulative 62% | Total dividend for 2022 | reduction in LSEG’s Scope 1, | On behalf of the Board, I would | | --- | --- | --- | | | Scope 2 (market-based) and | like to thank all colleagues | | | Scope 3 fuel and energy-related | for their dedication and | | | GHG emissions since 2019. It is | professionalism throughout the | | | important that we lead by example | year. I look forward to working | | | and LSEG became the first global | with the Board and the Executive | ## 107p exchange group to publish its own Committee to execute against our Climate Transition Plan, which strategic objectives and to build ## 2021: 95.0p | | received the backing of 99% of | on our new strategic partnership | | --- | --- | --- | | | our shareholders in April 2022. | with Microsoft. | | Growth in total dividend | We support the evolution and | | Don Robert adoption of best practice Chair guidance for Climate Transition 14 March 2023 Plans and will review and refine our Plan over time. ## 12.6% LSEG has the right combination ## 2021: 27% of capabilities and assets that position us as a key partner to help our customers navigate trends across the financial markets ## We are committed to value chain. We are seeing growing demand for sustainable ## working in partnership with finance investment data and analytical tools, and we are ## our customers globally to embedding these services throughout our business. ## create valuablesolutions. LSEG has a massive ESG data set which covers over 600 metrics for over 15,000 companies, going back more than 20 years. More details can be found This content helps our customers on pages 50-59 and in our separate Sustainability Report identify and target sustainable www.lseg.com/investor-relations/ investment opportunities which sustainability 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. 05 London Stock Exchange Group plc Annual Report 2022 ## Chief Executive ## Officer’s statement | Introduction | Simply put, our strategy is | | --- | --- | | 2022 has been another turbulent | working. We are delivering against | | year in the markets. Countries | our three strategic objectives – | | around the world are facing | integrating our business; | | uncertainty in the macro | driving growth; and building an | | environment, such as increased | efficient and scalable platform. | | inflation, rising interest rates | We continue to deliver on or | | and recession risks, as well as | exceed all our financial targets | | geopolitical turmoil including | and we are making excellent | | the war in Ukraine. | progress in realising the benefits | of the Refinitiv integration. Like many global organisations, | | LSEG has worked to address | We supply business critical | | --- | --- | --- | | | these challenges over the past | solutions globally, to customers | | | year. However, with highly | that include almost every top | | | diversified capabilities across | global bank and the vast majority | | | the trade lifecycle, resilience is | of the world’s top asset managers. | | | built into our business model. | We have strong leadership | | | Many of our product offerings sit | positions in the products and | | | deep within customer workflows | services we offer across the | | | and we provide the valuable data | financial markets value chain. | | Many of our product | and services needed to help them | And we are making it easier for | | | navigate uncertainty. As a result, | our customers to work with us | | offerings sit deep within | LSEG is well positioned in the | across different parts of our | | | current climate. | business. For example, we have | | customer workflows and | | simplified our offering in Data & | | | How did LSEG perform in 2022? | Analytics, distilling more than | | | In 2022, we delivered a strong | 240 individual products down | ## we provide the valuable data financial performance with into nine customer solutions continued revenue growth across centred on core industry themes. ## and services needed to help our businesses. For example, Capital Markets saw a 9.8% We also worked with customers ## them navigate uncertainty. As a rise in revenue, primarily driven to develop a valuable, new by the continued strong solution for important bank capital ## result, LSEG is well-positioned performance of Tradeweb. rules, known as the Fundamental Review of the Trading Book | in the current climate. | In our Post Trade Division, record | (FRTB), which will be implemented | | --- | --- | --- | | | volumes in interest rate swaps | over the next two years. These | | David Schwimmer | and further growth in RepoClear | rules create challenges for banks | | Chief Executive Officer | resulted in a 7.5% increase. And | looking to manage their capital | | | in Data & Analytics, the work we | efficiently. To oversimplify, | | | have taken to get closer to our | with better quality data on the | | | customers is driving significantly | positions in their trading books, | | | better retention as a result of | banks will have to hold less | | | improved execution, strong | capital against these positions. | | | demand for our products and | We are able to offer the most | | | new sales. We have also seen | comprehensive range of data | | | continued acceleration in our | including from Tradeweb, | | | Annual Subscription Value growth | Yield Book and SwapClear | | | – up from 4.6% at the end of 2021 | and it is a key differentiator | | | to 6.2% at year end, excluding the | for our customers. | 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. 06 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Chief Executive Officer’s statement continued Our strong cash generation At a high level, our plans comprise enables us to continue to four main elements: ## Our new long-term make significant but targeted — The migration of our data investments. In the medium to platform to Microsoft Azure, ## strategic partnership with long term, these investments allowing much greater flexibility, will deliver a more scalable and usability and scalability than ## Microsoft is a win-win-win: efficient business and enhance we have today. our customer offering. In 2022, — An enhanced version of LSEG ## a win for our customers, we completed the acquisitions of Workspace with seamless GDC, MayStreet and TORA within Teams communication and ## a win for Microsoft and | our D&A division and Quantile in | Microsoft 365 interoperability, | | | --- | --- | --- | | our Post Trade division. We also | including built-in compliance | | | announced the acquisition of | features for the first time. | a win for LSEG. | | Acadia, subject to regulatory | — The development of new | | | approvals. By combining these | analytics tools, combining | | | additional capabilities with | the best of our data and | | | our connectivity into, and | analytics with Microsoft AI | | | relationships with, market | and collaboration tools. | | | participants all over the world, | — A 10-year cloud deal | | | we will create substantial value | underpinning all our | | 1 for our customers. work together. Growth in total income excluding recoveries And we see plenty more We’ve also agreed to explore the opportunity ahead. development of digital market infrastructure based on cloud Can you provide more detail technology, with a goal to ## 5.7% on your strategic partnership transform how market participants with Microsoft? interact with capital markets. ## 2021: 6.1% Our new long-term strategic 1 Pro-forma, constant currency growth, excluding the impact of the deferred revenue partnership with Microsoft is What are the strategic accounting adjustment. 2022 growth includes the impact of lost revenue as a result a win-win-win: a win for our opportunities and challenges of the Ukraine/Russia conflict. customers, a win for Microsoft in the data economy? Growth in adjusted earnings per share and a win for LSEG. As digital technology becomes more integral to all sectors of the | It is a transformative partnership | economy, data is becoming | | | --- | --- | --- | | for LSEG and will significantly | increasingly important as the | | | accelerate our strategy to be the | foundation of digital trade. | | | leading global financial markets | OECD research estimates that | 16.7% | | infrastructure and data provider. | rapidly growing cross-border | | | We’re bringing together LSEG’s | data transfers already contribute | 2021: 71.9% | | leading data sets, analytics and | $2.8 trillion to the global economy, | | | global customer base with | and further estimates show that | | | Microsoft’s trusted cloud services | global data flows are expected | | For more information on our purpose | and global reach to transform | to grow to $11 trillion by 2025 – | and strategy and business model, | | --- | --- | --- | | workflow and the user experience | greater than the value of the | see pages 30 to 36. | | for our customers across the | world’s total trade in goods. | | financial markets value chain. LSEG is at the heart of this As always, we will retain our open global paradigm shift towards approach, making it even easier a data economy. There is growing for users to access our data demand for data to inform and combine it with their own, decision-making and fuel driving multiple possibilities for innovation. This will also new products and creating support efforts to address issues meaningful revenue growth such as climate change and opportunities for both LSEG financial crime. and Microsoft over time. 07 London Stock Exchange Group plc Annual Report 2022 Chief Executive Officer’s statement continued ### Unlocking the value of data flows This year we will continue to EXECUTIVE MANAGEMENT TEAM in the digital economy can drive build on the good progress we’ve ### Day-to-day management of the Group is led sustainable growth, empower made rolling out Workspace, ### businesses and communities, giving customers a more flexible by the CEO David Schwimmer, supported and facilitate solutions to and intuitive user experience. ### by the Executive Committee. society’s greatest challenges. We’ll also be launching our replatformed FX venues, | While the data ecosystem that | providing our customers with | | | | --- | --- | --- | --- | | | | The team meets regularly | Changes to the | | underpins the digital economy is | greater performance and | | | | | | to review a wide range of | Executive Committee | | inherently global, a fragmentation | functionality, and supporting | | | | | | business matters, including | Andrea Remyn Stone | | in policy – whether that’s data | product innovation. Furthermore, | | | | | | financial performance, investment | (Group Head, Data & Analytics) | | localisation requirements, national | the modernisation of our network | | | | | | and projects, corporate | left the Executive Committee | | data centre mandates, or | infrastructure will deliver a more | | | | | | culture, development and | in June 2022. | | restrictions on the flow of data – | resilient experience for our | | | implementation of strategy, will slow down growth. It also risks customers in 2023, as well as Tim Jones (Chief People Officer) and setting and monitoring undermining both business and further efficiencies for the Group. left the Executive Committee of performance targets. | broader society being able | | | in January 2023 and was replaced | | --- | --- | --- | --- | | to harness the benefits of | 2023 will also be an important | Profiles of the Executive team | by Erica Bourne. | | international data transfers. | year in LSEG’s transformation as | are provided as at January 2023. | | | | we develop numerous capabilities | For further information on | | | Policymakers have an essential | through our strategic partnership | | | David Schwimmer and role in unlocking this potential with Microsoft. As ever, we will Anna Manz, who are also and we are working with other continue to put our customers members of the Board of companies and governments to first, and I look forward to Directors, see our Board advocate for better agreement developing the new products of Directors overview around the free flow of data. and services that will bring them on pages 90 to 93. stronger capabilities and allow We encourage governments and them to succeed in a changing regulators to contribute to this and uncertain landscape. agenda: pursuing digital economic cooperation and promoting Our people and culture are central international data transfers as a to our success. We have made strategic priority. Agreements significant progress in embedding with provisions to ensure the an inclusive culture that values free flow of trusted data and to a range of perspectives and assure standards for personal embraces diversity of every kind. data protection will demonstrate Over the year, we have also the benefits of an open, global supported colleagues facing digital economy and encourage challenging circumstances, such other jurisdictions to adopt a as in Ukraine and Sri Lanka and similar way forward. our teams continue to show remarkable resilience. On behalf What are your priorities of the Executive Committee, for 2023? I would like to thank all our My focus is to ensure LSEG people for their hard work and continues to deliver against our commitment in delivering another strategic objectives, reinforcing year of strong growth for LSEG. our position as a global markets | infrastructure and data provider. | David Schwimmer | | --- | --- | | Following the acquisition of | Chief Executive Officer | | Refinitiv, we are shifting from a | 14 March 2023 | 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. 08 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Chief Executive Officer’s statement continued | Top to bottom | Top to bottom | Top to bottom | Top to bottom | | --- | --- | --- | --- | | David Schwimmer | Daniel Maguire | Catherine Johnson | David Shalders | | Chief Executive Officer | Group Head, Post Trade | General Counsel | Chief Operating Officer | | Joined LSEG in 2018 | & CEO, LCH Group | Joined LSEG in 1996 | and Head of Integration | | | Joined LCH in 2008 | | Joined LSEG in 2019 | | Anna Manz | | Manages an international team | | | Chief Financial Officer | Held a variety of senior roles | of lawyers and compliance | 30 years’ experience in | | Joined LSEG in 2020 | across LCH and LSEG, | professionals, advising the Board | integration, technology and | | | with experience in risk and | and senior executives on key | operations in the financial services | | Balbir Bakhshi | default management, | legal and compliance issues and | sector. Was previously Group | | Chief Risk Officer | product management | strategic initiatives. She is also | Operations and Technology | | Joined LSEG in 2021 | and regulatory strategy. | Chair of FTSE International | Director at Willis Towers Watson, | | | | Limited. Catherine qualified as a | having led the integration | | Brings a deep commercial | Anthony McCarthy | | | | | | lawyer at Herbert Smith in 1993. | of Willis and Towers Watson, | | understanding and knowledge of | Chief Information Officer | | | and spent 19 years at RBS in a risk management. Was previously Joined LSEG in 2017 Erica Bourne number of senior operations Group Head of Non-Financial Risk Chief People Officer and technology roles. | Management at Deutsche Bank | Previously held various senior | Joined LSEG in January 2023 | | | --- | --- | --- | --- | | and served on the Supervisory | positions at Deutsche Bank, | | Brigitte Trafford | | Board of Deutsche Bank | including Managing Director in | Leads the global People function, | Chief Corporate Affairs | | Luxembourg S.A. as Chair | IT and Group CIO, and CIO for | responsible for attracting, | and Marketing Officer | | of its Risk Committee. | Investment Banking Technology. | developing and retaining talent | Joined LSEG in 2020 | for the Group’s global business. | Murray Roos | Erica previously led the People | Leads the Group’s | | --- | --- | --- | | Group Head, Capital Markets | function at Burberry Group, prior | communications, government | | Joined LSEG in 2020 | to which she held a number of | relations, regulatory strategy, | | | leadership and executive roles | sustainability and marketing | Joined from Citigroup, where across technology, consulting functions. 25 years’ corporate he was Global Co-Head of and financial services. affairs experience at Virgin Equities and Securities Services. Media, Lloyds Banking Group, Previously spent a decade at ICAP, Dow Jones and ITV plc. Deutsche Bank, holding various senior roles. 09 London Stock Exchange Group plc Annual Report 2022 ## A compelling ## investment story ### BUSINESS-CRITICAL SERVICES ### WITH STRONG COMPETITIVE POSITIONS 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. ### EXPOSED TO MULTIPLE ### GROWTH DRIVERS 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. ### DIFFERENTIATED CUSTOMER ### PROPOSITION 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. 10 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT A compelling investment story continued ### ATTRACTIVE ALL-WEATHER ### ECONOMIC MODEL 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% ### 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. ### STRONG LONG-TERM ### FINANCIAL RECORD Over the last 20 years | | 1 | | 1 | | --- | --- | --- | --- | | AEPS CAGR | | Total shareholder return CAGR | | | +14.6% | | +20.2% | | 1 Dividend CAGR ## +17.4% 1 Compound Annual Growth Rate. 11 London Stock Exchange Group plc Annual Report 2022 ## Key performance ## indicators ### 2022 FINANCIAL KPIS ## Total income Annualised 1 ## We are focused on delivering growth Subscription 2 ## Value growth ## consistently strong financial Definition Definition ## performance and achieving Income growth, independent A point in time measure of of FX movements. our recurring book of contracts ## the targets we have set. vs 12 months ago. Why this is important for LSEG Why this is important for LSEG ## These core financial KPIs Income growth is a key measure As a group, >70% of our revenues of our success since we operate are now high quality subscription- ## demonstrate the value our | | in growing markets and aim to | based revenues with a good | | --- | --- | --- | | | hold or grow market share. We | degree of visibility. Through | | combined group is delivering | guided to a 5-7% CAGR for total | ASV, we can measure the | | | income (excluding recoveries) | year-over-year growth of that | | for both our customers and | over the period 2020 to 2023. | recurring book of business at any | given point in time. ASV should | shareholders and they show | In order to give the best indication | act as a leading indicator for | | --- | --- | --- | | | of underlying performance here, | subscription revenue growth and | | that our strategy is working. | we have removed the impact of | has three key drivers: retention, | | | lost revenue in 2022 due to the | new sales and price increases. | Ukraine/Russia conflict. 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 | Analysis | Analysis | | --- | --- | --- | | assessment can be found in our Directors’ | On a constant currency basis, | We’ve delivered consistent | | Remuneration Report on pages 113 to 141. | we delivered total income | acceleration in our ASV over the | | | (excluding recoveries) growth | past two years. Our year-end ASV | 1 of 6.6% in 2022. (excluding U/R) of 6.2% represents a 320bps increase vs the ASV at | We delivered strong income | the end of Q1 2021. In that time | | --- | --- | | growth in 2022. We’ve made | we have kept our annual price | | successful progress on the | increase consistent, so we’ve | | integration of Refinitiv, improving | driven the acceleration through | | execution and performance. We | better retention and sales. | saw record volumes at SwapClear, supported by market volatility and Increasingly, we are now a critical we continue to position ourselves strategic partner to our customers. in structurally growing markets to By establishing a clearer view of benefit from trends such as the their workflows, we have utilised electronification of fixed income the breadth of our combined trading through Tradeweb. offering to embed wider-reaching, more tailored solutions that enhance the benefit we can offer. | | | 1 | | 2 | | | --- | --- | --- | --- | --- | --- | | Total income growth excl. U/R | | | ASV growth excl. U/R | | | | +6.6% | | | +6.2% | | | | 2021: +6.1% | | | 2021: +4.6% | | | | 2022 | | 6.6% | 2022 | | 6.2% | | 2021 | 6.1% | | 2021 | 4.6% | | Link to strategic objectives Link to strategic objectives Total income growth aligns to our ASV growth indicates the Growth objective, to accelerate progress we are making in 1 Pro-forma constant currency growth, excluding recoveries and the impact of Ukraine/Russia growth within and across growing our subscription and the deferred revenue accounting adjustment. 2 Excluding the impact of the Ukraine/Russia conflict. divisions. In 2022, we exceeded revenues. This therefore aligns 3 For more information on the criteria that constitute non-underlying items, see page 107. our target for this GSO. to our Growth objective. 12 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Key performance indicators continued ## Adjusted EBITDA Adjusted earnings Runrate revenue Runrate cost ## margin per share synergies synergies Definition Definition Definition Definition 3 Underlying EBITDA as a Earnings per share, Annual incremental revenue Annual incremental cost savings proportion of total income adjusted to remove any delivered as a result of synergies delivered as a result of synergies 3 | (excluding recoveries). | non-underlying items. | from the Refinitiv integration. | from the Refinitiv integration. | | --- | --- | --- | --- | | Why this is important for LSEG | Why this is important for LSEG | Why this is important for LSEG | Why this is important for LSEG | | We’re focused on building a more | A key financial metric that is | As a seamlessly connected | By successfully delivering against | | efficient, more scalable business | both central to our valuation | financial markets data and | our cost synergy programme, | | and increasing our EBITDA margin | and a significant element of | infrastructure provider, we are | we are able to demonstrate | | is evidence of our progress. | employees’ performance-related | able to build highly innovative | that the integration of Refinitiv | | We remain committed to our | remuneration. Growth in our | solutions for our customers, | has helped us build a more | | target of delivering a 50% | AEPS reflects our degree of | delivering incremental revenue for | streamlined and efficient LSEG. | | underlying EBITDA margin on | success in driving a strong top line | the Group. Our delivery of these | In 2022, we increased our target | | an exit rate basis by the end of | performance, as well as managing | synergies helps demonstrate the | from £350 million to at least | | 2023. Including the impact of | costs including tax and interest, | value we’re creating from the | £400 million of runrate cost | | M&A and the strategic partnership | and capital allocation. | acquisition of Refinitiv. In March | synergies by the end of 2025. | | with Microsoft, we expect to | | 2023, we raised our target from | | | report an EBITDA margin of | | £225 million to £350-400 million | | | around 48% in 2023. | | 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 | | Analysis | | | Analysis | | | Analysis | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Our adjusted EBITDA margin of | | Our adjusted earnings per share | | | By the end of 2022, we had | | | We had delivered £297 million | | | | 47.8% in 2022 is flat year-over- | | is a key indicator of whether we | | | delivered runrate revenue | | | of runrate cost synergies by the | | | | year but represents underlying | | are adding value for shareholders | | | synergies of £68 million, | | | end of 2022, exceeding our initial | | | | expansion of 110bps. In 2022, | | and we delivered 16.7% growth | | | exceeding our target range | | | target for the year of £220 million. | | | | this was primarily offset by lost | | in 2022. This growth in our AEPS | | | for the year of £40-60 million. | | | | | | | revenue due to the Ukraine/ | | primarily reflects our success in | | | | | | We are delivering these cost | | | | Russia conflict (-50bps) and | | both accelerating income growth | | | We are delivering our revenue | | | savings by consolidating our | | | | M&A (-30bps). | | and effectively managing our | | | synergies in three categories. | | | property footprint, closing data | | | | | | expenses in the year. | | | We’re cross-selling Refinitiv | | | centres, renegotiating agreements | | | | By modernising our technology | | | | | data products to new customer | | | with strategic suppliers and | | | | infrastructure, we are building a | | Higher depreciation and | | | segments, such as the underlying | | | deduplicating roles where | | | | more agile and efficient business | | amortisation – arising from | | | pricing data behind FTSE Russell | | | appropriate. As of the end of | | | | for the long term. We also showed | | investments to achieve synergies | | | indices. We’re enhancing existing | | | 2022, our property consolidation | | | | disciplined cost management in | | and drive future growth – was | | | products, for example by giving | | | and data centre decommissioning | | | | 2022 at a time of extraordinary | | offset by lower net finance | | | Workspace customers access to | | | programmes were >90% complete | | | | global inflation. We are optimising | | expense, and there was a small | | | Yield Book fixed income analytics. | | | and >85% complete respectively. | | | | processes and utilising our global | | decrease in the ordinary shares | | | And we’re building new products. | | | The cost to achieve these | | | | footprint to leverage talent in | | outstanding due to the ongoing | | | In 2022 we launched 70 new | | | synergies is in line with our | | | | lower-cost locations. | | share buyback programme. | | | synergy-related products. | | | initial plan. | | | | Adjusted EBITDA margin | | Adjusted earnings per share | | | Runrate revenue synergies | | | Runrate cost synergies | | | | 47.8% | | 317.8p | | | £68m | | | £297m | | | | 2021: 47.8% | | 2021: 272.4p | | | 2021: £15m | | | 2021: £151m | | | | 2022 | 47.8% | 2022 | | 317.8p | 2022 | | £68m | 2022 | | £297m | | 2021 | 47.8% | 2021 | 272.4p | | 2021 | £15m | | 2021 | £151m | | | Link to strategic objectives | Link to strategic objectives | Link to strategic objectives | Link to strategic objectives | | --- | --- | --- | --- | | Expansion of our EBITDA margin | Earnings per share growth | Revenue synergies contribute to | Cost synergies help us to manage | | aligns to both our Growth and | aligns to both our Growth and | income growth, so achievement | our expenses, so achievement | | Efficiency objectives. In 2022, | Efficiency strategic objectives. | against this KPI aligns to our | against this KPI aligns to our | | we exceeded our target for both | | Growth objective. | Efficiency objective. | of these GSOs. 13 London Stock Exchange Group plc Annual Report 2022 Key performance indicators continued ### 2022 NON-FINANCIAL KPIS ## Engagement index Gender diversity ## At LSEG, we’re committed to in leadership ## creating an environment where Definition Definition ## diverse talent can thrive, and to Our engagement index reflects The proportion of female employee satisfaction and the representation in senior ## driving the growth of a green likelihood that our staff would leadership roles. recommend LSEG as a great ## and sustainable economy. place to work. Why this is important for LSEG Why this is important for LSEG ## These five core non-financial | | We recognise the importance of | We strongly believe in promoting | | --- | --- | --- | | | establishing a diverse, inclusive | diverse gender representation | | KPIs measure our progress, | workplace where opinions can | across our organisation. In | | | be openly shared, contributions | December, we were delighted | | but also highlight the areas | recognised and individual and | to achieve our goal of ensuring | | | team achievements celebrated. | 40% of senior leadership roles | | where we can still improve. | | were filled by women by the | end of 2022 and we have created a number of policies and programmes to ensure we These KPIs align to our Group Strategic continue to build on this progress. Objectives (GSOs) which help determine More information on page 61. 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. | Analysis | Analysis | | --- | --- | --- | | | Our second Group-wide | In 2022, we were proud to deliver | | | engagement survey indicated that | a 7% year-over-year increase | | | overall engagement levels had | in the proportion of senior | | | improved to 75%, with sentiment | leadership roles filled by women. | increasing for both satisfaction and advocacy. 86% of colleagues We have now expanded the completed the survey. scope of our gender goals to the next level of leadership, | Achieving this level of | committing to the ambition that | | --- | --- | | engagement at a time when | 40% of Group Director roles | | many of our people are having | will be held by women by the | | to transition to new ways of | end of 2027. This represents our | | working indicates that we are | continued commitment to building | | making great progress on our | diverse pipelines of talent across | | cultural transformation journey. | the organisation. | | LSEG Engage engagement index | | Female rep at senior leadership | | | | --- | --- | --- | --- | --- | | 75% | | 40% | | | | 2021: 73% | | 2021: 33% | | | | 2022 | 75% | 2022 | | 40% | | 2021 | 73% | 2021 | 33% | | | Link to strategic objectives | Link to strategic objectives | | --- | --- | | The employee engagement | Ensuring the diversity of our | | index aligns to our Culture | people aligns to our Culture | | objective: to foster a diverse, | objective: to foster a diverse, | | inclusive culture and to connect | inclusive culture and to | | to create opportunity and deliver | connect to create opportunity | | excellence. In 2022, we exceeded | and deliver excellence. | our target for this GSO. 14 14 London Stock Exchange Group plc London Stock Exchange Group plc Annual Report 2022 Annual Report 2022 STRATEGIC REPORT Key performance indicators continued ## Ethnic diversity Sustainable issuers Carbon emissions ## in leadership | Definition | Definition | Definition | | --- | --- | --- | | The proportion of ethnically | The total number of issuers | The change in the amount of | | diverse representation in | across the Green Economy Mark, | carbon emissions we produce as | | senior leadership roles. | the Sustainable Bond Market | a direct result of group activities, | | | and the Voluntary Carbon Market. | relative to our 2019 baseline. | | Why this is important for LSEG | Why this is important for LSEG | Why this is important for LSEG | | --- | --- | --- | | We are committed to building a | Stimulating the green economy is | We are a member of the | | richly diverse team of leaders, | central to our purpose. We can | United Nations Climate Change | | recognising exceptional talent | measure the progress we are | ‘Race to Zero’ and we have set | | from a wide range of different | making here by tracking the | science-based targets to reduce | | backgrounds. We have pledged | overall level of issuer engagement | our carbon emissions with an | | that 20% of our senior leadership | in sustainable finance across the | ambition of reaching net zero | | roles will be filled by those from | London Stock Exchange. Our goal | by 2040. We aim to halve our | | underrepresented ethnic groups | is to grow the number of issuers | operational emissions by 2030 | | by the end of 2023, rising to 25% | year-over-year. | from a 2019 baseline. | 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 | Analysis | Analysis | | --- | --- | --- | | We remain committed to ensuring | The total number of issuers was | This metric tracks the change in | | we have diverse representation at | flat year-over-year, but well ahead | our carbon emissions (scope 1, | | senior leadership, acknowledging | of the 2020 figure. During 2022, | scope 2 (market based) and | | that there is more we need to do | we aligned the AIM and Main | selected scope 3 (fuel and | | in this area. In 2022, we expanded | Market eligibility requirements | energy-related activities (FERA)) | | our ethnicity targets to Group | for the Green Economy Mark, | vs a 2019 baseline. Like many | | Director level, committing that | which meant fewer AIM | companies, we saw a steep | | 25% of these roles will be held | companies were eligible for | reduction in our carbon emissions | | by those from underrepresented | inclusion than previously. | in 2020 and 2021, driven in large | | ethnic groups by the end of | Excluding this adjustment, there | part by lockdowns and travel | | 2027. We also piloted initiatives | was good underlying growth. | restrictions implemented as a | | including ‘Illuminate’, designed to | We launched the Voluntary | result of the Covid-19 pandemic. | | support Black and Latinx future | Carbon Market, attracting our | As we emerge from the pandemic | | leaders at critical milestones in | first issuer, and the number of | and as the Group continues to | | their career. | Sustainable Bond Market issuers | grow, we will stay focused on | | | showed continued growth. | achieving our long-term goals. | 1 | Minority rep at senior leadership | | Number of sustainable issuers | | Reduction of scope 1, 2, 3 (FERA) | | | | --- | --- | --- | --- | --- | --- | --- | | 15% | | 217 | | -62% | | | | 2021: 16% | | 2021: 217 | | 2021:-77% | | | | 2022 | 15% | 2022 | 217 | 2022 | -62% | | | 2021 | 16% | 2021 | 217 | 2021 | | -77% | | Link to strategic objectives | Link to strategic objectives | Link to strategic objectives | | --- | --- | --- | | Ensuring the diversity of our | This KPI aligns to our Sustainability | The reduction of our carbon | | people aligns to our Culture | objective: to establish LSEG as a | emissions aligns to our | | objective: to foster a diverse, | strategic enabler of sustainable | Sustainability objective: to | | inclusive culture and to | economic growth. We met our | establish LSEG as a strategic | | connect to create opportunity | target for this GSO in 2022. | enabler of sustainable economic | | and deliver excellence. | | growth. We met our target for | this GSO in 2022. 1 Reduction of scope 1, scope 2 (market based) and scope 3 (FERA) emissions vs a 2019 baseline. 15 London Stock Exchange Group plc Annual Report 2022 ## Data & Analytics Revenue split 5 4 1 3 2 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% we have delivered a significant Recurring revenue ### Data & Analytics has delivered a strong improvement in product retention, particularly within Trading. ### and broad-based performance in 2022. ## 97% ### In particular, we have now achieved four Enterprise Data Solutions Transactional revenue Serving the entire spectrum ### consecutive quarters of underlying growth of data needs across asset ## in our Trading & Banking business, following 3% classes, latencies and delivery mechanisms including real-time ### a number of years of decline. Across Data & In July 2022, David Schwimmer data and news, reference and ### Analytics, we’re continuing to invest in our took the role of Interim Head, legal entity data. Data & Analytics (D&A) with Phil ### capabilities to enhance our offering and Cotter taking the position of Structural market trends ### we’re really excited about the momentum Interim Head of Product Solutions driving growth: for D&A. The process to appoint — Regulation ### we’re building. a new permanent Head of D&A — Increasing reliance on is ongoing and we expect to technology and data David Schwimmer confirm this appointment in 2023. — Automation Group CEO, Interim Group Head, Data & Analytics Ron Lefferts continues to lead the — High speed trading & Sales & Account Management regression analysis function across the Group. — Algorithmic trading ### OUR PART IN THE TRADE LIFECYCLE | | | | | | | | | | | | | | | The division is split into five | Performance: | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | L O | P T I | M I S | | | | | | | | | | | | | | I T | A | | A | T | areas, each addressing different | +6.1% driven by strong demand for | | | A L | F O R | M A | | | & A | N A | L Y | P | K M | A N | A G | I O | | | | | I T | | T | I O | T A | | | T I C | C A R | I S | | E | M N | | | | A P | | | | N | A | | | S | D | | | | E | | | | C | | | | | D | | | | N | | | | N | customer needs. | the quality and depth of our data | | | | | | | | | | | A | | | | T | | | and our market-leading real-time Trading & Banking data distribution, with retention at Providing data, analytics and record highs. Growth in Enterprise workflow solutions across trading Data is supported by the ongoing and investment banking lifecycles, trend toward machine-readable including content and pricing, data to drive analytics and support C A T productivity tools, trade execution, decision-making. P E N I T A Y M L D E P L O and post-trade management. Investment Solutions ### We provide customers with a broad range Structural market trends Delivering a range of benchmarks, driving growth: analytics and data solutions, that ### of high-value data and analytics services, — Electronification and serve customers in all stages ### including investment solutions and indices, workflow automation of the investment process, ### trading workflow, wealth advisory and — Increasing reliance on data, supporting consistency and analytics and technology accuracy in investment strategy ### investment banking solutions and risk and asset allocation decisions. Performance: ### intelligence capabilities. The quality, depth +0.2% (2.3% excluding the impact Structural market trends ### and integrity of our data gives our customers of the Ukraine/Russia conflict) driving growth: ### the confidence to make critical decisions, with delivery of four consecutive — Sustainability & ESG investing quarters of underlying growth this — Growth in passive investing ### create leading investment and trading year. By partnering more closely — Growing sophistication in ### products, and drive automation and with our customers and improving fixed income indexing execution in a number of areas, — Multi-factor investing ### efficiencies across their operations. 16 16 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT 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. 17 London Stock Exchange Group plc London Stock Exchange Group plc Annual Report 2022 Annual Report 2022 Data & Analytics continued ### HIGHLIGHTS ASV growth acceleration Acquisitions in Data & Analytics Annualised Subscription Value In the year, we closed three (ASV) is our forward-looking KPI transactions within Data & which shows the year-on-year Analytics, enhancing our offering growth in the annualised value of and adding capability: subscription contracts. This has | shown notable acceleration since | TORA | | --- | --- | | our acquisition of Refinitiv, up 320 | A leading cloud-based technology | | basis points (excluding the impact | provider of multi-asset class | | of the Ukraine/Russia conflict) | order & execution management | | since Q1 2021. Year-on-year | solutions across global markets. | | growth in this metric is driven | The addition of TORA gives us | | by three factors: 1) new sales, | critical point-of-trade presence | | 2) product retention and | with buy-side customers, allowing | | 3) annual price reviews. | us to increase traction with this | key market segment. Since the Refinitiv acquisition | through to 2022, we have kept | MayStreet | | --- | --- | | the magnitude of our price | A high-quality low latency | | reviews relatively consistent. | technology and market data | | The acceleration in ASV we | provider. This acquisition | | have seen is coming from a | broadens and complements our | | combination of new sales and | real-time feeds and historical | | stronger customer retention | market data value proposition, | | through a focus on solution | particularly for front office | | selling and a vastly improved | customers, who use these | | understanding of how we can add | solutions to support research | | value to our customers’ workflows. | and strategy development | and to power electronic Workspace trading applications. We’ve made great progress | on the multi-year rollout of | Global Data Consortium (GDC) | | --- | --- | | Workspace, our next-generation | A global provider of identity | | data, analytics and workflow | verification data to support | | delivery solution, with over 50% | clients with Know Your Customer | | of the rollout complete and all | (KYC) requirements. This addition | | variants now live or in beta testing. | to our Customer & Third-Party | | Workspace has been built with | Risk Solutions business builds | | our customer groups in mind, with | strategic capability aligned to our | | variants aimed at our Trading & | vision of becoming a market- | | Banking, Wealth and Investment | leading global Digital Identity | | Solutions customers. | and Fraud solutions provider. | | Workspace allows customers to | In the year, we divested our | | interact with our content and tools | BETA, Maxit and Digital Investor | | in a flexible and open way, with | businesses. These businesses | | lighter processing requirements | provide back-office processing | | than the predecessor platform, | solutions to the wealth | | Eikon. Workspace is delivered | management industry. The | | across desktop, web, and mobile | divestment allowed for a more | | environments, and has been | streamlined Wealth business | | designed to provide a | focused on high growth areas | | customisable and intelligent | and our core capabilities. Upon | | user experience. In addition, | divestment, we announced a | | Workspace offers an integrated | long-term strategic partnership | | Python scripting environment for | with the acquirers for the provision | | developers to build their own | of data, content and tools. | analytics and tools within our environment. The Workspace rollout to date has seen positive customer feedback and improved customer engagement scores. 18 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Data & Analytics continued ### HIGHLIGHTS CONTINUED | Our strategic partnership | LSEG Workspace to use | Cloud infrastructure built | | --- | --- | --- | | with Microsoft | Teams and Microsoft 365 to | on Microsoft Azure | | In December, we announced a | transform user experience | We have entered into a 10-year | | new long-term strategic | for finance professionals | commercial agreement with | | partnership with Microsoft to | Alongside Microsoft, we plan a | Microsoft to migrate our | | architect our data infrastructure | step-change in the advancement | data platform and other key | | using the Microsoft Cloud, and to | of Workspace. Together with | technology infrastructure into | | jointly develop new products and | Microsoft, we will create an | the Microsoft Cloud. | | services in the data and analytics | all-in-one data, analytics, | | | space. The partnership will build | workflow, and collaboration | This infrastructure plan will be | | on the good progress we have | solution, specifically designed to | the foundation for all product | | made on the integration of | help finance and investment | development programmes and | | Refinitiv and enhance our position | professionals improve | enable us to build and run | | as a world-leading financial | communications and productivity | scalable applications to achieve | | markets infrastructure and | while maintaining regulatory | faster speed to market and | | data provider. | compliance. It will be a connected, | greater customer reach. At the | | | intuitive experience with a single, | same time, it will allow us to align | | The deal significantly advances | simple-to-use interface that | costs more directly to revenue | | our strategy of building an | helps users: | streams, reduce operational | | efficient and scalable platform | — For the first time, collaborate | complexity through the | | for Data & Analytics to deliver | with other LSEG customers | consolidation of multiple legacy | | next-generation services for a | inside and outside of their | technologies, and further | | range of customers across the | organisations, using Teams to | strengthen resilience and security. | | financial markets value chain | connect, chat, call, and meet | | | through improved workflow | | Microsoft investment | with built-in compliance, and greater flexibility. and Board representation security, and privacy. Microsoft have purchased — Create financial models, Data platform in the cloud a 4.2% equity stake in LSEG, run data analysis, and design Working with Microsoft’s Azure, underscoring its commitment to graphs using LSEG content we will accelerate our cloud the strategic partnership. Scott delivered in Excel. migration strategy, creating Guthrie, Microsoft’s Executive — Work seamlessly between cloud-based data architecture that Vice President, Cloud and LSEG Workspace, Teams consolidates our data sets onto AI Group, joined our Board and Microsoft 365 tools to one, flexible infrastructure. This as a Non-Executive Director deliver financial presentations will be simple, responsive and in January 2023. For more and reports. | efficient, and built with security, | | information, please refer to the | | --- | --- | --- | | privacy and compliance. LSEG | New cloud analytics | Report of the Nomination | | customers will be able to access | and modelling services | Committee on page 102. | | data faster when and wherever | With Microsoft, we will use Azure | | | they need it — enabling resilience | Machine Learning and our own | | | and adaptability as capital markets | advanced analytics and modelling | | | continue to evolve. | capabilities to co-develop a new | | suite of solutions. Businesses that Additionally, data scientists and rely on analytics will be able engineers will be able to utilise to scale without the need for our data and analytics services complicated processes and on our infrastructure, or leverage systems that often require our open financial data ecosystem extra servers, hardware, and by integrating their own data to employee resources. build custom solutions. 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. 19 London Stock Exchange Group plc Annual Report 2022 Data & Analytics continued Creating new products Cross-selling and — In the Sustainable Investing ### Revenue synergies Refinitiv’s extensive data offering distribution opportunities: space, the FTSE Russell Green is enabling the build out of new The combination of our two Revenues data set is now As a result of the Refinitiv FTSE Russell indices. For organisations has unlocked available via the Refinitiv acquisition, we announced we example, we launched the new customer segments and Data Platform and Datastream. would deliver £225 million of following index series this year: enhanced product opportunities. By making this data set run-rate revenue synergies by the — Russell Fixed Income Index – Here are a few examples of available through Refinitiv end of 2025. In March 2023, we our complementary series to how these opportunities have distribution channels, it is easily subsequently raised this target the flagship Russell US equity been realised: discoverable for new users to £350-£400 million. Bringing indices. The new offering is — FTSE Russell customers in a high-growth segment together Refinitiv’s market-leading designed to offer our customers are interested in accessing of the market. The data enables data content, with its notable a more precise asset allocation the underlying data which our customers to model depth and breadth of coverage, methodology to track the underpins the indices which portfolio and company-level and LSEG’s leading brands domestic US corporate they already subscribe to. analysis to understand climate provides the opportunity to launch bond market. We can now provide the index transition risks and identify innovative solutions, enhance — FTSE JPX Net Zero Japan – alongside the underlying investment opportunities in existing products and cross-sell in partnership with JPX (Japan constituent data so customers the green economy. to our existing client base. We Exchange Group). The series is can now track the benchmark — Refinitiv’s global presence have delivered £68m in runrate aimed at Japanese investors and simultaneously perform has opened up opportunities revenue synergies to date. seeking to mitigate climate analysis on the data to make to leverage its salesforce risks, capture climate investment decisions. We to introduce FTSE Russell Two of the key areas of our opportunities from the continue to enhance our data products into new customer synergy delivery to date are: | green economy and ensure | through the addition of new | and geographical segments. | | --- | --- | --- | | alignment with Net Zero by | attributes to existing data | We have seen penetration of | | 2050 in their portfolios. | sets and invest in new data | FTSE Russell products in the | | | sets to broaden and deepen | wealth management segment, | | Another area of product | the offering. | including increased flows within | | development has been within | — Yield Book, LSEG’s fixed | regions such as the Middle East | | Yield Book, our fixed income | income offering, has been | and South America, which were | | analytics platform. Using Refinitiv | embedded into Workspace, | limited historically. | | data we have broadened our | Refinitiv’s next-generation | | | Yield Book securitised offering | | Revenue synergies target | workflow solution. Now our to include collaterised loan customers can access a single obligations (CLOs), a major asset source solution for their fixed ## £350- class expansion within fixed income needs alongside income, of great relevance and other asset classes. Expanding ## £400m interest to the global buy and Workspace’s coverage in sell-side communities. A CLO is a fixed income also improves Runrate delivered to date | security investors can purchase, | its usability for our customers’ | | | --- | --- | --- | | backed by a pool of low-grade | back-office communities with its | | | corporate loans. Through the | | £68m | expanded trade reconciliation enhancement of Yield Book’s and reporting capabilities. 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. 20 20 London Stock Exchange Group plc London Stock Exchange Group plc Annual Report 2022 Annual Report 2022 STRATEGIC REPORT Data & Analytics continued ### 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. Phil Cotter Interim Head of Product Solutions, Data & Analytics 21 London Stock Exchange Group plc Annual Report 2022 ## Capital Markets Revenue split 1 2 3 1 Equities £248m 17% 2 FX £258m 18% 3 Fixed Income, Derivatives & Other £953m 65% Performance: Recurring revenue ### It was a strong year for Capital Markets +4.2% with FXall continuing to grow strongly as we replatform ### amidst a volatile market backdrop. Through ## 31% Matching, our dealer-to-dealer ### our multi-asset class offering, we’re positioning venue, modernising our Transactional revenue FX technology to secure ### ourselves to maximise the benefit from future growth ## macroeconomic and structural market growth 69% Fixed Income, ### trends. We’re also continuing to harness The division is split into three Derivatives & Other ### the power of our combined Group to create areas by asset class: Electronic marketplaces for rates, credit, equities and money ### innovative solutions that deliver real benefits Equities markets products, built and ### to our customers. Capital raising and trading venues operated through Tradeweb for equities — London Stock Murray Roos Exchange and Turquoise Structural market trends Group Head, Capital Markets driving growth: Structural market trends — Electronification of fixed driving growth: income markets — Globalisation — Electronic trading Performance: ### OUR PART IN THE TRADE LIFECYCLE +13.4% — Tradeweb continues to Performance: deliver double-digit revenue | | | | | | | | | | | L O | P T I | M I S | | +3.2% — increasing secondary | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | I T | A | | A | T | | growth across rates, credit and | | | A L | F O R | M A | | | & A | N A | L Y | P | K M | A N | A G | I O | | | | | I T | | T | I O | T A | | | T I C | C A R | I S | | E | M N | | | | A P | | | | N | A | | | S | D | | | | E | market activity driven by market | | | C | | | | | D | | | | N | | | | N | | equity asset classes, driven by | | | | | | | | | | | A | | | | T | | | volatility, but offset by a lower product innovation and increasing average yield. Subdued issuance market share in US Treasuries activity due to the challenging and Cash Credit. primary market conditions for customers this year. C FX A N T P I T E A L O Y M Providing electronic trading, D E P L workflow and data to the ### We offer our customers extensive access to institutional foreign exchange community through FXall and ### capital markets and liquidity across multiple FX Matching ### asset classes. We operate a broad range of Structural market trends ### international equity, fixed income, exchange- driving growth: ### traded funds/exchange-traded products and — Access to liquidity — Cross-border trading and ### foreign exchange markets. Our Group is home business globalisation ### to several capital formation and execution ### venues: the London Stock Exchange, AIM, ### Turquoise, FXall, Matching and Tradeweb. 22 22 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT STRATEGIC REPORT Capital Markets continued ### HIGHLIGHTS | We announced the development | In the emerging markets | | --- | --- | | of a new fully cleared NDF | bonds space, Tradeweb and | | (non-deliverable forwards) | FXall are collaborating | | Matching venue in Singapore | to develop a workflow solution to | | supported by the Monetary | allow emerging market products | | Authority of Singapore. The | to be traded more efficiently. | | venue will be a key addition to the | Customers face currency and | | FX ecosystem and will play an | price risk when trading, so the | | important role in meeting Asian | seamless linking of workflow | | market players’ growing FX | allows for the ability to carry | | needs. This initiative, launching in | out both legs of the trade | | 2023, will be the first FX venue | simultaneously — the purchase | | to be delivered on LSEG’s | of the bond and the currency | | proprietary trading technology. | conversion. The more efficient, | versatile workflow ultimately reduces execution risk for the customer. Alongside targeted funding for ### Voluntary Carbon green projects the platform also: ### Market launched — Brings transparency to sustainable finance – entities raising capital are required to We launched the London Stock disclose what projects they are Exchange’s Voluntary Carbon funding, directly or indirectly, Market in October providing and the expected carbon credit the infrastructure to enable yield, whilst also disclosing the companies and funds to raise industry standards they use to capital for projects that focus certify their projects. on the removal or reduction — Provides access to a wider of greenhouse gases in our range of investors – following atmosphere. In return for the public equity market investment in funds and framework, investors across companies trading on the all backgrounds (institutional, Voluntary Carbon Market, corporate, or retail) can partake shareholders may receive carbon in the funding of green projects. credits in lieu of cash dividends. The London Stock Exchange is As the leading global venue the first exchange to apply a for sustainable finance, we are public equity market framework to committed to continuing to play facilitate fundraising specifically a leading role in the further for green projects. development of market solutions to the climate crisis. 23 London Stock Exchange Group plc 23 London Stock Exchange Group plc Annual Report 2022 Annual Report 2022 ## Post Trade Revenue split 4 1 3 2 1 OTC Derivatives £402m 40% 2 Securities & Reporting £234m 24% 3 Non Cash Collateral £100m 10% 4 Net Treasury Income £255m 26% 1 Performance: Recurring revenue ### In a year of intense market volatility, LCH +10.0% driven by record volumes in SwapClear and despite a ### successfully carried out its role as a critical ## 30% one-off revenue benefit in ### financial markets infrastructure provider Q4 2021. SwapAgent and 1 Transactional revenue ForexClear, though smaller ### and continued to deliver the robust risk areas of the business, continue ## management that supports our customers 70% to grow strongly and show exciting potential. ### through this period of economic uncertainty. 1 Post Trade recurring and transactional proportion excludes Net Treasury Income. Securities & Reporting Securities clearing, capital ### Meanwhile, we’re continuing to build our The division is split across optimisation and regulatory four lines reflecting the ### presence in new growth areas and we’re reporting solutions. product offering and types ### expanding our regional coverage. of income generation. Performance: -3.8% with volume growth at Daniel Maguire All of these business lines serve RepoClear offset by impacts Group Head, Post Trade to position us well in the context of regulatory change and & CEO, LCH Group of the three key structural market increased competition in trends that are helping to drive cash equities clearing. growth: increasing regulation ### OUR PART IN THE TRADE LIFECYCLE within which our customers must Non-Cash Collateral operate and a continuing rise in L O P T I M I S I T A A T Fees are earned from handling A L F O R M A & A N A L Y P K M A N A G I O I T T I O T A T I C C A R I S E M N demand for both risk management A P N A S D E C D N N non-cash collateral balances. A T and capital optimisation solutions. Performance: In general, market volatility is also +3.6% as market volatility drove an important driver of strong clearing volumes and performance for our Post Trade higher collateral balances. division. In 2022, macroeconomic factors such as the ongoing global C T Net Treasury Income A P N I T M E uncertainty around interest rates A L D E P L O Y Income earned on cash assets have helped to drive higher lodged with the Central clearing volumes and therefore ### We support our customers with their clearing Counterparty (CCP) as margin enlarge the pools of collateral and default funds as part of the ### and reporting obligations. In addition we we hold on behalf of customers. risk management process. ### provide risk, balance sheet and financial OTC Derivatives Performance: ### resource management solutions, whilst working Clearing and capital optimisation +18.8% as market volatility solutions for OTC Derivatives. ### with our other divisions to extend this support and uncertainty around interest SwapClear, our clearing service rates drove record clearing ### across the value chain. for interest rate swaps, contributes volumes and higher cash c.80% of OTC Derivatives collateral balances. revenue. LSEG is responsible for over 90% of the global interest rate swap notional cleared. 24 24 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT STRATEGIC REPORT Post Trade continued ### HIGHLIGHTS | The exceptional performance we | Quantile is a provider of | | --- | --- | | delivered in our OTC Derivatives | compression and optimisation | | business in 2022 was supported | services to reduce risk and | | by accelerating growth in | capital requirements for | | SwapAgent, | customers, while Acadia is a | | our processing service for | provider of automated uncleared | | uncleared interest rate swaps. | margin processing and integrated | | We recognise the potential in | risk and optimisation services for | | this space, as increasingly | the global derivatives community. | | workflow inefficiencies are | Both of these acquisitions are | | driving customers to seek | highly complementary to LSEG’s | | greater standardisation in OTC | Post Trade capabilities. The | | derivatives trade processing. | Acadia transaction is subject | to regulatory approval. Supported by our acquisition of | Quantile and the announcement | First Singapore member joins | | --- | --- | | of an agreement to acquire | LCH SwapClear | | Acadia, we are bringing together | DBS, a leading financial services | | a set of capabilities that create a | group in Asia, joined LCH | | seamless platform to standardise | SwapClear as the first direct | | these processes, supporting | member in Singapore this year. | | greater financial resource | Central clearing continues to | | optimisation and operational | be a focus for banks in the | | efficiencies for our customers. | APAC region, and in 2022 | SwapClear recorded a 29% year-over-year increase in volumes in APAC currencies. All positions were resolved ### LCH default and the default was managed ### management in comfortably within VTB Capital’s initial margin (which had been ### action – VTB Capital conservatively calibrated) and there was no recourse to the On 24 February 2022, LCH member default fund. member and parent company to | VTB Capital, VTB Bank was added | The defaulted portfolio was | | --- | --- | | to the UK’s consolidated list of | fully settled on 4 April 2022, | | asset freeze targets, following | with final balances ready to be | | Russia’s invasion of Ukraine. | repaid to the administrators of | | VTB Capital became unable to | VTB Capital plc, in compliance | | settle its cleared transactions | with applicable sanctions. | at LCH Ltd EquityClear. During this time, the EquityClear | Following the sanctions | service remained open for its | | --- | --- | | announcement, LCH convened its | members with 100% up-time, | | DCMT (Default Crisis Management | registering heightened trade | | Team) to coordinate and plan | volumes averaging 5 million | | actions, and ultimately served | trades per day. | 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. 25 London Stock Exchange Group plc 25 London Stock Exchange Group plc Annual Report 2022 Annual Report 2022 ## Market trends ## and our response ### DIGITALISATION ## LSEG’s success is built on How trends are shaping LSEG’s response ## our ability to anticipate and financial markets and the global economy ## capitalise on the structural | | | Electronification of financial | Operating leading electronic | | --- | --- | --- | --- | | changes that are shaping | | markets continues to drive trading | venues – we are investing in our | | | | volume growth, improve efficiency, | leading FX and equity electronic | | financial markets and the | | and enable access to liquidity. | venues, as well as benefiting from | | | | This trend is expected to continue | structural growth at Tradeweb, | | global economy. | | as adoption across asset classes | which remains at the forefront of | | | | matures; for example, Tradeweb | electronification in rates and credit | | | | saw average daily volumes (ADV) | markets. For more information on | | Over the last 20 years, the Group | The four key market trends we | | | | | | across all asset classes grow | how we’re harnessing the natural | | has achieved considerable | see as crucial to financial markets | | | | | | c.10% YoY in 2022. | linkages between our trading | | growth and delivered shareholder | and the global economy today, | | | venues, see our Capital Markets value through a successful and in the future, are: Digital platforms are unlocking highlights on page 23. | combination of organic and | | new growth across multiple | | | --- | --- | --- | --- | | inorganic investment in areas of | 1. Digitalisation | | | | | | segments including digital | Helping customers with | | change. We continue to position | 2. Sustainability | | | | | | exchanges, digital payments, | improved workflow connectivity | | ourselves to capture growth | 3. Optimisation | | | | | | online banking, and retail | – we are improving connectivity | | opportunities as markets evolve. | 4. Resilience | | | | | | wealth – driving demand for | between our leading platforms | | | | ever-greater quantities of data | and venues, for example | | | | and more powerful analytics. | connecting ForexClear with | FXall, and our recent acquisition | Cloud-enabled business models | of TORA for order and execution | | --- | --- | | (e.g., Data-as-a-service (DaaS), | management. To read more | | Platform-as-a-service (PaaS)) are | about the acquisition of TORA, | | emerging, as firms look to build | see page 18. | new solutions, and do more with data and analytics. Broad distribution of data and analytics – we deliver through | The proliferation of new | multiple channels including | | --- | --- | | technology within society | desktop, cloud, API and feeds | | (e.g. AI, IoT, Blockchain) is | to meet a range of customer | | changing business models | needs. Our approach to cloud is | | and creating new value | further enhanced by the recent | | creation opportunities across | announcement of our strategic | | all economies globally. This | partnership with Microsoft. | | is impacting the expectations | Read more about the potential | | of customers, where jobs | benefits of our partnership | | are created and how capital | with Microsoft on page 19. | is allocated. Building next generation ADV of US corporate bonds capabilities – we are working to 1 traded electronically in 2022 deliver next generation solutions including our cloud-based data ## $15bn platform, leading workflow and collaboration via Workspace, and new cloud analytics and modelling built with Azure Machine Learning. 1 Coalition Greenwich study: https://www.greenwich.com/market-structure-technology/ october-spotlight-another-us-corporate-bond-e-trading-record-15-billion. 26 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Market trends and our response continued ### SUSTAINABILITY How trends are shaping LSEG’s response financial markets and the global economy | ESG and climate factors are | Facilitating sustainable investing | | --- | --- | | now mainstream considerations | – we deliver leading ESG indices | | in investment decision-making, | through FTSE Russell, attracting | | driving demand for insight. | $296 billion in global AUM. | | Business disclosure related to | Enabling green financing – | | ESG continues to broaden, | our Voluntary Carbon Market and | | and is increasingly mandated | Sustainable Bond Market are | | by regulators. | supporting customers on their | journey to net zero. See page Analytical models are unlocking 52 for more information. insight, but challenges remain | in addressing the availability | Supporting informed markets – | | --- | --- | | and auditability of data and | we provide ESG data and scores | | benchmarks, with c.60% of global | for >15,000 companies, and are | | asset owners citing the lack | building ESG data into many of | | of standardisation as the main | our products, including Yield | | barrier to increased adoption of | Book fixed income analytics, | | sustainable investment (2021 | and our Issuer Services platform. | FTSE Russell asset owner survey). Driving transparency – Customer Customers are demanding & Third-Party Risk propositions, that companies meet higher such as World-Check and standards, with more than one Media-Check, are enabling third of the world’s largest more transparent insight on companies now committed to critical areas including the fights 2 net zero . Increasingly, companies against financial crime, modern are expected to incorporate slavery, and terrorist financing. diversity and inclusion, fair governance and climate action as key components in their ambition statements and strategies. ESG assets as a percentage of 3 total global AUM by 2026 ## c.20% 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. 27 London Stock Exchange Group plc Annual Report 2022 Market trends and our response continued ### OPTIMISATION How trends are shaping LSEG’s response financial markets and the global economy Cost pressures are resulting in Enabling efficient capital flows firms looking to optimise their – the launch of our NDF matching operating models, reduce venue in Singapore with a fully headcount, and focus on cleared Central Limit Order Book core markets. (CLOB), will reduce risk for our clients, increase efficiency, and Interest rate movements have create a more diverse pool of encouraged investors to look liquidity. Read more on page 23. beyond traditional public markets in search of returns, with global Providing sophisticated alternatives AUM forecast to Post Trade solutions – the 1. hit $15 trillion in 2026 recent acquisition of Quantile, alongside innovations such as New technologies are being SwapAgent, will provide applied to automate and customers with greater control streamline post-trade workflows, and understanding of capital optimise how balance sheets requirements as they manage are utilised, and save costs. cleared and uncleared securities. Read more about our acquisition Machine learning, AI and of Quantile on page 25. process automation enable customers to unlock value Unlocking emerging pools of in their operating models, liquidity – we bring together deep increasing process efficiency. market infrastructure expertise and reliable data coverage across Cloud migrations enable more emerging pools of liquidity. agile approaches to controlling | data costs, remove legacy | Supporting operating efficiencies | | --- | --- | | infrastructure and servers, and | through our migration to cloud | | improve processes. It is estimated | – our recent partnership | | that cloud adoption will unlock | announcement with Microsoft will | | c.$1 trillion in global business | reduce operational complexity | 2. value by 2030 through improved data distribution and the consolidation of multiple Cloud expected spend growth legacy technologies, and will by financial institutions CAGR 3 further strengthen resilience 2022-26 and security. ## >20% 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. 28 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Market trends and our response continued ### RESILIENCE How trends are shaping LSEG’s response financial markets and the global economy Regulation has created a more Helping customers manage stable financial system – firms operational risk – Post Trade have progressed from a state of supports clients as they manage rapid implementation to more clearing operations, and optimises considered management, financial resources through shifting focus toward resilience. advanced analytics solutions including SwapAgent. Moves toward hybrid working has shifted consumer demand Enabling resilient venues – in many industries (e.g. retail, venue replatforming will reduce real-estate, hospitality). From a latency across our FX venues, technology perspective, this bringing them in line with speeds has led to increased focus on seen in equities markets, and will secure access, cyber security, improve reliability and robustness. and process controls. This is | expected to continue as the | | Tried and tested processes – | | --- | --- | --- | | proportion of employees working | | our track record in managing | | in hybrid environments remains | | defaults in Post Trade, while | | | 4 | minimising impact to the market, | | consistently above 2019 levels | . | | gives us significant credibility | Market volatility highlights the | with our members and regulators. | | --- | --- | | importance of trusted venues | To read about the default of a | | and secure clearing houses that | customer, VTB Capital, in 2022 | | are capable of meeting demand | and our response, see page 25. | spikes. Our market infrastructure | businesses have played a key role | Running critical data | | --- | --- | | in helping participants navigate | infrastructure – we are trusted to | | major market events in 2022. | operate the data infrastructure | that underpins our customers’ Global supply chains have faced businesses and critical decision- increasing pressure due to the making, including our Real-Time impact of the pandemic, higher network, Managed Distribution inflation and geopolitical events. Service (RTMDS), and Data This has led companies and Access Control System (DACS). capital allocators to further focus on identifying and mitigating supply chain risk. Large companies who have experienced fraud in the last 5 24 months ## >50% 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. 29 London Stock Exchange Group plc Annual Report 2022 ## Our purpose and strategy ### Our purpose 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. We drive financial We empower We enable customers to stability economies create sustainable growth by operating businesses that by helping our customers to by providing the tools and data are of systemic importance, raise capital, support that enable financial markets fundamental to the financial employment, innovate and to manage risk and make ecosystem and critical to access global financial informed investment decisions. our customers. networks, across multiple asset classes. ### This purpose underpins everything we do and sets the foundation for ### our strategy, our operations and our culture. ### Our strategy 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: ## 1 2 3 Globally essential Multi-asset class Seamlessly connected Read more on page 31 Read more on page 32 Read more on page 33 ### Priorities to deliver In order to deliver on our strategy we are executing against three ### on our strategy key priorities: Integrate our Drive Build an efficient world-class businesses growth and scalable platform Read more on page 34 Read more on page 34 Read more on page 35 30 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Our purpose and strategy continued ### OUR STRATEGY ## 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. New FTSE Russell indices ### Supporting critical ### launched since 2020 We have developed this broad range of ### workflows worldwide ### Shariah-compliant indices to offer additional ## >3,150 ### Case study depth and choice for global investors. The Since 2020, we have launched ### new series combines our high standards of well over 3,000 new FTSE ### Russell indices. In 2022, FTSE benchmark index design and governance Russell launched the FTSE ### with a robust screening and selection IdealRatings Islamic Index ### Series in collaboration with process based on Islamic principles. IdealRatings. The Index Series measures the performance of Arne Staal Islamic equity securities across Group Head and CEO, FTSE Russell global markets, providing a family of Shariah compliant indices for global investors. 31 London Stock Exchange Group plc Annual Report 2022 Our purpose and strategy continued ### OUR STRATEGY ## 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. Broker algos accessible through ### The breadth of ### TORA’s multi-asset class OEMS LSEG’s strategy is to deliver global, ### our coverage ### multi-asset class financial infrastructure for ## drives value 500+ ### our customers that operates as an open Case study Global exchanges connected ### ecosystem across the capital markets and The acquisition of TORA, a to TORA ### investment lifecycle. Our acquisition of leading cloud-based technology ## provider, allows us to offer 180+ TORA is a great example of us delivering customers an order and ### on that strategy. execution management system (OEMS) and a portfolio management system (PMS) Dean Berry covering equities, fixed income, Group Head of Trading & Banking Solutions foreign exchange, derivatives and digital assets trading. 32 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT 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. LSEG’s Trade Discovery solution ### Creating powerfully ### provides access to Globally, banks are finding the ### innovative solutions ### implementation of the FRTB requirements ## >1.1bn ### Case study very challenging. Through our extended Our comprehensive Fundamental ### Real Price Observations (RPOs) coverage of regulated markets and our data Review of Trading (FRTB) data across multiple asset classes ### solution seamlessly brings partnerships with LCH, Tradeweb and other together multiple LSEG offerings, ### leading market infrastructure providers, we can enabling customers to calculate ### capital charges under the provide access to billions of processed Real Price sensitivities-based method and ### Observations across exchange-traded and OTC fulfil look-through requirements ### for both funds and indices. cross asset class instruments, covering rates, This provides customers with ### credit, FX and equities in multiple jurisdictions. the tools they need to achieve compliance on a global scale. Stuart Brown Group Head of Enterprise Data Solutions 33 London Stock Exchange Group plc Annual Report 2022 Our purpose and strategy continued ### OUR PROGRESS IN 2022 Integrate our world-class businesses Drive growth | How we deliver Strategy in action | | How we deliver Strategy in action | | | --- | --- | --- | --- | | Focus on customers’ | Regulation is driving the | Develop strategic partnerships. Our recently announced 10-year | | | needs across asset classes, | adoption of FX clearing by | | strategic partnership with | | throughout their workflow | buy-side users (Uncleared | | Microsoft will help develop | | and on a global basis. | Margin Rules). We are improving | | new products and services for | | | connectivity between FXall | | data and analytics, delivering | | | and ForexClear, providing | | next-generation services for a | | | customers with workflow | | range of customers across the | | | efficiencies. Improved | | financial markets value chain. | connectivity allows FXall clients Improve sales execution and We are creating a differentiated to access the risk management partnership with customers. sales and service model. and efficiency benefits of We are focusing more resources clearing, by choosing to clear on our largest accounts and non-deliverable forwards (NDFs) developing deeper solution in ForexClear if desired. selling expertise, while also Leverage our unique and Capital Markets is integrating optimising and standardising growing position across financial more tools from across the the digital sales experience. data and capital markets to Group into its Issuer Services Optimise commercial We have successfully positioned create innovative solutions platform, improving our Primary relationships with customers. complementary solutions that for customers. Markets offering. Access to enable us to optimise the the Aftermarket Research commercial relationship we Collections allows issuers to have with customers. For explore market reports from example, as part of our revenue over 1,900 sources. 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 Market reports available from ## 15,000+ ## 1,900sources companies 34 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Our purpose and strategy continued ### EVOLVING PRIORITIES FOR 2023 AND BEYOND We are well positioned to Improving execution Build an efficient and scalable platform capitalise on the strong underlying including delivery of our Group drivers that support our business strategic programmes, resilience model (see following pages). and cyber security initiatives, and How we deliver Strategy in action our sales transformation journey. In 2023 our priorities will continue | Targeted investment to create a | LSEG has launched new | | | | --- | --- | --- | --- | | | | to evolve, as we progress from | Investing in better products | | more scalable business centred | cloud-based offerings, such as | | | | | | the integration of Refinitiv to | including the development and | | on cloud-based, open platforms. | Real-Time Optimised, in 2022. | | | | | | the transformation of the | deployment of product | Real-Time Optimised is reducing combined Group. These updated improvements across key customer infrastructure priorities combine continuity business lines such as Workspace, requirements, broadening with an even greater ambition FTSE Russell and replatforming access, and reducing lead for long-term growth: our FX venues; and the times for real-time data. development of ‘next generation’ Accelerating our strategic LSEG has made good progress projects such as our Post Trade approach to the data platform. on its existing programme for Solutions offering. the delivery of its cloud-based Harnessing our integrated data platform since the offering to create value greater completion of the Refinitiv than the ‘sum of the parts’ acquisition in January 2021. including improved customer Work on our new strategic experience across the workflows partnership with Microsoft will and asset classes that we enable LSEG to utilise Azure for serve; new innovative solutions cloud-based data architecture, developed in partnership with consolidating LSEG data sets market participants, such as the onto one, flexible infrastructure. LSEG Voluntary Carbon Market; The programme accelerates and unlocking the scalability LSEG’s cloud migration plans. provided by cloud technologies, in partnership with Microsoft. Cost synergies from integrating We continue to improve our Refinitiv and LSEG. 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. 2022 underlying EBITDA margin improvement vs PY ## +110bps 35 London Stock Exchange Group plc Annual Report 2022 # Our business model 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. 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 AUM¹ $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 1 ESG Passive AUM is at 30 June 2022 and prior period comparator is at 30 June 2021. The metric is updated bi-annually. London Stock Exchange Group plc Annual Report 2022 36 STRATEGIC REPORT Our business model continued ### WE BRING DEEP EXPERTISE AND A TRUSTED REPUTATION ### ACROSS THE FINANCIAL MARKETS VALUE CHAIN We operate across the breadth of LSEG’s offering spans the entire trade lifecycle the financial markets value chain, from issuance and investment L O P T I M I T A S A F O R M A N A P I M A N T A L A & L Y T A S K A G I O decision making, through to trade I T T I A I C I E N P O A T S C R M A N D D E C N N execution, clearing and post A T trade reporting. C T A N P I E T A Y M L D E P L O Data and analytics Capital deployment Data & Analytics Providing crucial insight to Through our trading venues and Capital Markets customers through a variety across asset classes, including Post Trade of data, indices, analytics FX, fixed income and equities. and workflow solutions. Capital optimisation Capital formation Clearing and reporting Through primary markets services through LCH operated by London and UnaVista, as well as Stock Exchange. innovative post-trade solutions. We are trusted by customers, We are uniquely positioned, Uniquely positioned partners, and regulators as a and bringing together these As the boundaries between data and infrastructure blur, provider of critical infrastructure. capabilities is enabling scale we will generate new areas of opportunity and collaborative This stems from decades of and new value creation as customer partnerships: experience operating trading we serve financial markets. venues, clearing systems, and — Unique trading and risk analytics. data and analytics infrastructure. — 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. Globally Global Global data recognised clearing, Global and analytics market settlement and leader in data provider infrastructure reporting and FMI business provider 37 London Stock Exchange Group plc Annual Report 2022 Our business model continued ### OUR FOOTPRINT IS DIVERSIFIED ACROSS ### MARKETS, GEOGRAPHIES AND CUSTOMERS We benefit from a footprint that 1 Revenue by geography positions us in multiple global markets, with a broad range of customers, and exposure to 1 3 multiple asset classes. Growing markets 2 Across the Group we are exposed to a broad array of asset classes 1 Americas 40% and growing liquidity pools, 2 APAC 15% including equities, FX and fixed 3 EMEA 45% income markets. Through our 1 Total income including recoveries Data & Analytics business, we are also able to capitalise on the growing demand for insight and ## automation. We expect this to be 48 further accelerated through the We serve 48 of the world’s 2 adoption of cloud in coming years. top 50 corporates 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. 2 By market capitalisation, as of February 2023. 38 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Our business model continued ### WE GENERATE HIGH QUALITY REVENUE WE CONSISTENTLY INVEST FOR GROWTH ### THAT IS MOSTLY RECURRING IN NATURE We generate a substantial We are highly cash generative, Our recently announced 10-year Recurring revenue proportion of our income through allowing us to continually strategic partnership with Visible revenue recurring revenue associated with modernise our infrastructure, Microsoft will also help build Mostly subscription and data subscriptions and licences. invest organically in new next-generation services that licence revenue, typically This business model benefits products and services, and empower customers to generate 12-24 months duration. | from a consistently high level | | acquire businesses that are | business insights, automate | | --- | --- | --- | --- | | of retention, contracts that are | Highly diversified | complementary to our business | complex and time-consuming | | typically 12-24 months in duration, | Revenues are broadly | model and distribution footprint. | processes, and ultimately, | 3 | and improving performance in our | based across activity, | In 2022 we invested £750 million | do more with less. | | --- | --- | --- | --- | | Annual Subscription Value (ASV). | product, geography and | in BAU capex that supports our | | | | >45,000 customers. | approach to growth, resilience | | | We are well exposed to growing | | and security. We also closed four | | More details can be found on pools of transactional income Strong customer relationships acquisitions: MayStreet, Quantile, pages 19 and 71 and on our website: through its venues. This includes Consistently high retention. GDC and TORA. Each of these www.lseg.com/investor-relations/ Tradeweb, which continues to businesses has significant growth benefit from the electronification Transactional revenue potential that is enhanced by of rates and credit markets, and Highly diversified and being part of the Group. For more other businesses positioned to growing with strong information on these acquisitions, attract liquidity flow such as Tradeweb performance. see our case studies on pages FXall (FX dealer-to-client), 18 and 25, and read about capital Matching (FX dealer-to-dealer), Total income allocation in more detail in the and LCH which benefits from CFO review on page 40. volume growth in swaps and 3 2 other OTC derivative markets, as well as the underlying income associated with treasury and 1 collateral operations. 1 Recurring revenue 73% 2 Transactional revenue 23% 3 Net treasury income 3% 3 Business-as-usual capex, on a constant currency accrued basis. 39 London Stock Exchange Group plc Annual Report 2022 ## Chief Financial ## Officer review | Introduction | companies we are facing cost | | --- | --- | | LSEG hit all its financial targets | inflation, we have a number of | | in 2022: our execution on the | levers at our disposal to mitigate | | Refinitiv integration has | its impact. | progressed well, and through | | our strong market positioning we | 2. Investing to transform | | --- | --- | --- | | | have been able to capture the | our businesses | | | benefit from renewed market | In areas like Investment Solutions | | | volatility and interest rate | or our FX venues, we have strong | | | uncertainty in our transactional | brands and customer loyalty but | | | businesses this year. Our financial | historically investment has not | | | performance is covered in detail | always kept pace with technology | | | in the pages that follow. My own | change. We have significant | | | review focuses on two topics at | projects in flight not only to | | | the forefront of our shareholders’ | address this “technology debt” | | | thoughts: how do we sustain | but to take the opportunity to | | | growth, and how do we allocate | leap ahead of our competitors | | | capital to support that growth? | in speed and functionality. | | | The pathway to | In FX for example, we have rebuilt | | | sustained growth | our tech stack and improved | | In less than two years, | Investors often ask me how I think | latency – speed – by a factor | | | about the opportunities in front | of 10. We are making similar | | we have significantly improved | of LSEG. First and foremost, we | investments, driving greater | | | benefit from having leading, scale | volume and customisation, | | | businesses that offer long-term | in our index business. These | ## the growth rate of many of growth. We have all witnessed in investments have not yet come other sectors how data can be to fruition, but should begin to ## the Refinitiv businesses, liberated by technology, creating contribute to growth in 2023. new insights and use-cases to ## in most cases just by doing 3. Making LSEG more than the drive growth. Financial services sum of its parts are at that tipping point and LSEG ## the basics better. Increasingly our customers see us is well positioned to take these as a strategic capital markets and opportunities. I see three levers Anna Manz data partner. They expect us to of growth that we are pulling: | Chief Financial Officer | | come up with innovative solutions | | --- | --- | --- | | | 1. Improving execution | to help them generate investment | | | In less than two years, we have | ideas, trade efficiently, manage | | | significantly improved the growth | risk and optimise capital. | For more information see our Financial Statements on pages 148 to 245. rate of the Refinitiv businesses Our businesses are highly within Data & Analytics, in most complementary but we are far cases just by doing the basics from realising the full benefits for better. We have changed sales our customers today. For example, incentives, simplified our product the potential for data from our portfolio, set more ambitious trading platforms to inform retention targets, learned more decisions for our index clients, or about customers’ actual usage for our leadership in FX and fixed and worked in closer collaboration income trading to come together with them as we roll out to manage risk in cross-border Workspace to different groups trading, is huge. Sustaining our of end-users. Our 2023 price growth rate into the long term reviews in part reflect this depends on our ability to bring incremental value that we are our businesses together in ways delivering for our customers. that no other company can. In addition, we set ambitious We have already begun this synergy targets for both revenue process. We have connected our and cost, and have raised those dealer-to-client foreign exchange targets. We now expect runrate platform, FXall, with ForexClear revenue synergies of £350-400 to drive growth in the foreign million by 2025, and runrate cost exchange clearing market. We’ve synergies of at least £400 million. also brought together FXall and Although in common with all 40 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Chief Financial Officer review continued Tradeweb to develop hedging 2. M&A – £786 million 1 Growth in total income excluding recoveries (excl. Ukraine/Russia) workflow solutions to allow Our M&A strategy is twofold: emerging market products to businesses providing services be traded more efficiently. which are complementary to our existing offer and can be scaled The complementary nature of our across our footprint and customer ## +6.6% combined offering creates the base; and technology-based opportunity for us to deliver businesses which, while often ## 2021: +6.1% innovative solutions like these. small in revenue terms, can There is so much more we can enhance existing services at do here. lower cost and higher speed Annual Subscription Value growth (excl. Ukraine/Russia) than organic investment. Capital allocation | Our goal is to invest for growth | We completed four acquisitions | | --- | --- | | using the cash flows we generate, | in 2022. Of these, GDC, Quantile | | building a platform for long-term | and TORA are established | ## +6.2% capital appreciation while businesses which can benefit rewarding investors today through from our much greater scale ## 2021: +4.6% | a progressive dividend, growing | and deeper customer | | --- | --- | | broadly in line with AEPS. We will | relationships. MayStreet allows | | do that within a leverage range of | us to significantly enhance the | | 1-2x net debt to adjusted EBITDA, | breadth of our low latency data | | which offers a degree of flexibility | offering much more quickly and | | while maintaining a sufficiently | cost effectively than if we were | | conservative structure even at | to develop this in-house. For | | the top of the range. | information on these acquisitions, | see pages 18 and 25. LSEG generated £3.3 billion in | operating cash flow in 2022, | 3. Dividend – £567 million | | --- | --- | | and a further £1.1 billion from the | The proposed final dividend for | | disposal of non-core businesses | 2022 is 75.3 pence – giving a | | and other property. Our leverage | total for the year of 107.0 pence, | | reduced from 1.9x at the start of | up 12.6% on 2021. This is | | the year to 1.8x by year-end. We | consistent with our dividend policy | | deployed our capital as follows: | and reflects a payout ratio of 34% | of AEPS. Our dividend per share 1. BAU capex – £750 million has grown at a compound annual Business-as-usual capex, on a rate of 17% over the last 20 years. constant currency accrued basis, | was £750 million. We continued to | 4. Share buyback – £300 million | | | --- | --- | --- | | focus on programmes to address | We remain very focused on capital | | | growth, efficiency and resilience. | discipline and will, from time to | | | Our investments in Tradeweb and | time, return excess capital to | | | Workspace product development | shareholders to the extent that we | | | are expected to drive continued | stay within our leverage range. | | | revenue growth. The upgrades | On the back of the disposal of | | | to our own infrastructure as we | BETA, a non-core business in the | | | roll out our software-defined | Wealth segment, we announced a | | | network, giving higher capacity | £750 million share buyback, which | | | and increased resilience, will | was 40% complete by the end of | | | benefit costs from 2023 onwards. | the year. Looking ahead, we are | | | Finally the development of our | seeking shareholder approval | | | data platform, including cloud | at the 2023 AGM for a directed | | | migration and the associated | share buyback, which will enable | | | transformation of how we import | us to buy shares directly from | | | new content, should underpin | entities owned by certain | | | both future revenue growth | investment funds affiliated with | | | and cost efficiency. In addition | Blackstone, an affiliate of Canada | | | to this capex, we also incurred | Pension Plan Investment Board, | | | £184 million of capex mainly | an affiliate of GIC Special | | | related to delivering the synergies | Investments Pte. Ltd, and by | | | relating to the Refinitiv acquisition, | Thomson Reuters, the former | | | which was in line with our plans. | Refinitiv shareholders. We expect | | | Total capex on a cash basis was | to deploy up to £750 million in | | | £966 million. | directed buybacks by April 2024. | 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. 41 London Stock Exchange Group plc Annual Report 2022 ## Financial review 6 Note: Unless otherwise stated, variances refer to growth rates on a pro-forma constant currency basis, excluding the impact of a deferred 3 revenue accounting adjustment Pro-Forma Constant Currency Variance (excluding deferred | | | 1 | | ¹ | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 | | 2021 | | Variance | | revenue adjustment) | | | Reported | | £m | £m | | | % | | % | 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% 2 Recoveries 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% 4 Basic Earnings per Share 141.8 85.8 65.3% 4 Dividends per Share 107.0 95.0 12.6% 3 Adjusted EBITDA 3,550 2,969 19.6% 6.0% EBITDA Margin 47.8% 47.8% Operating Profit 2,728 2,282 19.5% 4.6% 4 Adjusted Earnings per Share 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 5 movements. Excluding the impact of the Russia/Ukraine war, growth was 6.6% . 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. 42 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Financial review continued Strong revenue growth across all divisions | Growth excl. U/R | | Reported growth | | | --- | --- | --- | --- | | | 1 | | 4 | | +6.6% | | +12.8% | | £7,428m 1 +7.5% +5.3% +9.8% (+4.2% incl U/R) £6,587m 2 3 2 2021 Data & Analytics Capital Markets Post Trade FX and other 2022 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 Good improvement in underlying profitabilty Underlying Margin improvement ## +1.1% 47.8% (0.3%) +1.1% 47.8% (0.5%) (0.3%) | | 1 | | | | | | 1 | | --- | --- | --- | --- | --- | --- | --- | --- | | 2021 | | FX | Ukraine/Russia | M&A | Underlying | 2022 | | | | | | conflict | | business | | | | 1 Reported EBITDA margin | | | | | performance | | | 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. Reconciliation of Adjusted Operating Profit to Reported Operating Profit 2022 2021 £m £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. 43 London Stock Exchange Group plc Annual Report 2022 Financial review continued # **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. 44 London Stock Exchange Group plc^{}[] Annual Report 2022 Financial review continued 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 ![img-0.jpeg](img-0.jpeg) 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. 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. 45 London Stock Exchange Group plc Annual Report 2022 Financial review continued # **Capital Markets** | | 2022 £m | 2021 £m | Variance % | Pro-Forma Constant Currency Variance (excluding deferred revenue adjustment) % | | --- | --- | --- | --- | --- | | **Continuing operations** | | | | | | 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) | 107 | 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% | 46 London Stock Exchange Group plc^{}[] Annual Report 2022 Financial review continued 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% | 47 London Stock Exchange Group plc^{}[] Annual Report 2022 Financial review continued # **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 | 2022 £m | 2021 £m | | --- | --- | --- | | **Year ended 31 December** | | | | 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. Leverage¹ 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. 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. 48 London Stock Exchange Group plc^{}[] Annual Report 2022 STRATEGIC REPORT Financial review continued 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 Closing rate Average rate 12 months Closing rate ended 31-Dec-22 at 31-Dec-22 ended 31-Dec-21 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: 1 | Pro-Forma | P&L | | | | | | --- | --- | --- | --- | --- | --- | | | | 2022 | 2021 | Variance | | | Continuing operations | | £m | £m | | % | 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. 49 London Stock Exchange Group plc Annual Report 2022 ## Enabling sustainable ## growth ## LSEG is dedicated to enabling ## Through our sustainability ## sustainable economic growth. ## strategy we’re contributing to ## the global effort to decarbonise, ## Given our central role in capital ## innovate and grow the green ## markets, our global footprint ## economy, while ensuring that ## and presence throughout the ## everyone can share in the ## trade lifecycle, we are uniquely ## benefits of sustainable ## positioned to play a leading ## economic growth. ## role in this respect. David Schwimmer ## A more detailed account of our Chief Executive Officer ## sustainability progress during ## the year can be found in our ## Annual Sustainability Report. See our separate online Sustainability Report at the following address: www.lseg.com/en/sustainability- strategy/disclosures-and-reports 50 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Enabling sustainable growth continued ### SUSTAINABILITY STRATEGY Our sustainability framework Strategic priorities Anchored in our purpose of Accelerating the Enabling the Creating inclusive driving financial stability, just transition growth of the economic empowering economies and to net zero. green economy. opportunity. enabling customers to create sustainable growth, our Sustainability Strategy focuses on three strategic priorities where Enabling activity Supporting customers to create sustainable growth. we can have the greatest impact: accelerating the transition to net zero, growing the green economy Market engagement and policy advocacy. and creating inclusive economy opportunity. We deliver on our strategy through our products and Embedding sustainability into our operations. services, our market engagement, and our own operations. Materiality Alignment with global goals UN Sustainable Development Goals We carried out an assessment Our Sustainability Strategy was in 2021 to ensure that our informed by the UN Sustainable SDG 4 Quality Education Sustainability Strategy focuses on Development Goals. Our Ensure inclusive and equitable quality education and promote topics which are most important approach supports the SDGs lifelong learning opportunities for all. to our business and its long-term that are most relevant to our performance. The materiality business, and our delivery plans assessment included a broad SDG 5 Gender Equality align with specific focus areas of review of relevant regulations, Achieve gender equality and empower all women and girls. the seven listed here. disclosure frameworks and other information. It involved | interviews with stakeholders | SDG 8 Decent Work & Economic Growth | | --- | --- | | such as employees, customers, | Promote sustained, inclusive and sustainable economic growth, | | shareholders, suppliers, policy- | full and productive employment and decent. | influencers and media. The relative prioritisation of topics SDG 10 Reduced Inequalities was then evaluated, accounting Reduce inequality within and among countries. for internal and external stakeholder perceptions, and then validated by LSEG. The resulting material topics for LSEG are listed SDG 13 Climate Action Take urgent action to combat climate change and its impacts. here in order of importance: Material sustainability topics 1  Sustainable finance SDG 16 Peace Justice and Strong Institutions and investment Promote peaceful and inclusive societies, providing access to 2  Climate risk management justice for all and building effective, accountable and inclusive 3  Talent attraction and retention institutions at all levels. 4  Information security | and data privacy | SDG 17 Partnership for the goals | | --- | --- | | 5  Diversity and inclusion | Strengthen the means of implementation and revitalise the global | | 6  Corporate governance | partnership for sustainable development. | 7  Environmental management and GHG emissions (operational) 8  Human rights 9  Employee health, safety and wellbeing 10 Business ethics 11 Community engagement 51 London Stock Exchange Group plc Annual Report 2022 Enabling sustainable growth continued ### SUSTAINABILITY STRATEGY IN ACTION ### Accelerating the transition to net zero Enabling the growth of the green economy | We use our unique market | 2022 highlights | At the centre of capital markets, | 2022 highlights | | --- | --- | --- | --- | | position, capabilities, products and | — We published our first | we are playing a pivotal role | — £10 billion was raised on the | | services to accelerate the | Climate Transition Plan in | in enabling the flow of capital | London Stock Exchange Green | | transition to net zero. | March which received 98.6% | towards projects that help | Bond segment and £12 billion | | | shareholder support at our | deliver solutions to the | was raised on the Sustainable | | Key objectives | Annual General Meeting. | world’s environmental and | Bond segment. | | — Enable more capital to | — We achieved a 62% reduction | social challenges. | — We published the 2022 cohort | | be allocated to transition- | in our Scope 1, 2 (market-based) | | of 108 companies and funds | | related activity. | and 3 (business travel, | Key objectives | receiving the London Stock | | — Promote the role of data and | fuel-and-energy-related | — Provide market infrastructure | Exchange Green Economy | | disclosure to enable transition. | activities, employee commuting) | to support the growth of | Mark, provided to those that | | — Reduce the Group’s Scope 1 & | emissions since our 2019 | green finance. | contribute to environmental | | Scope 2 carbon emissions by | base year. | — Support green growth with | objectives through their | | 50% by 2030, with an ambition | — We launched the Voluntary | research, data and analytics. | products and services; their | | to be net zero by 2040. | Carbon Market (VCM) | — Engage with the market and | combined market cap was | | | designation and welcomed | policymakers to scale green | £156 billion. | | | Foresight Sustainable Forestry | economic activity. | | Green Bond capital raised See our separate Sustainability as the first listed issuer to be Report at the following address: admitted onto the market. www.lseg.com/en/sustainability- ## £10bn strategy/disclosures-and-reports Reduction in business travel Scope 1, 2 and 3 emissions Sustainable Bond capital raised (full definition above) ## See our separate Climate £12bn ## Report at the following address: -62% www.lseg.com/en/sustainability- strategy/disclosures-and-reports 52 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Enabling sustainable growth continued ### A RESPONSIBLE BUSINESS In addition to pursuing our three Human rights ### Creating inclusive economic opportunity strategic sustainability priorities Our Human Rights statement we are committed to operating sets out the requirements on our business in a responsible way. human rights and is aligned Our sustainability approach is with international human rights therefore underpinned by the standards and principles. following policies and standards: We monitor all current and emerging human rights-related | Business ethics | regulation and as a UK- | | --- | --- | | We are committed to the highest | headquartered business are | | standards of integrity. The | committed to adhere to the | | standards and behaviours | UK Modern Slavery Act 2015. | expected of all LSEG employees, regardless of geography or Sustainability Policy discipline, are set out in the Our Sustainability Policy sets out LSEG Code of Conduct. the requirements for us to ensure we identify, manage and improve | | | Cyber security and | our sustainability performance. | | --- | --- | --- | --- | | | | data protection | The Policy is approved by the | | | | The Information Security Policy | LSEG Board and is supported by | | Aligned with our purpose to | 2022 highlights | | | | | | sets out the overarching | several issue specific standards | | empower economies as a whole, | — We achieved our gender | | | | | | enterprise-wide information | including community investment, | | we also strive to empower | diversity goal of 40% female | | | | | | security guidance through which | human rights, environmental | | individuals and communities | representation within our senior | | | | | | information security risks are | management, diversity | | by championing inclusion and | leadership community. | | | | | | identified and managed. It is | and inclusion. | | economic opportunity. | — We published our first Pay | | | aligned to global industry Equity Report that considers standards, including those Whistleblowing Key objectives gender (globally) and ethnicity defined by the National Institute We are committed to providing — Embed an inclusive culture (for US and UK). More detail of Standards and Technology an open environment where our at LSEG. can be found on our Pay and the Financial Services colleagues, contractors and other — Promote inclusion in the market Equity Report. Sector Coordination Council third parties feel comfortable and society more widely. — Economic empowerment in (NIST FSSCC). raising concerns about adherence — Support economic the community was mobilised to our Code of Conduct, relevant empowerment in through the LSEG Foundation, The LSEG Privacy and Data laws and regulations or if they the community. which forged four new strategic Protection Policy applies to all consider something unethical or charity partnerships in 2022 personal data that is collected, potentially harmful. Employees with Room to Read, Girls | | | maintained, and used in any | can raise concerns independently | | --- | --- | --- | --- | | See our separate Pay Equity | Who Code, Skills Builder | | | | | | format by any division, business | through our Speak Up confidential | | Report at the following address: | and Women’s World Banking. | | | | | | unit or affiliate of LSEG. | 24-hour hotline or online to | | www.lseg.com/en/sustainability- | For further information on the | | | lseg.ethicspoint.com. The Group’s strategy/disclosures-and-reports LSEG Foundation, please see Financial crime, whistleblowing policy provides our Sustainability Report. bribery and corruption a method of addressing Our Financial Crime policy concerns while at the same Target achieved for women in sets out requirements to senior leadership roles time offering whistleblowers minimise financial crime, which statutory protection. encompasses, but may not be ## 40% limited to, money laundering, terrorist financing, breach of international trade sanctions, See more in our Sustainability Report online at the following address: bribery and corruption, fraud and www.lseg.com/en/sustainability- false accounting, insider trading, strategy/disclosures-and-reports 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. 53 London Stock Exchange Group plc Annual Report 2022 Enabling sustainable growth continued ### 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. Number of times sustainability Group Responsibility Chair covered 2022 LSEG Board Oversight of LSEG’s overarching sustainability ambition, Group Chair 3 strategy and performance. Board Risk Oversight of LSEG’s approach to identifying and managing Non-Executive Director, 1 Committee sustainability and climate-related risks. Professor Kathleen DeRose Board Audit Oversight of LSEG’s approach to regulatory requirements Non-Executive Director, 1 Committee related to sustainability disclosures. Dominic Blakemore Board Remuneration Oversight of LSEG’s approach to linking executive compensation Senior Independent 1 Committee to sustainability. Director and Chair of the Remuneration Committee, Cressida Hogg CBE Executive Committee Setting the Group’s sustainability ambition and strategy and Group Chief Executive 2 monitoring progress. Sustainability The Sustainability Committee reports to the Executive Committee Chief Corporate Affairs and 5 Committee on progress and meets quarterly as a minimum. Marketing Officer 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. Sustainability Group comprises senior sustainability experts from across Group Head of Sustainability 12 Working Group LSEG and is responsible for shaping and delivering the Group Sustainability Strategy and supporting the Sustainability Committee. 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. For more information see the Governance section of this report on pages 86 to 147. 54 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Enabling sustainable growth continued | Linking executive remuneration | Climate | TCFD Compliance Statement | In accordance with the Listing | | --- | --- | --- | --- | | to sustainability | We published our first Climate | In recognition that climate change | Rule 9.8.6R, we disclose against | | Our executives are incentivised | Transition Plan in March 2022 | is a critical global issue which has | the recommendations of the Task | | to drive progress towards our | setting out how we will achieve | significant implications for our | Force on Climate-related Financial | | sustainability ambition through | our targets which are approved | stakeholders including our | Disclosures (TCFD) which helps us | | the achievement of our Group | by SBTi (Science Based Targets | investors, customers, employees, | improve our understanding of the | | Strategic Objectives (GSOs), | initiative) against a 1.5°C | suppliers and partners, we | financial implications of climate- | | which relate to 40% of the annual | trajectory to: | produced our first stand alone | related risks and opportunities | | bonus pool. Our Remuneration | — Halve our Scope 1, Scope 2 and | Climate Report, which integrates | for our business for the year | | Committee assesses performance | selected Scope 3 emissions | our Climate-related Disclosures | ended 31 December 2022. | | against the GSOs. One of | (fuel and energy-related | and our Climate Transition plan. | This information is disclosed | | our GSOs is dedicated to | activities, business travel and | The report covers our climate | in our Climate Report which also | | sustainability, while sustainability is | employee commuting) against | ambitions, governance, scenario | presents an update on our | | also relevant to other GSOs such | a 2019 baseline by 2030. | analysis, risk management | Climate Transition Plan. | | as those focused on Culture, | — 67% of our suppliers (by Scope | and climate-related metrics. | | | Resilience and Customer. | 3 purchased goods and | We adopted this approach due | | | | services emissions) to set | to the detailed and technical | | See a TCFD summary table science-based targets by 2026. nature of the content and believe at the following address: — Our long-term ambition is to that this is the most useful and www.lseg.com/en/sustainability- Further detail of the GSO performance achieve net zero by 2040. transparent way to present our strategy/disclosures-and-reports assessment can be found in our climate-related disclosures. Directors’ Remuneration Report on We include Group emissions pages 113 to 141. as one of our key non-financial performance indicators. For more See our separate online Climate information, see page 14. Report at the following address: https://www.lseg.com/en/sustainability- Target reduction of our Scope strategy/disclosures-and-reports 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% Ambition for LSEG to reach net zero ### 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. ## 2040 55 London Stock Exchange Group plc Annual Report 2022 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 LSEG Board has ultimate oversight of the LSEG 2022 and opportunities. sustainability agenda and strategy. Climate Report Page 32 Management’s role in assessing and managing Sustainability Committee is chaired by Chief climate-related risks and opportunities. Corporate Affairs & Marketing Officer. The Chief Risk Officer and Chief Operating Officer are members of the Sustainability Committee. Strategy Identification of climate-related risks Led by Group Sustainability, engagement LSEG 2022 and opportunities. occurs across our business units to identify Climate Report and manage future climate-related risks and Page 11 onwards opportunities that have a material impact on and our business model. Impact of climate-related risks and LSEG’s business purpose and commitment opportunities on the organisation’s businesses, to sustainable growth reflects approach and strategy, and financial planning. consideration of climate-related risks and opportunities in our products and services and business operations. Resilience of strategy under varying Group Sustainability leads and co-ordinates climate-related scenarios. 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 Our Enterprise Risk Management Framework LSEG 2022 climate-related risks. includes and embeds sustainability risks which Climate Report are raised and owned by the business. 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 Climate-related risks are embedded within the risk management. Enterprise Risk Management Framework. Metrics and targets Metrics to assess climate-related risks Accurate data collection in place to support LSEG 2022 and opportunities. interim targets. Climate Report Page 28 onwards | Disclosure of scope 1, scope 2, and scope 3 | Combined data inventory reflecting legacy | | --- | --- | | greenhouse gas (GHG) emissions and the | business emissions for 2019, 2020, 2021 and | | related risks. | 2022 has been verified and published. | | Targets used to manage climate-related | Near-term science-based targets approved | | risks and opportunities and performance | with 2026 and 2030 target dates with a | | against targets. | 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 56 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Enabling sustainable growth continued | Our emissions – methodology | Our emissions are calculated | LSEG’s Scope 1, 2 and 3 | the GHG Protocol Corporate | | --- | --- | --- | --- | | & verification statement | according to an ‘operational | emissions disclosed here, and in | Standard and the GHG Protocol | | We report all the emission | control’ boundary using the | our Sustainability Report, have | Corporate Value Chain (Scope 3) | | sources required under the | GHG Protocol Corporate | been externally verified by | Standard. Conduct of the | | Companies Act 2006 (Strategic | Accounting and Reporting | Cameron-Cole against the | verification met the requirements | | Report and Directors’ Reports) | Standard (revised edition) and the | requirements of the WRI/WBCSD, | of ISO 14064-3:2006(E). | | Regulations 2013. These sources | UK Government Environmental | GHG Protocol, GHG Protocol | | | fall within our consolidated | Reporting Guidelines: Including | Corporate Accounting and | | | statement and we do not have | streamlined energy and carbon | Reporting Standard (revised | | | responsibility for any emission | reporting guidance (March 2019). | edition), GHG Protocol Scope 2 | | | sources that are not included in | | Guidance: An amendment to | | our consolidated statement. 7 Overall performance 2022 2021 2020 2019 % Change 1,5 Total Group Carbon Footprint (tCO e) 718,706 571,885 640,693 657,008 +9% 2 1 per headcount (HC) 30 24 27 27 +9% 1 per £m Total Income 93 80 90 96 -4% 2,5 Scope 1 1,450 1,000 1,960 2,163 -33% 3,5,6,8 Scope 2 Market based 4,167 3,138 6,492 10,189 -59% 3,8 Scope 2 Location based 69,833 106,566 111,644 143,206 -51% 4,5 Scope 3 713,089 567,747 634,175 646,569 +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). 57 London Stock Exchange Group plc Annual Report 2022 Enabling sustainable growth continued | Streamlined Energy and | Regulations 2018, along with the | sources of emissions for | for emissions sources was | | --- | --- | --- | --- | | Carbon Reporting (SECR) | addition of fugitive and process | which the Group is responsible. | determined using the operational | | LSEG calculates all available | emissions and the extension of | The methodology used was that | control approach. | | emissions sources required under | the scope to global emissions, | of the Greenhouse Gas Protocol: | | | The Companies (Directors’ Report) | rather than UK emissions only. | A Corporate Accounting and | | | and Limited Liability Partnerships | LSEG calculates greenhouse gas | Reporting Standard (revised | | | (Energy and Carbon Report) | emissions to cover all material | edition, 2015). Responsibility | | 2 (SECR) table 2022 2021 2020 2019 % Change 1 3 3 Total Energy Consumption (kWh) 164,955,639 262,134,466 276,810,614 371,895,033 -56% 1 UK Energy Consumption (kWh) 56,452,497 54,401,256 80,552,486 118,956,031 -53% Scope 1 458 556 716 1,381 -67% 4 Scope 2 – Market Based 612 422 577 153 +300% 4 Scope 2 – Location Based 10,672 10,908 17,758 27,805 -62% tCO e/HC (Scope 1 & 2 location-based) 2.52 2.53 4.07 6.75 -63% 2 3 3 3 tCO e/HC (Scope 1 & 2 market-based) 0.24 0.22 0.28 0.35 -32% 2 1 EMEA Energy Consumption (kWh) 5,646,972 12,353,859 14,077,652 42,882,337 -87% Scope 1 7 4 5 34 -78% 4 Scope 2 – Market Based 71 586 755 1,082 -93% 4 | | | Scope 2 – Location Based | | | 2,061 4,928 4,709 9,043 -77% | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 1 | | 1, 3 | | | 3 | | 3 | | | Americas | Energy Consumption (kWh) | | | 73,162,491 155,778,235 | | | 130,961,747 | | 158,530,000 -54% | Scope 1 547 187 450 393 -39% 4 Scope 2 – Market Based 3,188 1,786 2,431 6,550 -51% 4 Scope 2 – Location Based 40,476 77,060 63,969 80,463 -50% 1 APAC Energy Consumption (kWh) 29,674,070 39,189,207 49,521,785 48,161,602 -38% Scope 1 438 253 788 356 +23% 4 Scope 2 – Market Based 297 343 2,729 2,405 -88% 4 Scope 2 – Location Based 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 ### LSEG calculates greenhouse gas emissions to ### cover all material sources of emissions for ### which the Group is responsible. ## -56% 58 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Enabling sustainable growth continued Non-financial Sustainability reporting As signatories of the UN Principles information statement frameworks and guidance for Responsible Investment, we See our separate online Sustainability This non-financial information We are actively monitoring are committed to an ongoing Report at the following address: statement provides an overview developments including in relation process to align our strategy with www.lseg.com/sustainability-strategy/ | of topics and related reporting | to metrics. In 2022, our focus | the 2015 Paris Agreement and | disclosures-and-reports | | --- | --- | --- | --- | | references in our external | included among others, | the UN Sustainable Development | | | reporting as required by sections | the Task Force on Climate-related | Goals (SDGs). Our climate | | | 414CA and 414CB of the | Financial Disclosures (TCFD), and | ambition strives to make a | | | Companies Act 2006. We | the Global Reporting Initiative | positive contribution. | See our separate online Climate | Report at the following address: integrate non-financial and (GRI) standards metrics. www.lseg.com/sustainability-strategy/ sustainability-related information Further information on non- disclosures-and-reports across the Strategic report financial and sustainability and wider reporting suite, matters can be found within thereby promoting cohesive our reporting suite. reporting of non-financial and sustainability matters. | Reporting | Page references | Relevant policy and statement | | --- | --- | --- | | requirement | in this document | available on lseg.com | | Business model — Our strategy | Pages 26 to 39 | | — Our purpose-led areas of focus — How we create value — Our business performance Our stakeholders — Section 172(1) statement Pages 60 to 73 — Stakeholder focus areas Environment — Climate-related disclosures Pages 50 to 58 — Sustainability Policy — Environmental statement Our employees — Employees Pages 60 to 63 — Code of Conduct — Diversity and Inclusion — Diversity & Inclusion statement Governance — Section 172(1) statement Pages 70 to 73 — Sustainability Policy — Corporate governance and 86 to 141 — Directors’ remuneration report Respect for — Human rights and Modern Slavery Page 53 — Human Rights Statement human rights — Modern Slavery Act statement 2022 Anti-bribery — Risk overview Pages 53 and 74 to 84 — Anti-Bribery and Corruption statement and corruption — Mandatory learning for all employees Risk management — Principle Risks and uncertainties Pages 74 to 84 — Enterprise Risk Management Framework (ERMF) — Risk governance 59 London Stock Exchange Group plc Annual Report 2022 ## Our culture: ## building one LSEG ## 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% 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 60 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Our culture: building one LSEG continued | Our culture of connecting, | — Through our One Leadership | To build awareness across our | While we are proud of the | | --- | --- | --- | --- | | creating opportunity and | series we bring our senior | sites globally, we ran spotlight | progress we have made on | | delivering excellence shapes | leaders together and in 2022 | campaigns to celebrate a range of | gender representation, we | | how we work and how we help | this community focused on | events from International Women’s | acknowledge that there is more | | our people fulfil their potential. | ‘Leading with Ambition’. | Day to Black History Month to | we need to do to increase levels | | | | Pride Month, as well as a number | of ethnic representation at Senior | | In 2022, we introduced a wide | Driving Diversity & Inclusion | of religious festivals. We have | Leadership and within our Group | | range of programmes to activate | We believe there is a strong | eight thriving Inclusion Networks | Director population and this | | our culture, including: | correlation between diversity | which represent voices of | remains a key area of focus for us. | | | and inclusion and business | colleagues who are historically | | | Developing strong, engaged | performance. Our intent is | | Going forward, we are working | underrepresented in the and inclusive leaders to create a truly inclusive on providing more clarity around corporate environment and in Leadership development is at the organisation where: our ethnicity disclosures and will senior leadership. | centre of how we are creating | — We invest in our people. | | continue to evolve our diversity | | --- | --- | --- | --- | | diverse and inclusive teams. | — Our leaders take accountability | 2. Building a globally diverse | goals to ensure they are | | Leaders are accountable for | for driving sustainable change. | leadership team | representative of our growing | | making sure they attract, retain | — We are all accountable for | In 2021, we introduced the | employee and customer base | | and develop great people by | creating an inclusive culture. | following diversity goals at | and are useful measures of | | maximising their potential and | — All our people can achieve | senior leadership: | our progress. | | encouraging new ways of | their potential. | — 40% women in roles by the | | | thinking. There are several | This year we have made | end of 2022. | In 2022, we have developed a | | programmes to reach those | good progress against our | — 20% underrepresented ethnic | number of initiatives to make | | at all stages of their Leadership | four D&I ambitions. | groups in roles by the end of | our commitment clear. LSEG’s | | journey including: | | 2023 and 25% by the end | Inclusive Leadership Programme | | — Emerge: for those who | 1. Creating a culture that | of 2025. | looks to strengthen our leaders’ | | are interested in becoming | fosters belonging | | capability to foster innovation | | a leader. | At LSEG, we strive to create an | As of December 2022, we have | among diverse groups and our | | — Compass: for new People | environment where everyone | met our gender goal of 40% at | Returner Programme prioritises | | Leaders who bring our | feels they are given a fair | senior leadership resulting in a 7% | professionals returning to work | | culture to life and build high | opportunity, their voice is heard, | increase since December 2021. | after a career break, with a special | | performing teams. | and where everyone is respected | | focus on women. | | — Evolve: for existing leaders who | for who they are. Our policies | In 2022, we expanded our | | | are developing to lead several | and processes are constantly | diversity goals to Group Directors: | | | teams, often globally. | reviewed to support the needs | — 40% women in roles by the end | | | | of our people, including the | of 2027. | | | | introduction of a new global policy | — 25% underrepresented ethnic | | | | to support “Menopause at Work”. | groups in roles by the end | | of 2027. 2022 2021 (combined org) Disclosure Disclosure Gender Female % Male % rate % Female % Male % 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 1 Senior Leadership 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 2022 2021 (combined org) Under- Under- represented Disclosure represented Disclosure 2 Ethnicity White % ethnic groups % rate % White % ethnic groups % rate % 3 LSEG plc Board 11 85 2 15 100 – – – – – 1 Senior Leadership 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. 61 London Stock Exchange Group plc Annual Report 2022 Our culture: building one LSEG continued | 3. Creating equity in our | Adopting a hybrid approach | | --- | --- | | practices to maintain a | to work | | diverse pipeline of talent | In 2022, we continued to evolve | | Our Talent Identification | the ways in which we work and | | programme helps People Leaders | connect. We introduced a | | to better understand individuals’ | framework to guide working | | strengths and career interests, | patterns, recognising that different | | supporting their growth. | roles have different needs. | This approach includes three These individuals feed into our workstyles: Office First, Blended Talent Accelerator programmes and Digital First. Our approach that build our internal succession balances the benefits of being pipeline while supporting our co-located with colleagues in our inclusion commitments. The APAC offices and customer sites with the Accelerator programme focuses flexibility of being able to work on our APAC leadership pipeline from home. and ‘Illuminate’ focuses on building Black and Latinx During the year, we also representation across the UK continued to invest in our office and US. spaces and digital tools. We brought together more colleagues | 4. Shaping inclusion in | under one roof by consolidating | | --- | --- | | our industry | offices in six cities, and renovated | | We recognise that LSEG has a | nine offices to cater for more | | significant platform to help shape | collaborative workspaces. | inclusion across organisations and industries. Supporting our colleagues’ wellbeing This year, to provide a more At LSEG, our colleagues’ comprehensive study into our wellbeing is a priority. Ensuring pay equity position, we partnered that they have the emotional, with Mercer to carry out analysis physical, social, and financial across sub-sections of pay data: support to perform at their best gender (globally) and race and is a key part of our culture. Our ethnicity (for the US and UK). global Employee Assistance Programme (EAP) is a 24/7 We are also active participants in confidential support service that a number of important industry- provides qualified assistance to wide initiatives, including the first colleagues and their dependants ever sector-wide Socio-Economic on a wide range of topics. Diversity Taskforce, the Women in Finance Charter and the Change We have also trained close to the Race Ratio Programme. 180 Mental Health Awareness Champions globally, who are key Our progress has been to helping us improve mental recognised through a number of health literacy and support healthy awards including Company of the behaviours in the workplace. Year at the European Diversity | Awards and Large Brand of the | Measuring our progress | | --- | --- | | Year at the Bank of London | During the year, we further refined | | Rainbow Honours. LSEG was | the way we measure our culture, | | rated Gold in the India Workplace | supported by clear governance | | Equality Index and we are a | and standards to ensure data | | member of the Valuable 500. | privacy and protection. LSEG | Engage, our Group-wide survey, To underline our commitment, helps us to confirm what is Diversity and Inclusion forms working well and identify areas part of our Group Strategic where we need to improve. Objectives which are directly linked to overall pay and reward. For more information, please refer to our Remuneration Report on pages 113 to 141. 62 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Our culture: building one LSEG continued | Feedback from 2021 showed us | Externally, to strengthen and build | | --- | --- | | that colleagues were motivated | LSEG’s global talent reach, we | | by LSEG’s future potential but that | targeted priority marketplaces to | | there was more we could do | roll out our new employer brand. | | to simplify processes for our | In 2022, we launched campaigns | | colleagues. We have responded | in Bucharest, Bengaluru, Bangkok | | in a number of ways, including | and Manila centring on the | | streamlining cross-divisional | exciting opportunities we can | | communication and speeding | deliver for our people. | up our hiring processes. Building resilient teams | Results from our 2022 survey | LSEG continues to monitor | | --- | --- | | indicated that we are continuing | geopolitical events affecting | | to make good progress on our | our colleagues globally, taking | | cultural transformation journey. | interventions to support our | | Highlights include: | teams where necessary. | — Engagement score up 2 points | from 2021 to 75 points; | We responded to the Ukraine/ | | --- | --- | | participation remained high | Russia conflict by focusing on | | at over 85%. | the safety and wellbeing of our | | — Colleagues feel increasingly | people, remaining vigilant to the | | positive about their career | increased systemic risks and | | development opportunities | working with our customers to | | and they feel a stronger sense | facilitate business continuity | | of belonging. | efforts. Our teams in Romania and | | — People feel confident to speak | Poland set up donation banks and | | up and are encouraged to find | used their allocated two days of | | better ways to get things done. | volunteering to directly support | people displaced by the crisis | Focus areas include: | and, through LSEG Foundation | | --- | --- | | — Continuing to simplify our | donations and matched colleague | | systems and processes for | fundraising, more than £250,000 | | colleagues. | was committed to the International | | — Providing more clarity around | Rescue Committee’s (IRC) | | decision-making. | humanitarian efforts in the region. | | Another key element of our | LSEG continues to review | | listening strategy is our ongoing | economic challenges in the APAC | | dialogue between employees and | region, specifically in Sri Lanka | | the LSEG Board. In 2022, we had | where we have run regular | | 4 sessions covering more than | wellbeing checks and made | | 50 colleagues globally. As well as | exceptional compensation | | discussing our integration journey, | adjustments where necessary. | the sessions focused on how we can create a more collaborative Our teams in all of these culture and support our locations have shown remarkable colleagues through change. resilience and many, like Ukrainian colleague Maria Kolos pictured Attracting the best talent right, have valued being able At LSEG, we aim to attract to continue working despite and retain the very best the challenges. 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. Photo credit: Alexey Ermakov 63 London Stock Exchange Group plc Annual Report 2022 ## Board engagement ## with stakeholders The following pages set out how In addition, the Board recognises ## The Board recognises the the Board has engaged with, and that the Company’s shareholders sought to understand the views of, are a key stakeholder, and the ## importance of engaging with our key stakeholders: views and interests of Customers shareholders influence the ## the Group’s stakeholders Workforce decisions and actions taken Regulators by the Board. ## throughout the year. | | This has been achieved through | The Board seeks to engage | | --- | --- | --- | | | a combination of direct Board | with shareholders throughout the | | Meaningful engagement and | engagement and indirect | year with more detail provided | | | engagement, for example | in the Corporate Governance | | | via executive management. | Report on page 95. Further | ## two-way dialogue allows Management has used the information on the activities of the outputs of its engagement with Board can be found on page 96. ## the Board to understand the stakeholders to inform business- level decisions, with an overview ## interests, needs, and concerns of developments and relevant feedback reported to the Board ## of the stakeholders relevant and/or a Board Committee. ## 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. Read more about the activities of the Board in the Corporate Governance Report beginning on page 86. 64 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Board engagement with stakeholders continued ### CUSTOMERS How the Board has engaged A key area of focus for our We monitor customer feedback customers is the development to help us understand our of new products and services. ### Our diversified global business is built on customers’ views on the Group’s During the year, the Board ### customer partnership, delivering value across products and services as well as reviewed the new FX trading the ways that they would like us capability in Singapore, as well as ### the trading ecosystem in Data & Analytics, to improve our offering. Customer new FTSE Russell partnerships ### Capital Markets, and Post Trade. We remain engagement meetings are held to with SGX, Bursa Malaysia and enable our senior management to JPX in Japan. The Board also ### focused on the opportunities from bringing our understand what matters to our monitored the embedding of ### businesses together to benefit our customers customers and to build strategic our FX trading functionality into relationships with them. Tradeweb’s emerging market ### and drive sustainable long-term growth. bond trading interface so that During 2022, the Group CEO customers can, in a single ### We believe that aligning our strategy, services engaged with customers in a workflow, hedge their FX ### and products to the needs and interests of our number of ways, including: an exposure when they trade extensive outreach programme those bonds. ### customers is central to supporting long-term to key customers; individual ### value creation. meetings with particular emphasis Customers (and other on technology transformation, stakeholders) have also been operational resilience and product focused on technology and the offerings; and attendance at the operational resilience of the Customers we serve FTSE Russell World Investment Group. The Board has supported Forum to meet asset owners and management in the year in asset managers in person. allocating capital and investing in further improving our technology Management also engages and operational resilience. This ## 45,000+ | regularly with our customers on | includes the strategic partnership | | --- | --- | | a day-to-day basis, in meetings, | with Microsoft which will include | | at roundtable events and | the development of next- | | conferences. In 2022, | generation data, analytics and | | management was pleased to | cloud infrastructure solutions in | | meet with customers in person | order to provide even better | | and regularly welcomed | services for our customers on a | | customers to the office in | cloud platform which will provide | | Paternoster Square for meetings | greater efficiency and agility. | and also for market open and market close ceremonies, which The Board approved the were well attended. The Board is acquisitions of TORA, MayStreet, regularly updated on customer Global Data Consortium views and input. and Acadia which further strengthen our data and trading Many of our shareholders are also propositions and meet evolving customers, so the Group regularly customer needs. receives informal customer feedback through investor To support our customers with outreach programmes. their climate transition journey, the Group has facilitated the | Key matters for | raising of over £1.4 billion in | | --- | --- | | stakeholder group | capital since inception of the | | Key matters for customers | LSE Transition Bond segment and | | include product offering, product | £26.8 billion on the LSE Social | | innovation, a focus on digitisation/ | Bond segment. In October 2022, | | transformation, managing and | we launched our Voluntary | | reducing costs, system stability | Carbon Market designation to | | and sustainability. | facilitate financing at scale into | projects that mitigate climate How this engagement change. Further information can influenced Board discussions be found in our Sustainability and decision-making Report on pages 10 and 11 – Customer feedback is www.lseg.com/en/sustainability- communicated by the Group strategy/disclosures-and-reports. CEO, CFO and other members of the Executive team to the Board when decisions and actions are taken which could impact on customers. 65 London Stock Exchange Group plc Annual Report 2022 Board engagement with stakeholders continued | WORKFORCE | How the Board has engaged | In 2022, townhall meetings were | | --- | --- | --- | | | Engagement with our employees | held across the Group which were | | | includes formal and informal | attended in person and virtually. | ### The Group’s workforce is approximately | | meetings, an annual employee | Townhalls are held at the Group | | --- | --- | --- | | 24,000, across 65 countries and is fundamental | engagement survey and | and Divisional levels, and topics | | | townhall meetings. | are tailored to the different | ### to the success of the Group. Integration of the audiences with interactive Q&A ### Refinitiv business is progressing well with The Board seeks to engage with a sessions. A number of these wide cross section of employees townhalls were led by the CEO, ### ongoing two-way dialogue and feedback | | to better understand their | CFO and other members of the | | --- | --- | --- | | with employees at every level to ensure this | perspectives on the business. | Executive Committee. Over 13,000 | | | Board members engaged in | colleagues joined the global | ### happens effectively and efficiently, and we person with employees when townhall livestream for the ### build a unified and distinctive culture. they undertook their annual visit 2021 full-year results. to an overseas office, which was | | New York in 2022. | The Group CEO met colleagues | | --- | --- | --- | | Group workforce | | in the US during visits to New | | | Board members also met with | York, Fort Mill and Washington. | | | colleagues virtually through a | He also met colleagues in Saudi | | | series of conversations with | Arabia, United Arab Emirates, | | | employee forums held in key | Japan, Philippines and Singapore | | | regional locations. These | and held virtual meetings with | ## 24,000+ meetings provided Board colleagues in other regions. members with an opportunity to | gain insight into the culture and | A series of leadership events | | --- | --- | | any concerns at different levels of | were held in 2022 to provide | | the business. Directors provided | information on the Group’s | | feedback to the Board at the | strategy as well as focusing | | next meeting and several of the | on ‘Leading with Ambition’. | engagements were shared with the workforce via intranet articles. The annual ‘LSEG Engage’ These engagements included: employee survey provided — Dominic Blakemore and colleagues with an opportunity Cressida Hogg meeting with to share their views on working colleagues from the North at LSEG. and Southeast Asia region More information on employee — Martin Brand and Kathleen engagement can be found DeRose meeting with on pages 60 to 63 of the colleagues from the Strategic report. 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. 66 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Board engagement with stakeholders continued Key matters for How this engagement stakeholder group influenced Board discussions The key themes arising from these and decision-making engagements are: integration The Board was kept informed of activity and removing barriers to developments in Sri Lanka, execution; communications, Ukraine and Russia throughout including updates on business the year, including the welfare of performance and plans; culture, our colleagues and actions taken including inclusion and sense by management to support them. of belonging, hybrid working, This included inflationary pay rises wellbeing, empowerment, and in Sri Lanka, advancing salaries career progression; gender to those in Ukraine and ensuring and ethnic diversity, including funding was available to pay increasing leadership presence colleagues in Russia. in the APAC region; remuneration and reward; sustainability; and Feedback from the Board’s Covid-related support. engagement sessions in the previous year (see 2021 annual | Key themes from the Board | report) included concerns around | | --- | --- | | conversations in each region | underrepresentation of leaders | | were as follows. | based in Asia. Responding to this | | — EMEA: integration activity and | and other feedback, LSEG has | | removing barriers to execution; | created an Accelerator | | the Board’s position on | Programme to support the | | sustainability matters; inclusive | development of high potential | | culture and career progression; | candidates in APAC, providing | | empowerment and talent | them with the experiences and | | acquisition; technology; | exposure needed to progress | | employee wellbeing and | their careers. The first cohort | | support to colleagues in | launched in February 2022 for | | countries experiencing crisis | 64 individuals and concludes | | or conflict; and products and | in March 2023. In 2022, we | | services for customers. | also launched the Illuminate | | — Asia: culture, including inclusion | programme, designed to support | | and sense of belonging; gender | the acceleration of Black and | | and ethnic diversity, including | Latinx talent and strengthen | | increasing leadership presence | inclusive leadership capability. | | in the APAC region; talent | The first cohort launched in | | acquisition, career progression | September 2022 for 12 Black and | | and the Group’s future leader | Latinx leaders and 12 ally leaders | | accelerator programme; | and concludes in March 2023. | 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. 67 London Stock Exchange Group plc Annual Report 2022 Board engagement with stakeholders continued ### POLICYMAKERS, REGULATORS AND SUPERVISORS How the Board has engaged Key matters for The Board considers policy, stakeholder group regulation and supervisory Relevant key matters include: ### Maintaining an open and cooperative guidance that may affect the market competitiveness, including ### relationship with policymakers and regulators Group’s businesses globally and the attractiveness of the UK as in the countries in which we a global financial centre; ### on matters that affect our Group, industry, operate. These matters are also cross-border access to financial ### customers, and people is critically important. discussed as part of the Chairs’ services and data; sustainability Forum (composed of the Chair and ESG issues; data and ### The Group has a significant number of of the Group Board and the technology, including data privacy ### regulated entities around the world. These chairs of the principal regulated and digital assets; and resilience subsidiaries), the outputs of which and financial stability, including ### entities are supervised at the legal entity level, are provided by the Chair to the cloud and operational resilience. ### with our primary regulators predominantly Group Board at subsequent Board meetings. How this engagement ### engaging with the boards of those entities. influenced Board discussions and decision-making The Group Board takes into Countries where we operate consideration the priorities and focus areas of policymakers and regulators when discharging its duties and responsibilities. This includes Board discussions on ## 190 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. 68 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Board engagement with stakeholders continued Suppliers The Company continues to be a Our third-party suppliers are also signatory to the Prompt Payment important stakeholders of the Code, a voluntary code of practice Group. Given their significance, for businesses, administered by management regularly reassesses the Office of the Small Business the tiering of our suppliers based Commissioner (SBC) on behalf of on factors including the degree of BEIS. It sets standards for payment criticality of the goods/services practices between organisations being provided to LSEG, financial of any size and their suppliers. spend, and risk. The Board | approves all supplier contracts | As a signatory, the Company has | | --- | --- | | with a financial value of £50m or | agreed to: | | more (over the lifetime of the | — pay suppliers on time, within | | contract), and receives updates | agreed terms | | on the management of, and | — give clear guidance to suppliers | | relationships with third-party | on terms, dispute resolution | | suppliers where appropriate. | and prompt notification of | | The Risk Committee provides | late payment | | oversight of the risk relating to | — support good practice | | third-party suppliers to ensure | throughout their supply chain | | these arrangements are managed | by encouraging adoption of | | within risk appetite and any issues | the Code. | are appropriately remediated. Each year we publish a statement In addition to the procurement setting out the Group’s approach and ongoing management of to managing its supply chain. suppliers, a number of the Group’s More information on the subsidiaries are required to report Group’s approach can be found their supplier performance and at: www.lseg.com/en/policies/ policies as part of the Small modern-slavery-act-statement. 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. 69 London Stock Exchange Group plc Annual Report 2022 ## How the Board ## has complied with ## Section 172(1) | | Section 172 requires a Director | Decision-making | | --- | --- | --- | | Section 172 of the Companies | to have regard, amongst other | and Section 172 | | | matters, to the: | Information on how the Board | | Act 2006 (Section 172) requires | — Likely consequences of any | engaged with stakeholders | | | decisions in the long-term; | during the year, and how this | | a Director of a company to act | — Interests of the company’s | engagement influenced Board | | | employees | discussions and decision-making | | in the way he or she considers, | — Need to foster the company’s | during 2022 are set out on the | | | business relationships | previous pages. The following | | in good faith, would most likely | with suppliers, customers | principal decisions and activities | | | and others | demonstrate how the Board has | | | — Impact of the company’s | assessed and addressed different | ## promote the success of the operations on the community stakeholder interests and impacts and environment in making decisions that support ## company for the benefit of — Desirability of the company the implementation of the Group’s maintaining a reputation for purpose and strategy (as set out ## its members as a whole. | | high standards of business | on pages 30). We believe that | | --- | --- | --- | | | conduct and | principal decisions are those | | | — Need to act fairly as between | that are material, or of strategic | | Read more about the activities of the | members of the company. | importance to the Group, and | | Board in the Corporate Governance | | those that are significant to | | Report beginning on page 86. | In discharging its Section 172 | the Group’s key stakeholders. | | | duties, the Board considered | Details on how our Board and | | | these factors throughout the year. | its Committees operate, their | | | The Board recognises the | responsibilities, and the matters | | | importance of engaging with | considered during the year are | | | stakeholders and understanding | contained in the Corporate | | | their views, to help inform | Governance Report and the | | | strategy, Board discussions | Committee Reports on pages | | | and decision-making. In making | 86 to 116. | 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. 70 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT How the Board has complied with Section 172(1) continued 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 In December 2022, the Company announced a 10-year strategic partnership with Microsoft — Customers ### Strategic Corporation for next-generation data and analytics and cloud infrastructure solutions. Further — Employees ### partnership information on the partnership can be found on pages 7 and 19. The Company and Microsoft — Shareholders have agreed to co-invest in the product development roadmap for the data platform, — Pension schemes ### with Microsoft Workspace, and in analytics initiatives. — Regulators 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. 71 London Stock Exchange Group plc Annual Report 2022 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 | 72 London Stock Exchange Group plc^{}[] Annual Report 2022 STRATEGIC REPORT How the Board has complied with Section 172(1) continued Key matter Decision Stakeholders considered During the year the Board considered and discussed updates on sustainability matters and the — Communities ### Sustainability Group’s position on sustainability. LSEG is committed to being an enabler of sustainable economic — Customers growth. In 2022, following the completion of the Refinitiv acquisition, we reset our sustainability — Employees ambition and strategy, to reflect the scale and urgency of global sustainability challenges, — Shareholders our central role in financial markets and LSEG’s new scale and capabilities. As part of this, — Suppliers 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. EY has been the Company’s auditor since 2014, and the Company is required to undertake — Shareholders ### Change an audit tender every 10 years and to change external auditor after 20 years. The Audit — Suppliers ### of auditor Committee, on behalf of the Board, carried out a tender process in 2022 for its external audit — Regulators 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. 73 London Stock Exchange Group plc Annual Report 2022 ## Principal risks ## and uncertainties | | Risk management – introduction | Three Lines of Defence | | --- | --- | --- | | Managing risk is fundamental | The effective management of risk | The 3LOD model provides | | | is critical to the execution of the | appropriate segregation of | | to the successful execution | Group’s strategy. Accordingly, | duties and clear roles and | | | the Group maintains a robust | responsibilities across LSEG | | of our strategy and to the | Enterprise-wide Risk Management | business divisions, corporate | | | Framework (ERMF), which sets | functions, risk, compliance and | | resilience of our operations. | out the Group’s approach to risk | internal audit. It clearly defines | | | management and its appetite | roles and responsibilities, | | | for taking risks. Our regulated | with accountability for risk | | | entities, including clearing houses, | management sitting within the | Read more about the activities of the manage their risks in line with First Line of Defence, which is Board in the Corporate Governance both local regulation and internal the relevant business unit. Report beginning on page 148. risk and investment policies. Risk management approach | For each principal risk, the Group | The ERMF manages risk | | --- | --- | | has Executive leads with the Chief | throughout the full risk lifecycle. | | Risk Officer and Risk function | It is in place to support the ongoing | | providing a second line of | and systemic identification, | | oversight. The risk trend, shown | evaluation, management, | | for each principal risk, is based | monitoring and reporting of the | | on the Group’s 2022 risk profile. | significant risks faced and the | mitigating controls in place against As well as our principal risks, we them. This process is supported by continue to identify and monitor robust risk governance, designed emerging risks which are either to give a coherent view of risk new to the Group or are difficult across the full Group. to quantify due to their remote or evolving nature. In most cases, In order to maintain a risk the mitigation for such emerging management system that applies risks is to establish appropriate effectively and consistently across contingency plans and monitor all areas of the business, we have the development of the risk until in place a risk taxonomy. This is it can be quantified and removed an inventory of all types of risk or included as a principal risk. that are identified as inherent in business strategies and Risk culture objectives, including strategic, A strong risk culture requires non-financial and financial risks. everyone to understand and embrace their role in managing These risks are reflected in the risks and this is critical to the Group risk appetite statements effective embedding of the ERMF. and are managed through principles set out in the Group’s LSEG’s new partnership Our existing ERMF and risk Risk culture is a key enabler of the policies. Risk assessments with Microsoft governance practices described Three Lines of Defence (3LOD) determine whether risks are within In December, LSEG and Microsoft above will be used to assess, model, used to manage risk within the appetite set by the Board announced a new long-term manage and report on these risks LSEG, and is promoted by the and are reported to senior strategic partnership to architect and the change to our risk profile. ERMF in three ways: management and the Board. LSEG’s data infrastructure using Equally, the partnership with — It sets expectations by the Microsoft Cloud, and to jointly Microsoft provides strategic articulating risk appetite Risk governance develop new products and risk mitigation in response to and desired behaviours Risk governance and oversight is services for data and analytics. observable shifts within the through policies. enabled through an effective The partnership will inevitably Financial Market Infrastructure — It ensures risk is considered governance structure comprising change LSEG’s current risk profile, (FMI) and Technology sectors, in key business decisions Board-level committees (Board, specifically transformation risk, thereby ensuring LSEG remains through frameworks and tools. Audit and Risk) and executive- as we begin to co-develop new relevant, competitive and — It ensures risk is made level committees to promote products and services with responsive to how our customers transparent and included in active discussion and resolution Microsoft, and non-financial risks are adopting cloud computing. accountability and performance of risk issues. associated with large-scale cloud We also expect to see risk management. migrations as we deliver more of reduction opportunities as we The risk framework defines the our services from Microsoft Cloud. migrate our systems from legacy risk roles, responsibilities and technology and on-premises data governance structure. The risk centres to more modern, resilient governance structure ensures the technology in the Microsoft Cloud. appropriate expertise and overall input in order to adequately oversee and challenge the risk positions across the Group. 74 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Principal risks and uncertainties continued The risk committees, sub- Risk Governance Structure committees and relevant working groups are embedded within the Board Risk Committee overall governance structure of the Group. A Group and divisional Escalation of cross-divisional and/or material items committee structure provides risk Escalation as needed oversight with escalations between forums as needed. Group Executive Risk Committee Group-level committees consist of: an overall Group Executive Escalation as needed Risk Committee (ERC) and Group-level sub-committees, including Financial Risk (FRC), Group ERC sub-committees Technology, Cyber and Resilience Risk (TC&RC) and Non-Financial Financial Risk Technology, Cyber and Non-Financial Committee Resilience Committee Risk Committee Risk (NFRC) committees which meet on a regular basis. Other sub-committees, such as the Escalation as needed to relevant Group Sub-Committee New Product and Market Committee meet on an ad-hoc Group ERC sub-committees basis, when required. LCH Ltd and SA Capital Markets UnaVista Group Data & Analytics Each of the risk committees Risk Committees Risk Committee Risk Committee Risk Committee has detailed terms of reference, approved by the Board or their parent committee, setting out their respective roles and Overview of principal risks responsibilities. Strategic risks Non-financial risks Group risk appetite Global economic and geopolitical Technology Risk appetite is the level of risk Reputation/Brand/IP Information and cyber security threats that LSEG will accept in pursuit Transformation Business continuity of its strategic objectives and is Third-party risk aligned with the Group’s strategy. Data governance The risk appetite is a central People and talent pillar of the ERMF and is used Regulatory change and compliance as a benchmark for both risk assessment and monitoring, with regular reporting of aggregated Financial risks Emerging risks risks to both the Board Risk CCP risk Disruptive technology Committee and the ERC. Model risk Sustainability risk The Board, on an annual basis, articulates LSEG’s risk appetite. This is cascaded throughout the organisation with divisions and Three Lines of Defence functions establishing more detailed risk appetite statements Board/Board Risk Committee/Board Audit Committee and monitoring their risk profile against the agreed appetite levels. 1st line of defence 2nd line of defence 3rd line of defence Risks that are outside risk appetite are escalated to Executive Business units Risk and compliance Internal audit Committee members and to the — Implementation of — Review and challenge — Independent assurance of appropriate Risk Committee business strategy of business units business risk management and Boards. — Day-to-day risk management — Oversee the level of risk activities, including that the and decision making appetite within LSEG risk management framework — Effective implementation — Development of the risk is both designed and of the risk management management framework operating effectively framework, including — Provide specialist advice reporting and escalation and training across the organisation 75 London Stock Exchange Group plc Annual Report 2022 Principal risks and uncertainties continued ### STRATEGIC RISKS Risk trend key ### Risks related to our strategy (including the Increasing ### implementation of strategic initiatives and Stable ### external threats to the achievement of our Decreasing ### strategy). The category also includes risks Emerging ### associated with reputation or brand values. Risk category Risk Mitigation Risk overview The Group’s income streams benefit from diversification ### Global Whilst the Group is well diversified, global economic across both a broad global footprint and large customer economic underperformance or the influence of geopolitical relations base, helping mitigate the exposure to localised economic on global financial markets could have an adverse impact on downturns. Furthermore, a significant proportion of income ### and geopolitical our people, businesses, operations or financial conditions. streams across our business divisions comprise annuity and subscription-fee based recurring revenues, limiting the Executive lead Risk description Group’s exposure to shorter-term movements in the global Chief Executive Officer We operate in a broad range of equity, fixed income, foreign credit cycle. In conditions of volatility the Group benefits exchange and derivative markets servicing customers who Risk trend from market infrastructure capabilities exposed to trading increasingly seek global products and innovative solutions. volumes and pricing movements, including FX venues, If the global economy underperforms, or there is reduced LSE secondary markets, Tradeweb, and the London activity in our markets, it may lead to lower revenues. Central Clearing House (LCH). banks have recently taken steps to counteract inflationary pressures, mainly through raising interest rates. This has The Group performs regular monitoring and assessment impacted on financial markets, raising the risk of recession in of the potential impacts of market prices and volume advanced economies and the risk of default in some emerging movements. It also monitors and manages exposures to economies. More broadly, geopolitical relations continue to the market through hedging both foreign exchange and influence global financial markets, particularly the development interest rate risks, tracking key risk indicators and stress of Western countries’ relations with China and the ongoing testing financial resilience. conflict between Russia and Ukraine which is severely The Group regularly monitors external threats and impacting global energy and food supplies. 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. Risk overview Policies and procedures are in place to ensure the ### Reputation/ Several of the Group’s businesses are iconic and trusted appropriate use of the Group’s brands and to manage the brand/IP international brands, and as these businesses are more closely integrity of the Group’s reputation. LSEG actively monitors aligned under one overarching LSEG name, there is potential the use of its brands to prevent, identify and address any Executive lead for an event or incident to damage not only the reputation and infringements. The Group protects its intellectual property Chief Executive Officer value of an individual brand but also the broader set of LSEG by relying upon a combination of trademark, copyright, Risk trend branded products. patent and design laws, trade secret protection, database rights, confidentiality agreements and other contractual Risk description arrangements with its employees, affiliates, customers, The strong reputations of LSEG’s businesses are valuable suppliers, strategic partners and others. 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. 76 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Principal risks and uncertainties continued Risk trend key Increasing Stable Decreasing Emerging Risk category Risk Mitigation Risk overview Transformation risk is reduced by the application of the ### Transformation The Group is materially exposed to risk of loss or failure Group’s Enterprise Risk Management Framework to deploy resulting from transformation or integration as it continues to consistent, appropriate Risk Management and specific Executive lead grow rapidly both organically and inorganically. mitigations across the Group, both during and post- Chief Executive Officer, acquisition. The risk and change governance of the Chief Operating Officer Risk description Group following a merger or acquisition is aligned and As LSEG makes acquisitions, these may, in some cases, be Risk trend strengthened as appropriate following review. complex or necessitate change to operating models, business models, technology and people. The Group’s success has a The Group Transformation Forum, reporting to the high dependency on its ability to integrate all parts of its Executive Committee, is responsible for the successful business, including acquisitions, realise synergies across the delivery and risk management of the Group Strategic Group, and ensure that the Group is able to compete on a Programmes. Oversight and assurance across the global scale. A failure to align the businesses of the Group Group’s change portfolio is provided by Group Risk and successfully may lead to: an increased cost base without a Internal Audit. commensurate increase in revenue; a failure to capture future The Group has an effective track record of integrating product and market opportunities; and risks in respect of capital acquisitions, separating disposals and delivering tangible requirements, regulatory relationships and management time. synergies in an evolving regulatory and technological During 2022, the Group continued to undertake M&A activity, landscape. This is supported by robust governance and both acquisitions and divestments. Acquisitions require the programme management structures through the Group’s Group to operate and integrate different technology platforms Change Framework. 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. 77 London Stock Exchange Group plc Annual Report 2022 Principal risks and uncertainties continued ### FINANCIAL AND MODEL RISKS Risk trend key ### The risk of financial failure and loss of earnings Increasing ### and/or capital as a result of investment activity, Stable ### lack of liquidity, funding or capital, and/or the Decreasing ### inappropriate use of models. Emerging Risk category Risk Mitigation Risk overview CCPs by design are financially resilient against the largest ### CCP risk The Group’s CCP activities – through LCH – expose it to a default risks. The CCP rulebook is the foundation of its number of financial risks that arise from the CCP’s obligation resilience. The CCP rulebook is a legally binding document Executive lead to guarantee the performance of cleared contracts between signed by members that governs all clearing activities. Group Head of its members in the event a member defaults. It details the powers of the CCP to assess appropriate Post Trade margins, to place a member in default and to liquidate a Risk description Risk trend defaulting member’s positions and collateral. The key lines In the event of a member default, the CCP must restore a of defence laid out in the CCP rulebook include minimum matched book by liquidating or transferring the defaulting standards for member eligibility, initial and additional member’s positions held with the CCP. This can expose the margins posted by members, a portion of the CCP’s own CCP to both adverse changes in the market value of the capital, and then member default funds and mutualisation positions (such as changes in asset prices, interest rates, of losses. Additionally, the CCP can use powers of credit spreads and foreign exchange) and liquidation costs assessment to further absorb losses beyond the default (such as the cost of finding liquidity to exit the positions). fund. The resilience of these mechanisms is tested via In addition, the CCP has investment risk arising from the an annual fire-drill. investment of member cash and liquidity risk arising from its ongoing payment obligations. If the CCP does not have In its cash investment activities, the CCP’s primary sufficient cash available, there is a risk of a liquidity shortfall objective is to protect principal and liquidity and to ensure (i.e. the CCP failing to meet its payments). Non-financial risks prompt availability of cash when needed. Establishing arise as a result of the CCP’s day-to-day operations, such as strict criteria for the eligibility of counterparties, securities operational, legal & compliance and reputational risk. 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. Risk overview LSEG businesses have an industry standard model risk ### Model risk The Group’s model risks could arise from omitting models from control and governance framework in place, including inclusion into model inventory, from errors during the data our Model Risk Policy, the Model Management System, Executive lead sourcing, development, implementation or use of models, developer and validation documentation templates and Divisional Group Heads, or from errors in the decisions made based on their outputs. development and documentation standards. Robust model Chief Risk Officer validation, performed by an independent team, is in place Risk description Risk trend to confirm our critical models are fit for purpose, and has The Group utilises an increasing suite of models, including been rolled out across the full suite of models within the Artificial Intelligence (AI), across all of its business divisions Group. Model lifecycle controls are in place including (e.g., margin models used within our CCPs, D&A client facing ongoing performance monitoring for key models and analytics, market abuse detection models within the Capital tracking of model changes for all models. The risk oversight Markets division, or stress models used to calculate capital and is provided by the Model Risk Committee (MRC), which is a climate risk). Model risks could impact both the reputation and subset of the Financial Risk Committee (FRC). Additionally, the financial condition of the Group. 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. 78 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Principal risks and uncertainties continued ### NON-FINANCIAL RISKS Risk trend key ### The risk of loss or other adverse consequences Increasing ### to the business resulting from inadequate, Stable ### or failures associated with, internal processes, Decreasing ### people and systems, or from external events. Emerging Risk category Risk Mitigation Risk overview The Group continues to invest in the resilience of the ### Technology LSEG is highly dependent on the development and operation of technology systems and processes that underpin its its sophisticated technology and advanced information systems important business services. These investments are Executive lead and those of its third-party service and outsourcing providers. balanced across business growth, risk reduction initiatives Chief Information Officer and strategic transformation as an enabler to longer term Risk description Risk trend objectives. The performance and availability of the Group’s Technology failures potentially leading to system outages may systems are constantly reviewed and monitored to prevent impact our customers and the orderly running of our markets, problems arising and, where possible, to ensure a prompt data services and distribution. Overall, the number and severity response to any potential service-impacting incident. of incidents linked to the legacy estate continues to decline. 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. 79 London Stock Exchange Group plc Annual Report 2022 Principal risks and uncertainties continued ### NON-FINANCIAL RISKS CONTINUED Risk trend key Increasing Stable Decreasing Emerging Risk category Risk Mitigation Risk overview We continue to make significant investments in cyber ### Information and As a global Financial Markets Infrastructure (FMI) and data security and have a dedicated Cyber Security function led cyber security provider, LSEG is exposed to cyber risk. Increasing in by our Chief Information Security Officer (CISO) which is sophistication, frequency and persistence, cyber risks are focused on protecting and defending LSEG against cyber ### threats growing more dangerous and diverse. attacks. Due to the increasing sophistication of cyber adversaries and the techniques that they use, we Executive lead Risk description proactively collect and evaluate threat intelligence. Chief Information Officer Significant cyber events continue to be observed in the financial We recognise that the prevention of cyber attacks may sector and in the broader economy that demonstrate the Risk trend not always be possible and our focus and priority is on sophistication of cyber adversaries and the impact they can remaining resilient to withstand cyber attacks with minimal have on the victim organisation. Cyber risk is driven by the disruption to our business. Our approach to cyber security increasing use of data, technology and digital services by aligns to industry frameworks such as the National Institute LSEG directly and by our supply chain. In addition to the direct of Standards and Technology (NIST) cybersecurity impact on ourselves and our customers, our role as an FMI framework and we will continue to invest and advance means that a significant cyber event could create a systemic our cyber defence, detection, response and recovery impact to the UK financial sector and the global markets that capabilities. Our Group operates a three lines of defence we serve. We must acknowledge, to remain competitive in this framework and we have a dedicated Cyber Risk function era of data and digitalisation, that cyber risk cannot be within Group Risk providing independent oversight eliminated. However, it can be managed to a level of risk and challenge. that we are prepared to take as a cost of doing business. Risk overview We have been updating our business continuity plans ### Business Business continuity is one of the key objectives of the Group’s throughout 2022 to reflect operating model changes continuity operational resilience strategy. It helps address the Group’s following the integration of Refinitiv. We continuously ability to prevent, adapt to, respond to and recover from review our plans and ensure they reflect the changing risk Executive lead operational disruptions to minimise the impact on our customers landscape. Our plans are being migrated onto a single Chief Operating Officer, and on the financial stability of capital markets. platform to ensure consistency across the Group for 2023. Chief Risk Officer, Risk description We have implemented a three-tiered Group crisis Divisional Group Heads While the Group has processes and controls in place to ensure management structure to improve our ability to respond Risk trend the continuity of its services and operations, unforeseen events effectively at the appropriate level. A revised Group crisis such as physical security or cyber threats and increased management plan is in place with improved playbooks for geopolitical concerns could impact on the continuity of the key scenarios and is exercised to ensure the Group can Group’s services. The Group’s operations in Ukraine and respond effectively. Russia were impacted by the conflict, requiring us to comply We have performed a review of vulnerabilities in our with relevant sanctions and local legislative concerns and to key locations and are implementing a resilience strategy ensure the wellbeing of affected colleagues. 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. 80 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Principal risks and uncertainties continued Risk trend key Increasing Stable Decreasing Emerging Risk category Risk Mitigation Risk overview The Group continues to refine its third-party risk ### Third-party Failure to manage the risks associated with the selection, management framework to provide controls across all risk management and oversight of critical third parties could impact stages of the third-party lifecycle, covering: planning and on the Group’s ability to deliver its strategic objectives. selecting; contracting and onboarding; managing and Executive lead monitoring; and termination and exit. Risk description Chief Operating Officer, Our third parties are exposed to a range of risks including The framework helps make sure that the Group assesses Divisional Group Heads, geopolitical and cyber security threats and regulatory risk at key stages in the lifecycle and actively manages Chief Information Officer compliance risk, whereby events may result in suppliers being relationships with critical third parties to avoid a breakdown Risk trend unable to meet their contractual, regulatory, confidentiality or in service provision. other obligations to the Group. This could lead to material The Group focuses on the ability of critical third parties to financial loss, higher costs, regulatory actions and reputational continue to supply goods and services in accordance harm. The Group and its entities engage third-party service with requirements and in compliance with contractual providers including Cloud Service Providers (CSPs). obligations. Throughout the year, there have been no The Group has engaged CSPs to host critical services and significant impacts to the supply chain for the Group. 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. Risk overview LSEG’s Enterprise Data Governance function, led by the ### Data LSEG plays a significant role in the financial market Group Data Officer and the divisional data leadership management infrastructure and data landscape with commitments to its teams, works to develop and institute a comprehensive customers, counterparties, owners, vendors, regulators programme to ensure Group data is of the highest quality Executive lead and the public in the proper usage of its data. in order to support its intended use and the needs of our Divisional Group Heads, stakeholders, customers and regulators. The Group Data Risk description Chief Operating Officer Policy and its framework support initiatives that promote a LSEG collects, processes, licenses, calculates, owns, Risk trend data culture that embodies customers’ needs, improves transforms, administers, and distributes data in many formats efficiency and quality of decision-making and ensures (e.g. structured, unstructured, electronic and print formats, adherence to regulatory obligations. As such, the Group audio-visual, production, testing and archive data, derived has defined and implemented a standardised approach data and personal data). to data management oversight, governance, controls, Failure to govern the Group’s data successfully could result in measures and monitoring, as well as efficient issue those data being unfit for purpose with respect to quality and resolution to mitigate any adverse impacts to the business. usage. This could result in the Group or its customers and In addition, the Group’s Data Protection & Privacy Policy stakeholders utilising deficient data when making decisions sets out a framework for privacy compliance to make sure which could adversely affect the Group’s reputation, financial that personal data that is processed during the Group’s condition and operating results. Data privacy breaches, misuse business is used fairly, lawfully and in compliance with all of personal data or failure to protect confidential information applicable data protection and privacy legislation. The could adversely affect the Group’s reputation and expose it to Group’s Information Security Policy includes a framework litigation or other legal or regulatory actions. Unauthorised data for data leakage prevention and information security access or privacy breaches may cause some of the Group’s incident management. LSEG employees complete annual customers to lose confidence in its security measures and mandatory training courses on the Group’s data policies. could impact on the Group’s financial performance. 81 London Stock Exchange Group plc Annual Report 2022 Principal risks and uncertainties continued ### NON-FINANCIAL RISKS CONTINUED Risk trend key Increasing Stable Decreasing Emerging Risk category Risk Mitigation Risk overview In 2022, the Group focused on continued progress towards ### People Risks to the Group could arise from a lack of critical skills, talent D&I objectives, aligning benefit frameworks and processes and talent and knowledge, resulting in the Group being unable to achieve globally, embedding reward and performance frameworks its objectives. and launching leadership development and acceleration Executive lead programmes. There has also been a focus on ensuring Risk description Chief People Officer efficiency in internal processes and on supporting People and culture risks can arise from ineffective career Risk trend colleagues as they return to office environments through development, organisational structures and leadership, all of the hybrid working model. Talent identification and career which could impact on the engagement and wellbeing of our development frameworks were launched in 2022 to people. Furthermore, increased market competition and support our people in ensuring they have appropriate skills challenging geopolitical or economic conditions can result and resources available to undertake their roles effectively in an ability to attract and retain diverse, high-performing and to support their career journey at LSEG. talent, and/or could lead to a disengaged workforce. Risk overview Changes in the regulatory environment form key inputs into ### Regulatory LSEG is a global business operating within many regulatory our strategic planning, including the political impact on our change and environments. The Group is exposed to risks associated with growth strategies, both organic and inorganic. We monitor changes to regulatory requirements and how we manage regulatory developments continually and engage directly ### compliance those changes. with policymakers as well as regulatory and governmental authorities at local, regional and national levels. Executive lead Risk description General Counsel, Regulatory change risks that LSEG may face include: risks The Group continues to maintain systems and controls Chief Executive Officer, arising from the conditions under which LSEG can access a to mitigate compliance risk. In addition to the overall Divisional Group Heads particular market (e.g. EU equivalence for UK CCPs); the Group Compliance function, compliance resources with regulation and supervision of new activities; the overall reforms specialised knowledge of each of the regulated services Risk trend in the wholesale markets in the EU and the UK; and the greater provided by the Group are aligned with the regulated focus on information and cyber security, data localisation and entities operating within each business division. They ESG data and scoring providers. There is also a risk that one provide regulatory advice to the business, corporate or more of the Group’s entities may fail to comply with the functions and committees to support them in ensuring laws and regulatory requirements to which it is subject. In this that both day-to-day operations and business event, the entity may be subject to censures, fines and other developments are undertaken in accordance with the regulatory or legal proceedings. 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. 82 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT Principal risks and uncertainties continued ### EMERGING RISKS Risk trend key ### Risks which are new to the Group or which Increasing ### are difficult to quantify due to their remote or Stable ### evolving nature. Decreasing Emerging Risk category Risk Mitigation Risk overview The Group actively monitors new technological ### Disruptive Structural market changes, new business models and advances developments and the pace of change, developing robust technology in cloud, artificial intelligence (AI) and distributed ledger innovation strategies to mitigate the risk resulting from technology (DLT) could lower entry barriers, increase emerging technology. The Group, including through our Executive lead competitive pressures and change the markets we serve. Strategy function, actively scans for potential investment Chief Information Officer, opportunities in emerging technology and has a dedicated Risk description Divisional Group Heads innovation function with subject matter expertise in specific Change driven by disruptive technology could negatively Risk trend areas of technology. The Group partners with advisers and impact on the performance of our core business and disrupt builds proof of concepts to test new hypotheses and, by our commercial models. This risk spans the business, and the collaborating with our customers, can identify and quickly pace of change of business models, technology advances and react to changing consumption preferences. market entrants continues to accelerate. Regulators are actively exploring the application of new Cloud providers are expanding their capabilities from storage frameworks to manage the development of innovative to a wide range of data management and analytics solutions. financial services technologies. We expect these to be They also enable a whole new ecosystem of providers, important for maintaining resilience and stability in the including new market entrants, who can now take advantage of market while enabling innovation with emerging cloud providers’ customer bases and fast development cycle. technology. The Group participates in relevant industry The increased use of AI internally and among customers and academic forums, partnering closely with regulators. brings with it associated risks such as inherent bias and The Group continues to maintain systems and controls automated decision-making and data management. It will also to mitigate the risk resulting from emerging technology. introduce new challenges for cyber security defence and Risk arising from the Group’s use of cloud, AI and DLT is detective mechanisms. identified, assessed, managed and reported through the As technology and regulatory clarity improves, aggressive Group’s risk framework. We align with industry best competitor activity in DLT could increase risk of disruption. DLT practices and guidance when considering increased presents a potentially disruptive risk to parts of our business use of AI and DLT. as it may result in a reduced need for centralised intermediaries, thereby bypassing some of the services we offer. 83 London Stock Exchange Group plc Annual Report 2022 Principal risks and uncertainties continued ### EMERGING RISKS CONTINUED Risk trend key Increasing Stable Decreasing Emerging Risk category Risk Mitigation Risk overview We support the development and adoption of global ### Sustainability Sustainability risk can be defined broadly as an environmental, standards for sustainable finance and encourage risk social or governance event or condition that, if it occurs, can consistency in regulation across jurisdictions. LSEG is an cause significant negative financial or non-financial impact active member of a number of groups that are helping set Executive lead on the Group. Sustainability risk also includes the opportunity global standards including: the Transition Plan Taskforce, Chief Corporate Affairs that may be available to LSEG because of changing social, the Green Technical Advisory Group, the Glasgow Financial and Marketing Officer, economic, environmental or regulatory factors. Alliance for Net Zero, the Climate Financial Risk Forum, Divisional Group Heads the Voluntary Carbon Markets Forum, the Singapore Green Risk description Risk trend Finance Industry Taskforce, the India-UK Sustainable Sustainability risk encompasses a wide variety of other risks Finance Working Group, and the Hong Kong Financial which are diverse in nature, ranging from regulatory reporting Services Agency ESG Focus Group. and Diversity and Inclusion to greenwashing, amongst others, and their individuality needs to be recognised and addressed. Internationally, we work with our peers in the financial sector to drive collaboration on sustainable finance and The Group’s focus to date has been primarily on integrating investment, including through the Glasgow Financial climate risks and opportunities into investment decision-making, Alliance for Net Zero, the Climate Data Steering Committee to enable transition to a low-carbon economy (see page 55 and the United Nations Sustainable Stock Exchanges on Climate Risk). International organisations, governments and initiative. This engagement helps shape the policy regulators are focused on integrating climate-related risks and and disclosure response to climate-related risks and opportunities into strategic and investment-related decision- opportunities and supports the review and enhancement making in order to prepare for a world which will be impacted of our market position with regards to sustainable finance. by rising global temperatures. This remains an area of emerging In line with increased disclosure requirements for and wide-ranging policy development, impacting on financial corporations and financial markets participants, LSEG has market participants and corporates. taken proactive steps to develop its methodology to We assess climate risk for the Group to encompass both understand how climate change impacts its businesses, physical and transitional risks. Physical risks are acute and both from a risk and opportunity perspective. chronic risks which may impact on our people as well as our With regards to physical climate-related risks, given global, geographically-dispersed property portfolio. Transitional incidences of flooding which have impacted on LSEG over risks are factors such as product availability, policy, regulatory the course of 2022, we continue to carry out extensive and market-related developments that may impact on our reviews, including the initiation of detailed environmental business as the world transitions to a Paris-aligned carbon assessment of our property locations. This work will emission trajectory. continue to progress in 2023, and will feed into our Our aim is to reinforce the Group’s resilience to both physical enhanced mitigation response across our portfolio. and transitional risks including how the transition will impact From a transitional climate risk perspective, we have on demand for financial products and services. These efforts made progress this year in designing architecture to draw on internationally-recognised guidance, including the allow us to potentially deploy departmental-wide carbon Task Force on Climate-related Financial Disclosures (TCFD) budget targets, the first step in a multi-year process of recommendations, and we aim to be well prepared for ongoing implementing carbon pricing mechanism considerations and forthcoming mandatory reporting requirements and to into business decisions. This initiative will allow us to protect the Group’s reputation. LSEG continues to report and prepare the business for any potential future regulatory submit disclosures aligned to TCFD. initiatives on carbon pricing, allowing us to better For more information on our approach to sustainability, understand the cost and opportunity associated with please see our “Enabling Sustainable Growth” section on any such action. pages 50 to 59 and our 2022 Climate Report which can be Finally, we incorporate sustainability risk into LSEG’s found on our website: www.lseg.com/en/sustainability-strategy/ taxonomy at different levels to recognise the diversity disclosures-and-reports. 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. 84 London Stock Exchange Group plc Annual Report 2022 STRATEGIC REPORT ## Financial viability ## statement In accordance with provision policies and processes for Scenario Assumption Associated | 31 of the Code, the Directors | managing its capital; its financial | | | principal risk | | --- | --- | --- | --- | --- | | confirm that they have a | risk management objectives; | | | | | reasonable expectation that the | and its exposure to credit risk, | Global Financial | A replay of the 2008 crisis, | Global economic | | Group will continue to operate | liquidity risk and market risk. | Crisis | re-assessed to align with | and geopolitical. | | and meet its liabilities, as they | | | current market conditions. | See page 76 | | fall due, for the next three years. | The business plan is stress tested | | The scenario considers the | for more | | | using severe but plausible | | collapse of a major financial | information | A period of three years has been downside scenarios as institution and a simultaneous chosen for the purpose of this determined relevant by the default of one medium-sized viability statement, in line with (domestic rather than the Group’s business plan. Financial Risk Committee, over international) bank. the full three-year plan period. Additionally, the scenario Viability period These scenarios are then includes the consolidation The Directors’ assessment has assessed against the Group’s of four medium-sized banks been made with reference to risk appetite parameters. Impacts into two. | the Group’s current position and | on the performance of core | | | | | --- | --- | --- | --- | --- | | prospects, the Group’s three-year | revenue streams and segments | | | | | business plan, the Group’s risk | are modelled through business | Global Pandemic The scenario considers the | | Global economic | | appetite and the expected impact | inputs, with appropriate mitigating | | proliferation of Covid-19, | and geopolitical. | | of severe but plausible downside | factors also considered. | | or a similar pandemic, with | See page 76 | | scenarios and updated based | | | significant impacts throughout | for more | | on the observed impact of | The scenarios modelled are | | the global value chain. | information | | the Covid-19 pandemic on | discussed in the table on the | | There are severe, highly | | | the business. | right-hand side of this page. | | synchronised downturns | | associated with a persistent Given the Group’s acquisitive The results show that a repeat loss of output in developed nature in recent years and future of the Global Financial Crisis and emerging economies. would have the largest impact Governments worldwide organic growth strategy, a on Group EBITDA. No scenario implement restrictions on three-year window is considered over the three-year period human interaction and travel the most appropriate horizon for to control virus contagion. | the Group’s management to make | leads to a breach of the Group’s | | | | | --- | --- | --- | --- | --- | | its viability statement because | risk appetite thresholds, or an | | | | | it is the period over which it can | inability to meet the Group’s | | | | | | | Severe UK | This scenario assumes | Global economic | | forecast with sufficient clarity, the | financial obligations through | | | | | | | economic downturn | GBP-USD currency rates | and geopolitical. | | Group’s financial performance, | insufficient headroom. | | move to parity with outsized | See page 76 | | cash flows and strategic position. | | | moves in UK interest rates, | for more | A reverse stress test has been A 12-month period from the inflation, unemployment, information completed, to evaluate the house prices and GDP. expected date of the signing financial impacts required to of the financial statements is breach the Group’s risk appetite considered for the going concern thresholds. The likelihood of this Cyber security The scenario considers a Information and assessment (see note 1.2 to the threats cyber ransomware attack cyber security scenario materialising is viewed financial statements of page 166). impacting the Group’s ability threats. See as remote. to serve a large portion of page 80 Business planning process its customers. for more Borrowing facilities The business plan makes information The Group’s borrowing facilities certain assumptions about the and respective repayment dates, performance of the core revenue and the net debt position of the streams and segments, using Change delivery This scenario assumes Transformation. Group, are included in note 22 failure key supplier unavailability See page 77 existing product lines as well from page 207. The facilities that due to geopolitical and for more as assumptions on take up of new mature during the viability period technological issues, which information product lines. It considers known are expected to be refinanced. results in the delayed inorganic activity, as well as delivery of one of the Group’s assumptions on: the appropriate Conclusion key strategic programmes. levels of investment to support The Directors assessed the expected performance; the ability prospects and viability of the to refinance debt as required; and Group in accordance with expected returns to shareholders. provision 31 of the UK Corporate Governance Code taking into Assessment of viability account the Group’s three-year The principal risks and business plan, and the principal uncertainties facing the Group are risks to the Group’s future set out on pages 74 to 84 of the performance and liquidity. The Strategic report. In addition, the Directors have a reasonable Financial Risk management note expectation that the Group has on page 220 of the accounts the ability to meet its obligations includes: the Group’s objectives, over the viability period. 85 London Stock Exchange Group plc Annual Report 2022 ## Governance ## 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. 86 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE 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 87 London Stock Exchange Group plc Annual Report 2022 # Corporate governance introduction ![img-1.jpeg](img-1.jpeg) The Board is responsible for the long-term sustainable success of the Company, generating value for shareholders and contributing to wider society. Don Robert Chair 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. London Stock Exchange Group plc Annual Report 2022 88 Corporate governance introduction continued 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 89 London Stock Exchange Group plc Annual Report 2022 ## Board of Directors ## The Board’s membership ## reflects a wide range of skills ## and business experience, ## drawn from a number of ## industries, which is critical for Don Robert David Schwimmer Chair of the Company and Group Chief Executive Officer ## bringing both the expertise the Nomination Committee ## required and to enable different Appointed to the Board in January 2019 and Chair of Appointed to the Board in ## perspectives to be brought | | the Company in May 2019. | August 2018. | | --- | --- | --- | | to Board discussions. | Skills, knowledge | Skills, knowledge | | | and contribution | and contribution | | | — Strong track record in | — A wealth of knowledge | | | global financial services, | surrounding market structure, | | | international business and | investment banking and | | | mergers and acquisitions | emerging markets | | | — Expert regulatory knowledge, | — Extensive experience in corporate | | | accompanied with a deep | finance, capital markets, and | | | understanding of technology | mergers and acquisitions | | | and data & analytics | — Deep understanding of the | | | — Significant executive | business and the markets within | | | and non-executive listed | which the Group operates | board experience | | Experience | Experience | | --- | --- | --- | | | Don spent 18 years at multinational | Prior to joining the Group in August | | | information company Experian plc, | 2018, David spent 20 years at | | | where he most recently served as | Goldman Sachs, where he held a | | | Chairman (2014-2019). Prior to that | number of senior roles, most | | | he was Group Chief Executive | recently as Global Head of Market | | | (2005-2014) and CEO of the North | Structure and Global Head of Metals | | | American business (2001-2005). | & Mining. During his tenure, he also | | | Don has served in a variety of senior | served as Chief of Staff to Lloyd | | | roles including Chair of the US | Blankfein, who was then President | | | Consumer Data Industry Association, | and COO of Goldman Sachs, and | | | Senior Independent Director of | spent three years in Russia as | | | Compass Group plc and Non- | Co-Head of Russia/CIS. Prior to | | | Executive Director of the Court | joining Goldman Sachs, he practised | | | of Directors, Bank of England. | law at Davis Polk & Wardwell. | | Director changes in 2022 | Other current appointments | Other current appointments | | Jacques Aigrain | Non-Executive Director and | Non-Executive Director, Centre | | | Chair-designate, Keywords Studios | for New American Security | Stepped down from the Board on plc (becoming Chair in May 2023); (Not-for-Profit). 27 April 2022, having served over Chair of Council, The London School eight years on the Board. of Hygiene & Tropical Medicine; Partner, Corten Capital; Non- William Vereker Executive Director of Validis Joined the Board on 3 October 2022. Holdings Limited and FlexCharge; Visiting Fellow, Oxford University; * Director changes since and Honorary Group Captain, 31 December 2022 Royal Air Force. 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, Committee membership will step down from the Board on Nomination (Chair) 17 March 2023. Remuneration 90 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE Board of Directors continued Anna Manz Dominic Blakemore Martin Brand Erin Brown* Group Chief Financial Officer Independent Non-Executive Non-Executive Director Non-Executive Director Director and Chair of the Audit Committee | Appointed to the Board in | Appointed to the Board in | Appointed to the Board in | Appointed to the Board in | | --- | --- | --- | --- | | November 2020. | January 2020. | January 2021. | January 2021. | | Skills, knowledge | Skills, knowledge | Skills, knowledge | Skills, knowledge | | and contribution | and contribution | and contribution | and contribution | | — Extensive expertise in accounting, | — Extensive experience in corporate | — Significant board and | — Significant international financial | | corporate finance and mergers | finance, investor relations, | executive experience across | management experience | | and acquisitions | and capital markets | listed companies | — Expertise in mergers & | | — Significant financial and | — Significant financial leadership | — Highly accomplished in corporate | acquisitions | | strategic leadership in areas | experience from various | finance, with a focus on the | — Specialised knowledge | | such as risk, treasury | international financial institutions | financial technology sector | of accounting, corporate | | management and accounting | — Strong strategic planning and | — Extensive experience in strategic | finance, data & analytics, | | — Expertise in business | decision-making experience | planning, data & analytics and | and treasury-related matters. | | diversification and transformation | | mergers & acquisitions | | | Experience | Experience | Experience | Experience | | --- | --- | --- | --- | | Anna is a chartered accountant. Prior | Dominic is a chartered accountant | Martin’s work at Blackstone Inc. | Erin is currently Head of Finance at | | to joining the Group in November | and has been Group Chief Executive | has seen him involved in several | Thomson Reuters Corporates. Her | | 2020, Anna was Chief Financial | Officer of Compass Group plc since | of their high-profile investments | previous roles at Thomson Reuters | | Officer and Executive Director of | 2018. Previously, he served as | including; Sphera, Ellucian, Refinitiv, | includes Treasurer, Vice President | | Johnson Matthey plc (2016-2020), | Group Finance Director (2012-2015), | Bumble, IntraFi and Paysafe. He | of Knowledge Solutions – Tax & | | leading its Finance, Procurement, | Group Chief Operating Officer, | previously worked as a derivatives | Accounting, Vice President, Finance, | | and IT functions. Prior to joining | Europe (2015-2017) and Deputy | trader with Goldman Sachs in New | and Vice President and Assistant | | Johnson Matthey plc, Anna spent | Chief Executive Officer in 2017. | York and Tokyo, and with McKinsey | Treasurer. In 2018, Erin led Thomson | | 17 years at Diageo plc in a number | Dominic was formerly a Non- | & Company in London. He was a | Reuters’ sale of a 55% interest in its | | of senior finance roles, including | Executive Director and Chair of the | Director of Refinitiv until 2021 and | former Financial & Risk business | | most recently as Chief Strategy | Audit, Risk and Compliance | was Chair of Tradeweb Markets | (now Refinitiv) to certain investment | | Officer and member of the | Committee of Shire plc (2014-2018). | (a subsidiary of LSEG) until | funds affiliated with Blackstone. | | Executive Committee. | He previously served as Chief | February 2022. | Prior to joining Thomson Reuters, | | | Financial Officer of Iglo Foods Group | | Erin held a number of finance roles | | Other current appointments | Limited (2010-2011). Before joining | Other current appointments | at General Motors (2003-2011). | | Non-Executive Director of ITV plc. | Iglo, Dominic was European Finance | Head of North America Private | | | | & Strategy Director at Cadbury plc | Equity, and Global Co-Head of | Current appointments | | | (2008 -2010). | Technology Investing, Blackstone | Head of Finance, Thomson | | | | Inc.; Director, UKG Software; Director | Reuters Corporates; Director, | | | Other current appointments | Liftoff Mobile; Director, First Eagle; | York Parent Limited. | | | Group Chief Executive Officer, | Trustee, American Academy Berlin. | | Compass Group plc; and Vice-Chair, University College London. Committee membership Committee membership Committee membership Audit (Chair) Nomination Nomination Nomination Risk 91 London Stock Exchange Group plc Annual Report 2022 Board of Directors continued | Professor Kathleen DeRose | Tsega Gebreyes | Scott Guthrie* | Cressida Hogg CBE | | --- | --- | --- | --- | | Independent Non-Executive | Independent | Non-Executive Director | Senior Independent | | Director and Chair of the | Non-Executive Director | | Director and Chair of the | | Risk Committee | | | Remuneration Committee | | Appointed to the Board in | Appointed to the Board in | Appointed to the Board in | Appointed to the Board in | | December 2018. | June 2021. | February 2023. | March 2019. | | Skills, knowledge | Skills, knowledge | Skills, knowledge | Skills, knowledge | | and contribution | and contribution | and contribution | and contribution | | — Executive leadership experience | — Deep financial services and | — Market-leading experience in | — Significant board and executive | | in capital markets and asset and | capital markets experience | cloud infrastructure and data & | level experience combined with | | wealth management | gained from various global | analytics | a strong corporate background in | | — Significant non-executive listed | senior executive and | — A deep and valuable | infrastructure, private equity and | | board experience | non-executive roles | understanding of the technology | capital markets | | — Expertise in the financial | — Significant expertise in | market | — Strong Chair experience and | | technology market, | international business | — Specialist in digital transformation. | competency in embedding | | risk management and | and technology | | corporate governance values | | data & analytics. | — Strong background in strategy | | — Specialist knowledge in mergers | | | and business development. | | and acquisitions, financial | services regulation and pensions. | Experience | Experience | Experience | Experience | | --- | --- | --- | --- | | Kathleen held a number of senior | Tsega spent seven years at Celtel | Scott has 25 years’ experience | Cressida spent nearly 20 years with | | roles at Credit Suisse Group AG | International, a leading mobile | leading large technology teams at | 3i Group plc and was one of the | | (2010-2015). Other positions | telecommunications provider in | Microsoft, and has been Executive | co-founders of 3i’s infrastructure | | Kathleen has undertaken have | the Middle East and North Africa. | Vice President of Microsoft’s Cloud | business in 2005, before becoming | | included Managing Partner, and | During her tenure at Celtel, Tsega | and AI division since 2014. He is | Managing Partner in 2009. During | | Head of Portfolio Management and | held a variety of senior roles | responsible for Microsoft’s Cloud | this time, Cressida advised on all | | Research at Hagin Investment | including Senior Group Adviser, | Platform, Data and AI solutions, | of 3i’s infrastructure transactions. | | Management (2006-2010), and | Zain Africa BV (2007-2016), Chief | Operating Systems, Business | She was also Global Head of | | Managing Director, Head of Large | Strategy and Development Officer | Applications, Development Tools, | Infrastructure at Canada Pension | | Cap Equities at Bessemer Trust | (2005-2007), Chief Business | and Industry Solutions. The products | Plan Investment Board (2014-2018). | | (2003-2006). Prior to 2003, | Development and Mergers & | and services his team delivers | In addition to her senior executive | | Kathleen also held a number of roles | Acquisitions Officer (2003-2005) | include Microsoft Azure, Dynamics | positions, Cressida served as a | | at Deutsche Bank and JPMorgan | and Director, Mobile Commerce | 365, Power BI, SQL Server, Nuance, | Non-Executive Director of | | Chase (formerly Chase Manhattan | and New Product Development | GitHub, Visual Studio and the core | Associated British Ports Holdings | | Bank). In addition to her senior | (2000-2003). In addition to her | Windows operating system. Scott | Limited and a Non-Executive | | executive positions, Kathleen served | senior executive positions, Tsega | was previously Corporate Vice | Director of Anglian Water Group. | | as a board member of EDGE | has served as Vice Chair of SES | President of Microsoft Azure | | | (Economic Dividends for Gender | SA, and Non-Executive Director of | (2011-2014), Corporate Vice | Other current appointments | | Equality) (2014-2015), and she | Hygeia Nigeria Limited (2009-2015), | President of Microsoft’s Developer | Chair, Land Securities Group PLC | | was founding Chair of Evolute | ISON Group (2013-2018) and Sonae | Division (2008-2011), General | (until 16 May 2023); Chair-designate | | Group AG (2016-2017). | SA (2015-2019). | Manager Microsoft Developer | and Non-Executive Director, BAE | | | | Division (2005-2008). | Systems plc (becoming Chair in | | Other current appointments | Other current appointments | | May 2023); Non-Executive Director, | | Non-Executive Director, Experian plc; | Founding Director, Satya Capital | Other current appointments | Troy Asset Management Ltd. | | Non-Executive Director, Voya | Limited; Non-Executive Director, | Executive Vice President, | | | Financial Inc.; Non-Executive | Airtel Africa plc. | Microsoft Cloud and AI Group. | | 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 | Committee membership | Committee membership | Committee membership | | --- | --- | --- | --- | | Risk (Chair) | Audit | Nomination | Remuneration (Chair) | | Audit | Nomination | | Nomination | | Nomination | Risk | | | | 92 | | London Stock Exchange Group plc | | Annual Report 2022 GOVERNANCE Board of Directors continued Dr Val Rahmani Douglas Steenland Ashok Vaswani William Vereker Independent Non-Executive Director Independent Independent Non-Executive Director Non-Executive Director Non-Executive Director | Appointed to the Board in | Appointed to the Board in | Appointed to the Board in | Appointed to the Board in | | --- | --- | --- | --- | | December 2017. | January 2021. | June 2021. | October 2022. | | Skills, knowledge | Skills, knowledge | Skills, knowledge | Skills, knowledge | | and contribution | and contribution | and contribution | and contribution | | — Significant expertise and | — Extensive Chair and executive | — Extensive experience in, and | — Highly experienced banker, | | knowledge of technology and | experience across a range of | understanding of, banking and | including experience in | | technical risk management | listed companies | the financial services industry | executive roles | | — Deep understanding of digital | — Background as a legal | — Deep knowledge and | — Significant knowledge | | transformation, innovation, | practitioner, bringing expertise | comprehension of technology, | and experience of capital | | sales and marketing | in corporate law and finance | risk management, and wealth | markets, post trade and | | — Extensive listed director | — Detailed understanding of | management | investment banking | | experience accompanied | international business, financial | — Expertise in data & analytics and | — Deep knowledge of financial | | by expert corporate | services and insurance. | capital markets. | services and regulatory and | | governance knowledge. | | | government relations. | | Experience | Experience | Experience | Experience | | --- | --- | --- | --- | | Val worked for IBM for almost | Douglas is the former President | Ashok held a number of senior roles | William began his career at Morgan | | 30 years, and was Chief Executive | (2001-2004) and Chief Executive | within Barclays Group, including: | Stanley and held a variety of | | Officer of cyber security start-up, | Officer (2004-2008) of Northwest | Chief Digital Strategy Officer at | investment banking roles with a | | Damballa Inc., for four years. | Airlines Corporation. Prior to this, | Barclays plc (2021-2022); CEO, | focus on the energy and utility | | Her past career also included | he held a number of executive | Global Consumer Banking & | sectors, which culminated with him | | Non-Executive Director positions | positions at the company including | Payments (2019-2021); CEO, Barclays | being MD & Head of European | | at Aberdeen Asset Management | Executive Vice President, Chief | UK (2016-2019); CEO, Personal and | Utilities (2001-2005). He also held | | plc and Teradici Corporation. | Corporate Officer, Senior Vice | Corporate Banking (2014-2016); | a number of senior executive roles | | Val previously ran the Innovation | President and General Counsel. | CEO, Retail and Business Banking | in the investment banking sector | | Panel for Standard Life Aberdeen | Previously, he was a senior partner | (2012-2014); CEO, UK Retail and | with Lehman Brothers (2005-2008), | | and holds a Doctorate of Philosophy | at Washington, D.C. law firm Verner, | Business Banking (2011-2012); | Nomura (2009-2013), and UBS | | in Chemistry from the University | Liipfert, Bernhard, McPherson and | CEO, Africa (2010-2011); and CEO | (2013-2018). William’s time at UBS | | of Oxford. | Hand and worked in the Office of | of Barclaycard Europe (2010). | saw him serve as Global Head of | | | the General Counsel of the US | Prior to joining Barclays, Ashok was | Investment Banking from 2016 to | | Other current appointments | Department of Transportation. | a Partner at Brysam Global Partners | 2018. William served as the Prime | | Non-Executive Director, | Douglas was Chairman of the | LLC (2007-2009), a private equity | Minister’s Business Envoy (2018- | | RenaissanceRe Holdings Limited; | Air Transport Association (2008- | firm specialising in consumer | 2020), before becoming Vice Chair | | Non-Executive Director, CTG Inc; | 2009), after serving as a Director | financial services in emerging | of the EMEA Investment Bank at | | Non-Executive Director, Elliott | (2005-2008). | markets. From 1987 to 2007, Ashok | JP Morgan. | | Opportunity II SPAC; Non-Executive | | held a number of senior roles within | | | Director of Entrust. | Other current appointments | Citigroup Inc. Currently, Ashok | Other current appointments | | | Senior Adviser, Blackstone | serves as the President of Pagaya, | Chairman, Santander UK; Member, | | | Private Equity Group; Director, | a FinTech based in New York. | UK Investment Council; Member, | | | American International Group | He is responsible for helping the | Advisory Board, Celonis GmbH; and | | | Inc.; Director, Hilton Worldwide | company grow and scale. | Chair, Advisory Board of Gonville | | | Holdings Inc.; Director, American | | and Caius College, Cambridge. | | | Airlines Group, Inc. | Other current appointments | | Non-Executive Director, the Forward Institute; Non-Executive Director, S P Jain Institute of Management, UK Committee membership Committee membership Committee membership Committee membership Nomination Nomination Audit Nomination Remuneration Nomination Remuneration Risk Risk Risk 93 London Stock Exchange Group plc Annual Report 2022 # Corporate governance report ## 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' and the Director appointed by Microsoft), 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. 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. 94 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE Corporate governance report continued Attendance at Board meetings As well as expanding our in-person conference schedule following two When Directors were not able to attend meetings, they received years of Covid restrictions, we also ran a number of roadshows with and reviewed the relevant meeting papers. Where they had comments executive management both internationally and in the UK, stepping up or concerns on the matters to be discussed, they provided these to our efforts to explain our investment case and strategy to a wider range the Chair of the Board or Committee in advance of the meeting. of prospective global investors. We achieved broad coverage of our The Chair of the Board engaged with Directors between Board existing register, meeting with over 80% of our active shareholder base. meetings to discuss business and strategic issues. The Chair met with the Non-Executive Directors, without the Executive Directors Through our external adviser, Makinson Cowell, we ran a being present, at the end of every scheduled Board meeting. comprehensive investor perception study. As part of the study, Makinson Cowell engaged with a broad range of investors and touched Comprehensive Board and Committee papers, comprising an on a wide variety of topics including LSEG’s disclosure around strategy, agenda and formal reports and briefing papers are sent to Directors financial performance and targets, as well as the general tone and level in advance of each meeting. Directors are also updated with written of insight of our communication with investors. Feedback was broadly and verbal reports, from senior executives and external advisers positive and investors recognised the growth characteristics and during the meeting. opportunities of our investment case. However, while our investor education events were almost universally regarded as helpful, investors Stakeholder engagement still felt that LSEG could do more to address the perceived complexity The Board seeks to understand the interests, needs and concerns of of the Group. To this end, investors expressed a desire for more deep shareholders and other key stakeholders (including customers, the dives into the various businesses that make up the Group and to hear workforce and regulators) to enable the Company to pursue long-term more often from divisional management. In terms of shareholder sustainable success. For more information on how we engage engagement, the LSEG executive team and IR team were broadly seen with our stakeholders as well as how the Board has discharged its as accessible and helpful but some shareholders highlighted a lack of duties under Section 172 of the Companies Act, please see pages communication outside of the UK. In particular, it was suggested that 70 to 73 of the Strategic Report. LSEG should step up its involvement at sector conferences in the US, as well as proactive engagement with investors in North America Relations with shareholders more broadly. We believe that regular and ongoing engagement with our key stakeholders and, in particular, our shareholders is central to good The Board receives a report on IR matters at each of its scheduled corporate governance. The Group’s Investor Relations (IR) function, meetings, including feedback from investors, market expectations reporting to the Chief Financial Officer, manages a shareholder of financial performance and updates on share register composition. engagement programme throughout the year. In 2022, we welcomed Sell-side analyst research notes on LSEG are regularly circulated our new Head of Investor Relations, Peregrine Riviere, to the Group, through the business, including to the Board and senior executives. The bringing over 20 years’ IR experience across a wide range of industries. Group’s corporate brokers also provide the Board with advice on market sentiment, input on market communications and share register analysis. The Chair, Senior Independent Director and Chairs of each Board Committee are available to engage with major investors, typically to In addition to information on financial and operational performance, the discuss corporate governance matters. In 2022, the Chair engaged Group engages with shareholders and relevant shareholder advisory with shareholders on matters including sustainability, remuneration and agencies on environmental, social and governance (ESG) matters. The Board composition, as well as performance against the Company’s Group produces an annual Sustainability Report that details its approach strategy. The Chair of the Remuneration Committee consulted with to ESG matters: www.lseg.com/investor-relations/sustainability. major shareholders and proxy voting agencies to understand their views on the proposed approach for our Remuneration Policy and Our AGM provides the opportunity for all shareholders to meet and key executive remuneration decisions. Further details and the outcome to put questions to the Board of Directors. We were delighted that we of this engagement are included within the Directors’ Remuneration were able to return to a physical AGM in 2022, held at Butchers’ Hall. Report from page 113. The IR section of the Group’s website (www.lseg.com/investor-relations) Senior management and the IR team engage with investors to discuss is a primary source of regularly updated information about the Group. strategy, performance, sustainability and other matters. We saw a strong All financial reports and statements, regulatory news service return to in-person engagement in 2022. Senior executive management announcements and disclosures, presentations and other relevant and the IR team took part in 12 conferences this year, with 10 of those documents are available on the website, together with a list of analysts held in person across the US, London and Continental Europe, hosted producing research on the Company and a summary of analysts’ by banks or industry organisations. Across the year, we held over 450 forecasts of performance. Recognising that joining our preliminary and engagements with institutional equity and debt investors, primarily from interim results conference calls is not always possible, recordings of the UK and USA but with increasing interest from countries such as these calls are accessible to all shareholders via the Group website. Canada and Australia as we look to broaden our outreach. 95 London Stock Exchange Group plc Annual Report 2022 Corporate governance report continued Workforce engagement During the year, the key matters considered by the Board included The Board believes that having a diverse workforce makes us more the following: dynamic, fosters innovation and boosts performance. The Board continues to support the goals for senior leadership set by management Customer which include goals for ethnic diversity and gender diversity. The Board — Customer matters, including meetings with customers and key regularly tracks progress against these through D&I reporting. Further account executives during the Board visit to New York information on D&I can be found in our culture section on page 60. — Reviews of updates on customer metrics and key customer initiatives. — Reviews of new products and services, including the Fundamental Information on workforce engagement can be found in the stakeholder Review of the Trading Book and the Yield Book for fixed income engagement section on page 66. The Board believes that the direct and analytics, and approved acquisitions that would deliver additional indirect engagement it undertakes with the workforce, as well as the customer benefits. range of engagement activities that it has undertaken during the year, Strategy, execution and integration as described in the stakeholder engagement section, are effective and — Regular updates on progress against the strategic objectives, have facilitated meaningful, two-way dialogue between the Board and capital expenditure and investment projects and key projects employees. The forms of engagement undertaken during the year have and programmes. enabled the Board to hear from a broad range of our workforce both — Regular updates on the Refinitiv integration, including in relation across our regions and at different levels of seniority and role type, to achieving the stated targets and synergies, customer matters, given the size and global footprint of the Group. people and culture, transformation and technology. — Approval of M&A transactions, including MayStreet, TORA, Board independence Global Data Consortium and Acadia, and the divestment of BETA. The Board has evaluated the independence of all the Non-Executive Subsequently, the Board agreed to use the proceeds of the Directors. In assessing each Director, the Board considers whether sale of BETA to return £750 million to shareholders via a share there are relationships or circumstances which are likely to affect or buyback programme. could appear to affect a Director’s judgement. — Annual Board strategy day at which the Group’s strategy was considered and approved. Scott Guthrie was appointed to the Board as a Non-Executive Director — Review and approval of the strategic partnership with Microsoft for with effect from 1 February 2023. Scott represents Microsoft Corporation next-generation data & analytics and cloud infrastructure. and was appointed in connection with the strategic partnership (for further information please see pages 7 and 19). Martin Brand, Sustainability Erin Brown and Douglas Steenland were appointed to the Board — Review and approval of the sustainability strategy. as Non-Executive Directors in 2021. Martin and Douglas represent — Consideration and agreement of a climate-related resolution that Blackstone and Erin represents Thomson Reuters. In accordance was put to shareholders at the 2022 AGM. with the terms of the Relationship Agreement, Erin will step down from — Considered and challenged updates on sustainability matters and the Board on 17 March 2023. Blackstone and Thomson Reuters are the Group’s position on sustainability as well as progress achieved each considered to be significant shareholders of LSEG. The Board against strategy. agreed that Martin, Douglas, Erin and Scott would not be considered — Review and approval of the annual Sustainability Report, Climate independent under the Code given their relationships with Blackstone, Transition Plan, TCFD Report, and the Modern Slavery and Human Thomson Reuters and Microsoft. They are not members of the Trafficking Statement. Audit, Remuneration or Risk Committees. The Board has evaluated the independence of the other Non-Executive Directors and concluded People and culture that each are independent in character and judgement. The Chair — Regular updates on employee welfare, including future ways of was independent on appointment. working, return to the office, the situation in Sri Lanka and the Ukraine/Russia conflict. In line with the Code, at least half the Board, excluding the Chair, — Reports from Directors on their engagement with colleagues are independent Non-Executive Directors. All Directors are subject across the Group. The Board requested management to take action to annual re-election at the Company’s AGM. in response to the feedback from colleagues. Further information can be found in the stakeholder engagement section on pages 66 Matters considered by the Board and 67. Each of the regular meetings includes a wide-ranging report from the — Discussion of the results of the annual LSEG Engage survey. The Chief Executive Officer and reports from the Chief Financial Officer Board endorsed the actions proposed by management in response on the Group’s financial performance and from the Chief Operating to the feedback from the workforce. 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. 96 London Stock Exchange Group plc Annual Report 2022 Corporate governance report continued 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. 97 London Stock Exchange Group plc Annual Report 2022 Corporate governance report continued Next steps Committee 2023 areas of focus The Board agreed that areas of focus for 2023 should be: Audit Committee — Board knowledge: Board members provided valuable insight — Training on climate-related and sustainability financial disclosures regarding the areas where it would be beneficial to spend more and corporate reporting time and/or gain further understanding, including further teach-ins on each Division in the Group, moving to the cloud, and acquisitions Nomination Committee — Board, executives and deeper relationships: desire from — Continued focus on Board and Executive Committee succession the Board to further deepen Board relationships with the — Continued focus on ensuring future changes to the Board are Executive Committee appropriately managed to facilitate an orderly refreshing of the — Board composition and succession planning: Board members Board and avoid the possibility of several Directors stepping provided views and suggested priorities in terms of down in quick succession future composition — Continue to ensure there is a diverse talent pipeline — Stakeholders: identification of further opportunities to engage Remuneration Committee with shareholders, including their views on LSEG and growth; and — Simplification and further improvements to the quality of the customers, including a deeper understanding of customer needs information received and the data that is most valuable to them. Risk Committee The results of the effectiveness reviews of the Board’s Committees — Continued focus on sustainability and climate-related risks were positive about the management and composition of the — Continued focus on cyber risks, move to the cloud and committees as well as the quality of the information received. technology risks Areas for focus are summarised in the next column. 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 Ensuring the Board contains the appropriate — Appointment of William Vereker and Scott Guthrie; their skills and experiences Board mix of skills and experience include understanding the markets in which LSEG competes and technological composition expertise, respectively Stakeholder Continue to seek additional opportunities — Regular updates on shareholder engagement and views oversight for the Board to be provided with the views — Makinson Cowell investor perception study of shareholders and customers — 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 Continue to allocate Board time for training — Deep dives throughout the year on various projects, including ad hoc meetings organisation and deep dives in particular on the Data & to review the strategic partnership with Microsoft Analytics division Strategic Continue to increase the Board’s focus on the — These matters were discussed at the Board strategy offsite oversight external influences and environment impacting — The integration of the Refinitiv business has been a standing agenda item at strategy, including in relation to customers, each of the scheduled Board meetings in 2022 competitors, sustainability, other emerging — Competitor update provided to Board in Q2 2022 external influences, and risks — Various deep dives and business briefings during Board visit to New York People Ensure continued focus on executive — Stronger engagement with executives throughout the year, including a practice and talent succession planning of inviting an Executive Committee member to attend and participate in each Board meeting Conflicts of interest Indemnities The Company’s Articles of Association allow the Board to authorise Directors have the benefit of indemnity arrangements from the Company conflicts of interest that may arise and to impose such limits or in respect of liabilities incurred as a result of their office and execution conditions as it thinks fit. The Group has established procedures of their powers, duties and responsibilities. The Company maintained a whereby actual and potential conflicts of interest are regularly reviewed, Directors’ and Officers’ liability insurance policy throughout the year. appropriate authorisation is sought prior to the appointment of any This policy covers the Directors for any such liabilities in respect of new Director, and new conflicts are addressed appropriately. which they are not indemnified by the Company and, to the extent to which it has indemnified the Directors, also covers the Company. The decision to authorise a conflict of interest can only be made by Neither the Company’s indemnity nor insurance provides cover for non-conflicted Directors and, in making such decisions, the Directors a Director in the event that the Director is proved to have acted must act in a way they consider, in good faith, would be most likely to fraudulently or dishonestly. promote the Company’s success. 98 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE Corporate governance report continued Risk Management and Internal Control Financial Control Framework The Board is responsible for ensuring the Group’s risk management LSEG has established a Financial Control Framework (FCF) that sets framework and internal control system is maintained and remains out to develop and maintain a robust financial control environment, that effective. The internal control system ensures the quality and integrity mitigates the risk of material financial misstatement, and helps protect of internal and external financial reporting as well as operational, legal the Group against financial fraud. The FCF seeks to enhance and align and regulatory compliance. It prescribes the extent of the principal risks the control environment within the Group and will be of pivotal the Group is willing to take to achieve its long-term strategy. importance in ensuring that the Group is compliant with the potential future requirements of the UK Government’s Audit and Corporate The system of internal controls is designed to facilitate the management Governance reform. The FCF aims to ensure clear links between the of the Group and its businesses within the Board’s risk appetite rather Group’s financial reporting risks and the associated processes and than eliminate the risk of failure to achieve the Group’s objectives, controls, making sure these are tested and appropriately documented. and can only provide reasonable, but not absolute, assurance against The FCF is also focused on ensuring the right culture and training is in material misstatements. The Board remains committed to operating place to support a risk-first mindset. The Audit Committee receives within a strong internal control system, with a view to continuously regular updates on the progress being made to enhance the FCF. maturing, embedding, and optimising enhanced risk management throughout the Group. Financial Reporting Controls The Group’s financial reporting process is facilitated using accounting The Board delegates some of its responsibilities to the Audit Committee policies and reporting formats, and is supported by guidance issued and Risk Committee. to all reporting entities within the Group, in advance of each reporting period end. Management is responsible for the maintenance of the The Audit Committee regularly works alongside the Risk Committee to control environment for financial reporting and ensuring policies and monitor the adequacy and effectiveness of the Company’s internal procedures exist around the maintenance of records. The submission control systems and risk management systems. The Audit Committee of financial reports from each reporting entity is subject to a rigorous reports regularly to the Board on its activities. In 2022, the Audit review. Management must provide assurance regarding the reliability Committee reviewed the Group’s proposals to comply with the UK and accuracy of the Group’s financial reports. The Audit Committee Government’s Corporate Governance and Audit reforms and advised reviews the application of the Group’s accounting policies as well as on the Group’s principal risks, in relation to its financial position during significant accounting judgements and estimates. It also reviews the the reporting period. Further details on the activities of the Audit externally reported interim and full-year results and satisfies itself that Committee, can be found on pages 105 to 110. these are fair, balanced and understandable. The Risk Committee assists the Board in fulfilling its responsibilities Internal Audit by advising on risk strategy and overseeing the development, The Board, together with the Audit Committee, is responsible for implementation, and maintenance of the Group’s Enterprise Risk ensuring the independence and effectiveness of the Internal Audit Management Framework (ERMF) and the Group Risk Appetite statement. function. Internal Audit’s primary function is to provide independent and The Risk Committee reports regularly to the Board on its activities. objective assurance to the Board, the Audit Committee and executive Further details on the activities of the Risk Committee can be found management on the adequacy and effectiveness of the Group’s system on pages 111 to 112. of internal controls. The Internal Audit function provides opinion and challenge on the control environment, and provides assurance over A summary of some of the Group’s risk management and internal control the Group’s ERMF which supports managing risks to within appetite procedures are listed below: and achieving the Group’s long-term strategic objectives. Throughout 2022, the Internal Audit function performed a programme of assurance Enterprise Risk Management Framework over key risks applicable to the Group as well as audits required The Board annually approves the Group’s ERMF. The ERMF sets out a by regulation. Thereby, Internal Audit assured the adequacy and standard approach for managing risk across the Group. It ensures that effectiveness of the Group’s framework of governance, risk all risks are adequately understood and managed across all levels of management and controls. To ensure independence, the Internal the Group. Further details on the ERMF can be found in the principal Audit function sits within the third line of defence in the Group’s risk risks and uncertainties section from page 74. control structure and has no operational responsibilities for the legal entities or processes which it reviews. Risk Appetite Statement The Risk Committee approved the Group Risk Appetite statement which The independence of the Internal Audit function from executive outlines the key concepts of risk appetite and risk tolerance that the management is ensured through the following measures: Group will accept in pursuit of its strategic objectives. It is determined in — The Chief Internal Auditor reports directly to the Chair of the line with the Group’s strategy. The Group Risk Appetite statement allows Audit Committee and has direct access to the Chair of the Board. management to understand the potential risks associated with strategic For administrative matters she has a secondary reporting line to and operational decisions, assess whether the risk return on capital is the Chief Executive Officer (CEO) acceptable, and put in place mitigating actions to reduce risks to — The Chair of the Audit Committee and CEO jointly assess the acceptable levels. It maintains the correct balance between risks and performance of the Chief Internal Auditor rewards, thus ensuring the Group remains more resilient by taking better — The Audit Committee approves the Internal Audit Charter and informed decisions. 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 99 London Stock Exchange Group plc Annual Report 2022 Corporate governance report continued 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. 100 London Stock Exchange Group plc Annual Report 2022 # Complying with the provisions of the Code 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 | 101 London Stock Exchange Group plc Annual Report 2022 ## Report of the ## Nomination Committee 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. ## Key areas of focus for the Committee purpose and responsibilities ## Committee in the year were The Nomination Committee is responsible for monitoring the balance of skills, knowledge, and experience as well as the diversity of the Board. ## Board composition, succession It is also responsible for making recommendations of new appointments to the Board and overseeing Board and senior management succession ## planning and the appointments planning. Further details on the responsibilities of the Nomination Committee can be found in the Committee’s terms of reference ## of William Vereker and Scott which are reviewed annually and available on the Group’s website at: https://www.lseg.com/en/about-us/corporate-governance ## Guthrie to the Board. The Committee met twice during the year and, in addition, Committee Don Robert members also met with director and senior management candidates. Chair of the Nomination Committee 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. 102 London Stock Exchange Group plc Annual Report 2022 Report of the Nomination Committee report continued GOVERNANCE 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.iseg.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. 103 London Stock Exchange Group plc Annual Report 2022 Report of the Nomination Committee report continued 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% 104 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE ## Report of the ## Audit Committee 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 ## This year the Committee tender on a periodic basis ## led a comprehensive external 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 ## audit tender process, reviewed corporate governance section of the Group’s website at: www.lseg.com/ en/about-us/corporate-governance. ## the progress on further This report considers how the Committee has fulfilled its responsibilities ## strengthening the Internal Audit during the year. ## function and assessed the Committee membership and attendance The Committee comprises four (2021: four) independent Non-Executive ## Group’s preparation for the UK’s Directors. Tsega Gebreyes was appointed as a Committee member on 3 October 2022, whilst Jacques Aigrain left the Committee and the ## upcoming Audit and Corporate 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. ## Governance reform The skills and experience of each Committee member are provided in Dominic Blakemore the Board of Directors section on pages 90 to 93. The UK Corporate Chair of the Audit Committee 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. 105 London Stock Exchange Group plc Annual Report 2022 Report of the Audit Committee report continued The Group Chair, Group Chief Executive Officer, Group Chief Financial Activities during the year Officer, Group Financial Controller, Group Chief Risk Officer, Group Chief Below we set out the main work undertaken by the Audit Internal Auditor, and representatives of the external auditor, EY LLP (EY), Committee covering: are all regular attendees at Committee meetings. Other members of 1. Financial reporting management may also be invited to present specific matters. The Group 2. Internal controls, internal audit and risk management Company Secretary is the Secretary to the Committee. 3. Oversight of the external auditor 4. Other activities in the year In addition to formal meetings, the Chair of the Committee and some Committee members met with senior management during the year. 1. Financial reporting The Chair of the Committee also meets separately with the external Significant accounting judgements, estimates and assumptions and auditor, as required, ahead of each meeting. 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 The Committee reviewed the acquisition accounting for each material During 2022, the Group completed four material acquisitions. This required acquisition, including: the valuation of acquired tangible and intangible assets, including customer — Determination of the consideration paid relationships, trade names and goodwill. The fair value of acquired — Assessment of arrangements for any contingent payments intangible assets and resulting goodwill recognised on acquisition are — Identification and valuation of acquired net assets with a particular focus subject to significant estimates of: on acquired intangible assets — Future performance of the acquired business (e.g. forecast revenue, — Assessment of the resulting goodwill expected revenue attrition, forecast operating margin) — Alignment of accounting policies to LSEG — Any contributory assets charges The Committee satisfied itself that goodwill and purchased intangibles had — Rate of return required to determine an appropriate discount rate been recognised appropriately. (in order to calculate the net present value of the assets acquired) See note 12 to the financial statements on pages 186 to 189. Impairment assessment of goodwill and acquired intangibles The Committee considered the approach and methodology to performing The Group carries significant amounts of goodwill and acquired intangible the detailed annual goodwill impairment assessment as well as the indicators assets on its balance sheet. In line with IAS 36 Impairment of Assets, of impairment of other purchased intangible assets. This included reviewing these are assessed for impairment: key assumptions: — Annually for goodwill allocated to the Group’s cash-generating — Cash flow expectations units (CGUs) — Short- and long-term growth rates — When there are indicators of impairment of acquired intangible assets — Discount rates used for the Group’s cost of capital Impairment tests are based on value-in-use calculations which require Given the significant changes in inflation and interest rates during the year, significant estimates over: the Committee was particularly focused on the growth rate assumptions — Future performance and the discount rates used and approved a revised methodology for — Growth rates considering the growth profile of the CGUs. The Committee also — Discount rates 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 The Committee reviewed the methodology used to capitalise software developed software development costs and satisfied itself that it was adequate and in conformity The Group continues to develop and capitalise significant levels of with IFRS. software. The capitalisation of software development costs involves The Committee also considered possible indicators of impairment for management judgement against criteria set in IAS 38 Intangible Assets. significant internally developed software. The Group recognised an £11 million impairment charge in relation to software assets. Revenue recognition The Committee was satisfied that sufficient analysis had been performed The Group generates revenue from a variety of sources that are material in this area to conclude that revenue has been recognised appropriately in size and volume. Judgements are applied to the timing of revenue and that there is no evidence that any manipulation of revenues has recognition and year-end revenue accruals, particularly across Refinitiv taken place. subscription revenues, Capital Markets trading fees and FTSE Russell The Committee also reviewed the significance of judgements applied and revenue accruals. assessed any necessary disclosure requirements. It was concluded that no judgement on revenue recognition required individual disclosure in the Annual Report and Accounts. 106 London Stock Exchange Group plc Annual Report 2022 Report of the Audit Committee report continued 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 107 London Stock Exchange Group plc Annual Report 2022 Report of the Audit Committee report continued During the year, the Committee received an update on the Internal — Root cause insights on the issues raised and feedback from executive Audit function, which included: management on specific audits — The development of a refreshed target operating model to reflect — Key performance indicators such as the distribution of audit the enlarged business and global footprint. The Committee endorsed ratings, percentage of past due actions and percentage of the approach for building out the global audit function self-identified issues — Internal Audit’s balanced scorecard — The Results of Quality Assurance activities undertaken during The Committee concluded that the Internal Audit function is both the year 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 Impact of acquisitions and disposals on the risk landscape to the Board that it could report to shareholders on the effectiveness As a result of the acquisitions and disposals throughout the year, of the Group’s internal control system and risk management systems. the internal audit universe was updated to reflect the changed This assurance satisfies principle O of the Code. The Board statement organisation. As part of annual planning, an inherent risk assessment can be found on page 99. was undertaken which, alongside regulatory requirements for internal audit work, guided the audit plan for 2022 and, similarly, the 3. Oversight of the external auditor plan for 2023. Management is undertaking significant work to ensure The Committee approved the EY audit plan, the methodology used, that the risk landscape is fully understood and that appropriate the scope of the audit, the risks, and areas of focus as well as the controls are in place to mitigate risk to within the firm’s stated risk materiality threshold for the Group and the threshold for reporting appetite over time. This work will be supported by the Risk function unadjusted differences. and by Internal Audit, both of whom are building out resources to support the necessary oversight and assurance. 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 As regards the work of Internal Audit, the Committee: Code. The Committee relied on its own judgement supported by the — Approved changes to the audit plan throughout the year and following evidence: confirmed its support for the coverage model that provides the — A report from management on its own evaluation of the effectiveness independent assurance plan of the external auditor — Approved the 2023 internal audit plan, internal audit budget and — Reports from EY on the status of their 2022 plan and the results of resources for the Internal Audit function their work, as well as EY’s own assessment of their independence. — Reviewed the annual Internal Audit Opinion as well as themes/root The external auditor’s reports were discussed at each Committee cause analysis arising from audit work performed meeting and their views and opinions used to challenge decisions — Satisfied itself that management is closing actions within by the Group reasonable timeframes — The separate meetings held with EY at each Committee meeting — Noted Internal Audit’s consideration of fraud risk in the annual without management being present work programme — The FRC’s 2021/22 Audit Quality Inspection results — Received an update on the enhancements being made to the Speak-Up and whistleblowing protocols In considering the independence of the external auditor, the Committee was made aware of three non-audit tax advisory services which were The Committee undertook its annual review of, and approved, provided to certain entities within the Group by Deloitte USA, which the Internal Audit Charter. audited one of the Group’s subsidiaries. It was concluded that these The Internal Audit External Quality Assessment in February 2022, services were prohibited under the FRC’s Ethical Standard. EY placed performed by Deloitte LLP, concluded that LSEG Internal Audit reliance on the work performed by this component audit firm. demonstrates general conformance (the highest rating) with relevant The Committee reviewed the services provided and the additional standards and other criteria. The Assessment noted that there are areas audit procedures performed by EY and concluded that the provision upon which Internal Audit should continue to focus. The Internal Audit of the services did not call into question the independence of the work function developed an action plan to address these improvement performed by the auditors. Appropriate safeguards were in place to points. Actions are being completed in line with anticipated timescales. ensure that individuals who performed the services were not part of the The Committee obtained additional comfort by meeting with the Group audit teams. Additional reviews of the component auditors’ work did not Chief Internal Auditor at each Committee meeting without executive identify any other areas concerning the independence of the audit. management present. Based on all evidence presented, the Committee satisfied itself that the The activities of the Committee relating to internal controls enabled it to external audit has been conducted independently and effectively with satisfy itself that the Internal Audit function is independent, objective the appropriate rigour and level of testing. and adequately staffed to perform its duties. In addition, the Committee EY were appointed as the Group’s external auditor in 2014. The lead assessed the effectiveness of the Internal Audit function throughout the audit partner and other key partners identified are required to rotate year using qualitative and quantitative indicators including: every five years. Other partners are required to rotate every seven — Completeness of the audit plan years. In light of the additional scale and complexity of the Group — Results of Quality Assurance activity over audit work (updated at least following the acquisition of Refinitiv, Simon Michaelson was appointed once a year) as lead audit partner during the year. — Quality of the audit reports and the issues raised 108 London Stock Exchange Group plc Annual Report 2022 Report of the Audit Committee report continued 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. 109 London Stock Exchange Group plc Annual Report 2022 Report of the Audit Committee report continued 4. Other matters Sustainability and Climate Risk reporting Going concern and long-term financial viability statement During the year, the Committee discussed the Group’s disclosure The Directors are required to assess whether it is appropriate to requirements regarding sustainability and climate change. The prepare the financial statements on a going concern basis and, in Committee also reviewed the broader landscape for climate risk accordance with the Code, provide a statement on the Group’s viability. reporting and the Group’s plans for ensuring it remains compliant with At its meeting in February 2023, the Committee reviewed the Group’s future changes, including the amendments to the Companies Act 2006 forecasts and projections, taking into account reasonably possible that will be required for the financial year ended 31 December 2023. changes in trading performance. It confirmed that the going concern basis in preparing the financial statements continues to be appropriate. Whistleblowing investigations See page 147 of the Statement of Directors’ responsibilities for the The Group’s whistleblowing policy provides a method of addressing going concern statement. At the same meeting, the Committee also concerns while at the same time offering whistleblowers protection from considered the Group’s long-term viability with reference to the Group’s victimisation, harassment or disciplinary proceedings. During the year, current position and prospects, three-year business plan, risk appetite the Committee continued to closely monitor the effectiveness and and the expected impact of severe but plausible downside scenarios independence of the Speak-Up and whistleblowing arrangements of on the business. See page 85 of the Strategic Report for the financial the Group. viability statement. Areas of focus in 2023 Fair, balanced, and understandable (FBU) reporting — Assessing the Group’s readiness to comply with the UK Government’s In line with principle N of the Code, the Committee satisfied itself Audit and Corporate Governance reform and climate-related that the Annual Report is fair, balanced and understandable and has disclosure requirements presented its conclusions to the Board. The Committee assessed drafts — Reviewing the Group’s plan for implementing a leading Financial of the Annual Report including the financial statements and discussed Control Framework with management the process undertaken to ensure that the relevant — Receiving early and continuous understanding of the impact of the requirements were met. This process included: Group’s acquisitions and disposals on financial and tax accounting, — Independent reviews of the entire report by people not directly and ensuring that the transactions are accurately represented in the involved in preparing the report Group’s annual report and accounts — Extensive review and verification processes by the appropriate — Monitoring the Group’s uncertain tax positions departments and senior managers to ensure the accuracy of — Continuing to assess the impact of developments in accounting standards the content — Receiving assurance that the internal control and risk management — Consideration of the balance of disclosure between positive and environment remains robust negative points on the Group’s performance in the year — Supporting the build-out of the Internal Audit function to enable timely execution of the annual audit plan See page 147 of the Statement of Directors’ responsibilities for the fair, balanced and understandable statement. Dominic Blakemore Chair of the Audit Committee Audit and Corporate Governance reform 14 March 2023 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 110 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE ## Report of the ## Risk Committee 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 ## Risk management is Vereker was appointed as a Committee member on 3rd October 2022. ## fundamental to the successful 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 ## execution of our strategy Secretariat is the Secretary to the Committee. In addition to the standing attendees, various other members of management are invited to ## and to the resilience of our present specific matters relevant to the Committee’s remit. ## operations. The Group The Board is satisfied that each member of the Committee has the skills and experience necessary for the Committee to effectively discharge its ## continues to support its key responsibilities. The Chairs of the Audit and Risk Committees each sit on both Committees, which ensures appropriate identification and ## markets and deliver stable and management of issues relevant to both Committees. ## resilient services that meet our 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 ## clients’ needs. The Group’s provides regular updates to the Chair throughout the year. ## risk culture, objectives, appetite, Purpose, responsibility, and terms of reference The Committee has a role overseeing and advising the Board in relation ## governance and operations are to current and potential future risk exposures and risk profile; and in overseeing the effectiveness of risk management frameworks. The ## well established, underpinning Committee reviews the risk profile of the Group, and its divisions, on a regular basis and comments on the adequacy of the processes ## the whole organisation. 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, Kathleen DeRose and reviews the adequacy of the Enterprise Risk Management Chair of the Risk Committee 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. 111 London Stock Exchange Group plc Annual Report 2022 Report of the Risk Committee Summary of the key areas of focus Risk management function During the year, the Committee focused on programmes to embed the The CRO leads and oversees all aspects of risk management for the Group risk management framework. The Committee paid particular Group. He reports to the Chief Executive Officer, and also, to ensure attention to ensure that key activities supported the vision of the Group independence, to the Chair of the Risk Committee. The Committee Risk function and enabled the fulfilment of the 2022 Group Strategic approves the CRO’s remit and ensures that the CRO has the Objectives. This included embedding of the operational resilience independence and resources necessary to perform his duty. Group framework, improving the technology environment and the ongoing management consults with the Committee on the appointment and development of the Group’s risk culture and the framework for dismissal of the Chief Risk Officer. identifying and managing sustainability-related risks. Given the focus on Data & Analytics and Technology Risk, two deep dive sessions The Committee meets with the CRO without the presence of executive were held where executives updated the Risk Committee: management at each Committee meeting. — Management highlighted the key risk considerations within the 2023 priorities Data & Analytics business, focusing on the structural changes In 2023, the Committee’s priorities include: needed to address foundational management and oversight of — Continued embedding of the Group’s Operational Resilience Programme. wider operating plans. — Continued review and monitoring of potential impacts from — Management presented the Technology risk profile of the Group, macroeconomic and geopolitical events on the Group’s strategy detailing the progress in the last 12 months and prioritisation of the and business model. remediation activities. — Enhancing further the approach to sustainability-related risks and In addition to the review and monitoring of the Group’s risk profile, associated risk processes. the Risk Committee’s priorities are: — Continued focus on technology remediation and enhancement of — Continue to oversee the embedding of the Enterprise Risk the Cyber Security Framework. Management Framework across the Group and a strong risk culture. Committee effectiveness — Continue to review and challenge the identification, management and The Committee’s effectiveness was assessed as part of the 2022 mitigation of risks across the Group. Board and Committee effectiveness review. Further details can be — Oversight of existing and new emerging risks through the geopolitical found in the Governance section of this report on pages 97 and 98. forecast and their impact on LSEG. The result of the review was that the Committee is performing well — Continue to provide oversight on developing and enhancing cyber and operating effectively. security and operational resilience. Kathleen DeRose Activities of the Committee Chair of the Risk Committee The Committee establishes formal agendas covering all responsibilities 14 March 2023 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. 112 London Stock Exchange Group plc Annual Report 2022 # Directors' Remuneration Report ![img-2.jpeg](img-2.jpeg) 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. **Cressida Hogg** Chair of the Remuneration Committee ## 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 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 GOVERNANCE Directors' Remuneration Report continued ## STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE 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 (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. 1 Pro-forma total income excluding recoveries, constant currency growth rate excluding the deferred revenue adjustment. 114 London Stock Exchange Group plc Annual Report 2022 Directors' Remuneration Report continued 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. 115 London Stock Exchange Group plc Annual Report 2022 Directors' Remuneration Report continued ## STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE 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. 116 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE Directors’ Remuneration Report continued ### REMUNERATION AT A GLANCE 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 Group Group Group Wider Directors Executives Leaders Directors 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 Annual performance-related bonus based on Group, divisional (where applicable) and personal performance bonus 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 LTIP awards are granted to senior leaders who have the ability to Eligible for Restricted incentive significantly influence the long-term performance of the Group. Share Awards plans aligned with Subject to stretching performance targets over three years. long-term company performance and shareholder interests. Vesting in equal tranches over three years. Holding Additional two-year period holding period post-vesting applies to Executive Directors. | Shareholding requirement Minimum | | Minimum | | --- | --- | --- | | | shareholding | shareholding | | | requirement (MSR) of | requirement of 2x | | | 4x base salary for the | base salary for the | | | CEO and 3x base | Group Executive | | | salary for the CFO, to | team, to be built up | | | be built up within five | within five years of | | | years of appointment. | appointment. | Executive Directors are also required to hold the lower of their actual shareholding and 100% of their MSR for two years post-departure. 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 Our Employee Share Plans offer employees around the globe the opportunity to invest and share in the Group’s Employee Share Plan 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. 117 London Stock Exchange Group plc Annual Report 2022 Directors’ Remuneration Report continued ### REMUNERATION AT A GLANCE 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. | Chief Executive Officer | | | Chief Financial Officer | | | | --- | --- | --- | --- | --- | --- | | | | 1 | | | 1 | | | 3 | | | 3 | | | | | 2 | | | 2 | | Fixed 19% | | | Fixed 19% | | | | 1 Salary, pension and benefits | | | 1 Salary, pension and benefits | | | | Performance-based 81% | | | Performance-based 81% | | | | 2 Annual Bonus (of which 50% deferred into shares) 35% | | | 2 Annual Bonus (of which 50% deferred into shares) 32% | | | | 3 LTIP 46% | | | 3 LTIP 49% | | | * Illustrative example based on ‘Maximum’ scenario of the application of the remuneration policy shown on page 126. 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 7.3% 16% 60% 60% EPS growth Actual: 19% Relative Median ranking Upper quartile ranking 40% 22% TSR growth Actual: Ranked 40th Total 100% 82% 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. FY2023 Group Bonus Pool 2023 LTIP AOP is a key profitability measure for the Group and continues to The AEPS and TSR measures used for the LTIP are well aligned to our be the main financial measure for annual bonus plan purposes. strategy of driving growth and delivering shareholder value over the The non-financial element is focused on the delivery of key strategic longer term and ensure a balance of absolute and relative measures. objectives, including ESG goals. 2 2 1 1 1 Based on Group Adjusted Operating Profit (AOP) performance 60% 1 Based on average adjusted EPS growth 60% 2 Based on Group Strategic Objectives 40% 2 Based on relative TSR growth 40% 118 London Stock Exchange Group plc Annual Report 2022 Directors' Remuneration Report continued GOVERNANCE ## REMUNERATION POLICY REPORT 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. | 119 London Stock Exchange Group plc Annual Report 2022 Directors’ Remuneration Report continued ### 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 Purpose and link to strategy Provides a core element of remuneration which reflects the responsibilities Provide local market competitive benefits and support the wellbeing of of the role. our people. Enables the recruitment and retention of individuals of the calibre required to execute the Group’s strategy. Operation Operation Base salaries are normally reviewed annually by taking into account a A market aligned benefits plan is offered in each key country in which we range of factors, including: operate. For the UK, a flexible benefits plan is offered, in which individuals — Size and scope of the role. have certain core benefits (such as private medical, life assurance and — Size, complexity and global breadth of the organisation. income protection) together with a taxable cash allowance which can be — Skills and experience of the individual. spent on elective benefits (such as additional medical, life or dental cover). — Market competitiveness/relative positioning. Car transportation may also be provided for Executive Directors — Performance of the Group and of the individual. where appropriate. — Wider market and economic conditions. Due to the high profile of the Group, the Committee reserves the right to — Level of increases being made across the Group. 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 Maximum Opportunity There is no defined maximum salary. There is no defined maximum. Increases are determined based on the factors described above. 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 The Committee’s normal approach is to initially consider increases within dependent on individual circumstances. the range awarded to other employees. More significant increases may be awarded in certain circumstances, such as where there is a significant Participation in the Save As You Earn Option Scheme (or international change in the scale, scope or responsibility of a role, where the organisation equivalent) is capped at the same level as all other participants, which is has undergone significant change, development within a role and/or determined by the Company within the parameters of applicable legislation. 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. Performance Measures Performance Measures n/a n/a 120 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE Directors’ Remuneration Report continued Retirement Benefits Annual Bonus Purpose and link to strategy Purpose and link to strategy Provide Executive Directors with retirement benefits. Rewards annual performance against stretching financial, strategic and individual targets aligned to delivery of the Group’s strategy. Support recruitment and retention of high-calibre people. Deferral reinforces retention and enhances alignment with shareholders by encouraging longer-term focus and sustainable performance. Operation Operation Provision of annual pension allowance, invested in the Company’s defined The Group operates a Group-wide bonus pool which is funded based on contribution plan or taken as a cash allowance. the achievement of financial and strategic goals of the Group. Allocations to individual Executive Directors are made from this pool based on the In certain jurisdictions, more bespoke pension arrangements may be Committee’s assessment of their individual performance, taking into account provided. In such circumstances, the Committee will give appropriate the Group’s financial and strategic performance and the achievement of any consideration to local employment legislation, market practices and the individual objectives related to their role. cost of the arrangement. 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 Maximum Opportunity The maximum annual pension contribution/cash allowance for Maximum annual bonus opportunity of 225% of salary for CEO and 200% of Executive Directors is 10% of salary (except where determined by local salary for the CFO. 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. Performance Measures Performance Measures n/a 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. 121 London Stock Exchange Group plc Annual Report 2022 Directors’ Remuneration Report continued ### REMUNERATION POLICY REPORT CONTINUED LTIP (Long Term Incentive Plan) 2014 Share ownership Purpose and link to strategy Purpose and link to strategy Incentivises performance over the longer term through the award of Ensures alignment with shareholders’ interests. performance-related shares. Aligns reward with long-term, sustainable Group performance and a focus on shareholder value. Operation Operation — Under the LTIP 2014, which was approved by shareholders at the Executive Directors are expected to build up their share ownership over a 2014 AGM, awards of shares (or equivalent) are granted annually subject period of five years. The minimum shareholding requirement is 4x base to performance conditions. salary for the CEO and 3x base salary for other Executive Directors. — Awards normally vest subject to performance targets assessed over a Executive Directors are expected to hold 100% of their minimum performance period, normally of at least three financial years, with an shareholding requirement for two years post-departure from LSEG. additional holding period of two years. The Committee has discretion to In cases where the individual has not had sufficient time to build up their set different performance periods if it considers them to be appropriate. share ownership to meet the minimum shareholding requirement prior to — The Committee shall determine the extent to which the performance their departure from LSEG, the post-employment shareholding requirement measures have been met. The Committee may make adjustments to will be based on their actual level of shareholding on departure. performance targets if an event occurs that the Committee determines that an adjustment is appropriate. The performance targets will be at The Committee has discretion to vary or waive part or all of the post- least as challenging as the ones originally set. employment shareholding requirement in exceptional circumstances. — 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. Maximum Opportunity Maximum Opportunity Although there is a facility for maximum awards of up to 400% of N/a salary under the plan rules in exceptional cases, it is expected that awards under this plan will normally be up to 300% of salary. Performance Measures Performance Measures The Committee determines performance targets each year to ensure that N/a 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. Notes to the Policy Table Malus and clawback provisions Selection of performance measures A malus provision applies to awards granted under the 2014 LTIP and to Performance targets are set by the Committee to be both stretching and unvested awards under the Deferred Bonus Plan. This would allow the achievable, taking into account the Group’s strategic priorities and the Committee in its absolute discretion to determine, at any time prior to economic landscape. the vesting of an award, to reduce, cancel or impose further conditions in certain circumstances, including; The performance measures that are used for our annual bonus and LTIP have been chosen to support the Group’s strategy. For the annual (i) where there is a material misstatement or restatement of the results bonus plan, the Committee continues to believe that it is appropriate of the Group in its audited accounts, to use a balance between financial targets, strategic objectives and individual performance objectives. (ii) the negligence, fraud or serious misconduct of the individual which results in significant reputational damage to the Group or which has a The Committee considers that the measures to be used for the LTIP, material adverse effect on the financial position of the Group or the i.e. TSR and adjusted EPS, are currently the most appropriate measures business opportunities of the Group, of long-term performance for the Group. The Committee reviews the LTIP measures, weightings and targets on an annual basis, to ensure (iii) if the individual is a member of a business unit in the Group which their continued suitability and to ensure they are sufficiently stretching suffers significant reputational damage or material adverse effect on its for LSEG. financial position or on its business opportunities, 122 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE Directors’ Remuneration Report continued (iv) where behaviour of the individual is considered to breach the — Recognising that the Group competes for talent in the FTSE 100 and standards of the Group’s Code of Conduct, or where there is serious globally in the broader financial services, data and technology misconduct that has significant reputational consequences for the sectors, on an exceptional basis, the Committee has the ability to Group or a relevant business unit, include other elements of pay which it feels are appropriate taking into account the specific commercial circumstances (e.g. for an interim (v) where there is a material failure of risk management in the Company appointment). However, this would remain subject to the limit on or any member of the Group or a relevant business unit, variable remuneration set out above. The rationale for any such component would be appropriately disclosed. (vi) where an error in assessing any performance conditions is — In addition, where an individual forfeits arrangements as a result of discovered, or appointment, the Committee may offer a buy-out, in such form as the Committee considers appropriate taking into account all relevant (vii) any other circumstances that the Committee deems to be similar in factors which may include the vehicle, expected value and timing of nature or effect to those above. forfeited opportunities. Any such buy-out will be limited to the commercial value of payments and awards forfeited by the individual. A clawback provision applies to vested awards granted under the — Where an Executive Director is required to relocate from their home 2014 LTIP, vested awards under the Deferred Bonus Plan and annual location to take up their role, the Committee may provide reasonable bonuses paid previously. This would allow the Committee in its absolute relocation assistance and other allowances including expatriate discretion to claw back from individuals some or all of the vested awards assistance. Global relocation support (normally for up to five years) or paid bonus in certain circumstances, including; and any associated costs or benefits (including but not limited to housing, school fees, tax preparation and filing assistance and flights (i) if there is a material misstatement or restatement of the results of the back to the home country) may also be provided if business needs Group in its audited accounts, require it. Should the Executive’s employment be terminated without (ii) the negligence, fraud or serious misconduct of the individual which cause by the Group, repatriation costs will be met by the Group. results in significant reputational damage to the Group or a material — In the event that an internal candidate was promoted to the Board, adverse effect on the financial position of the Group or the business legacy terms and conditions would normally be honoured, including opportunities of the Group, pension entitlements and any outstanding incentive awards. — The remuneration package for a newly appointed Non-Executive (iii) if the individual is a member of a business unit in the Group which Director would normally be in line with the structure set out in the suffers significant reputational damage or material adverse effect on policy table for Non-Executive Directors (see page 125). its financial position or on its business opportunities, Service contracts and payments for departing Directors (iv) where behaviour of the individual is considered to breach the The Group’s current policy is that Executive Directors’ service standards of the Group’s Code of Conduct, or where there is serious agreements should have notice periods that are no longer than misconduct that has significant reputational consequences for the Group 12 months. The Group may terminate an Executive Director’s service or a relevant business unit, agreement by making a payment in lieu of notice of a sum equal to 12 months’ salary, pension, flexible benefits allowance, and life and (v) where there is a material failure of risk management in the Company medical insurance (but excluding bonus and share incentives), plus any or any member of the Group or a relevant business unit, accrued unused holiday entitlement. Consideration will be given to appropriate mitigation terms to reduce payments in lieu of notice made (vi) where an error in assessing any performance conditions is on termination in the event of the Executive Director commencing discovered, or alternative employment, being appointed as a Non-Executive Director or providing services pursuant to a consultancy agreement in the (vii) any other circumstances that the Committee deems to be similar in 12 months following the Executive Director’s departure. nature or effect to those above. The Group may pay an Executive Director’s reasonable legal fees for Clawback will normally apply for a period of 3 years following vesting receiving advice in connection with their employment. of shares/deferred cash bonus and/or payment of bonus, unless the Committee determines otherwise. The lawful termination mechanisms described above are without prejudice to the Group’s ability in appropriate circumstances to Recruitment policy terminate in breach of the notice period referred to above, and thereby When determining the remuneration package for a newly appointed to be liable for damages to the Executive Director. Liquidated damages Executive Director, the Committee would seek to apply the clauses are not used. following principles: — The package should be market competitive to facilitate the In the event of termination by the Group, each Executive Director may recruitment of individuals of sufficient calibre required by the Group. have an entitlement to compensation in respect of his statutory rights Consistent with the UK Corporate Governance Code, the Committee under employment protection legislation in the UK and potentially would intend to pay no more than it believes is necessary to secure elsewhere. Directors’ and Officers’ liability insurance and an indemnity the required talent. to the fullest extent permitted by the law and the Group’s Articles of — The ongoing remuneration package would normally include the key Association are provided to the Executive Directors for the duration of elements on the same terms as those set out in the policy table for their employment and for a minimum of 7 years following termination. Executive Directors. — The maximum level of variable remuneration which may be awarded The Committee considers that this is consistent with current best on recruitment (excluding any buy-outs referred to below) is 625% of practice and this approach will generally be adopted for new salary. Incentive awards made in the first year of appointment may be appointments. Where appropriate and when recruiting non-UK based subject to different performance measures and targets appropriate to Directors, the Committee may agree different terms based on local the newly recruited Executive Director. legal requirements or market practice. 123 London Stock Exchange Group plc Annual Report 2022 Directors’ Remuneration Report continued ### REMUNERATION POLICY REPORT CONTINUED Treatment of variable incentives Detailed share plan provisions Annual bonus Share awards are subject to the terms of the relevant plan rules under Individuals may be considered for an annual bonus in respect of the which the award has been granted. The Committee may adjust or period prior to cessation. Any award would be at the discretion of the amend awards only in accordance with the provisions of the plan rules. Committee, subject to the Executive Director’s performance and period This includes making adjustments to awards to reflect certain corporate of employment. events, including a variation in the Company’s share capital, a demerger or a special dividend. In change of control circumstances, all LTIP Deferred Bonus Plan awards will normally vest on an accelerated basis to the extent that the For good leavers, awards will usually vest at the normal vesting date, performance conditions are satisfied, and, unless the Committee although the Committee may determine that awards vest on cessation determines otherwise, subject to time pro-rating. Deferred Bonus of employment. The award will usually vest in full, or on a pro-rated basis awards will normally vest in full. The Committee may also allow or at the Committee’s discretion. If the vesting of a good leaver’s award(s) require some or all of an award to be exchanged if not yet vested. is required to be accelerated due to local law requirements (including tax law), the Committee would ordinarily impose a post-vesting holding Individual terms period on the resulting net-of-tax shares for the balance of the original David Schwimmer entered into a service agreement with the Group vesting period, during which the leaver would not be permitted to sell on 12 April 2018 and was appointed with effect from 1 August 2018. or transfer those shares. Good leavers are those who cease to be David Schwimmer’s service agreement may be terminated by either an employee of a member of the Group by reason of death, injury, party giving at least 12 months’ notice. Alternatively, the Group may disability, ill-health, redundancy, the sale of the individual’s employing terminate the contract by payment in lieu of notice of a sum equal to business or the transfer of the Company out of the Group, or any other 12 months’ salary, pension, flexible benefits allowance, life and private reason which the Committee decides in its discretion, having regard to a medical insurance (but excluding bonus, share incentives and car range of relevant factors including the Executive Director’s performance, transportation). Any payment in lieu of notice will be paid in equal length of service and circumstances of their departure. monthly instalments from the date of termination of the employment. Should Mr Schwimmer commence alternative employment, be Where an individual is not considered to be a good leaver, unvested appointed as a Non-Executive Director or provide services pursuant awards will lapse. Where an individual is summarily dismissed, all awards to a consultancy agreement in the relevant period (of 12 months) will lapse. following his departure from the Group, the instalments will be reduced by one-twelfth of the annual remuneration earned from the alternative Deferred awards are subject to malus and vested awards are subject to employment, directorship or consultancy. Payments of the instalments clawback as detailed above. 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 Long Term Incentive Plan 2014 or benefits payable to Mr Schwimmer under his service agreement or For good leavers, awards will normally vest at the normal vesting date under any bonus or share incentive plan would be subject to US excise and following the end of the performance period, unless the Committee tax, the payments and benefits may be reduced if this would result in determines that awards should vest following cessation of employment. Mr Schwimmer receiving a greater after tax amount than if the benefits If the vesting of a good leaver’s award(s) is required to be accelerated were not reduced. On termination (other than by reason of summary due to local law requirements (including tax law), the Committee would dismissal) Mr Schwimmer will be eligible to receive a pro-rata bonus for ordinarily impose a post-vesting holding period on the resulting the year in which his employment is terminated subject to Company and net-of-tax shares for the balance of the original vesting period, during individual performance. which the leaver would not be permitted to sell or transfer those shares. Vesting will be subject to performance and unless the Committee Anna Manz entered into a service agreement with the Group on determines otherwise (or that another basis of reduction is appropriate) 24 June 2020 and was appointed with effect from 21 November 2020. pro-rated for time in employment. Good leavers are those who cease to Anna Manz’s service agreement may be terminated by either party be an employee of a member of the Group by reason of death, injury, giving at least 12 months’ notice. Alternatively, the Group may terminate disability, ill-health, redundancy, and the sale of the individual’s the contract by payment in lieu of notice of a sum equal to 12 months’ employing business or transfer of the Company out of the Group, or any salary, pension, flexible benefits allowance, life and private medical other reason which the Committee decides in its discretion, having insurance (but excluding bonus, share incentives and car transportation). regard to a range of relevant factors including the Executive Director’s Any payment in lieu of notice will be paid in equal monthly instalments performance, length of service and circumstances of their departure. from the date of termination of the employment. Should Ms Manz commence alternative employment, be appointed as a Non-Executive Where an individual is not considered to be a good leaver, unvested Director or provide services pursuant to a consultancy agreement in awards will lapse. the relevant period (of 12 months) following her departure from the Group, the instalments will be reduced by one-twelfth of the annual Unvested awards are subject to malus and vested awards are subject remuneration earned from the alternative employment, directorship to clawback as detailed above. or consultancy. On termination (other than by reason of summary dismissal) Ms Manz will be eligible to receive a pro-rata bonus for the Buy-out awards year in which her employment is terminated subject to Company and If a departing Executive Director holds a buy-out award granted to them individual performance. in connection with their appointment, that award will be treated in accordance with its terms. 124 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE Directors’ Remuneration Report continued Remuneration policy for wider workforce Opportunities vary by organisational level. Some sales employees are The Committee has responsibility for overseeing arrangements for all eligible to participate in sales compensation plans rather than the annual of our people and reviews broader workforce policies and practices in bonus plan. order to support decisions on executive pay. Deferral of a portion of the annual bonus is operated for our Executive Paying our people fairly relative to their role, skills, experience and Director, Group Executive and Group Leader populations. 50% of the performance is central to our approach to remuneration, and our reward annual bonus for our Executive Directors and Group Executives is framework and policies support us in doing this. Our Group-wide reward deferred into shares for a period of three years. For our Group Leaders, framework establishes a transparent and robust compensation structure, 50% of their annual bonus is deferred if the award is more than elements and leverage for each career stage in the organisation, £150,000, vesting in equal tranches over three years. This reinforces the providing the Committee with oversight of workforce remuneration. alignment of the pay of our senior employees with shareholder interests and the Group’s long-term performance. The Committee places great importance on ensuring our pay policies and incentives support the desired culture and behaviours of the Group. The malus provision on unvested awards applies automatically to all As detailed in the Annual bonus operation section on page 133, bonus awards granted under the Deferred Bonus Plan and the 2014 LTIP. awards for our Group Executive team as well as our Executive Directors The Committee also exercises discretion at each grant date to apply are determined in accordance with performance against an individual clawback rules to all awards granted, including participants other than scorecard. This provides the Committee with greater structure in Executive Directors. determining the bonus of senior management as well as allowing for a greater focus on culture and behaviours. In setting remuneration for Executive Directors, the Committee considers the overall approach to rewarding employees across the Group taking The remuneration policy for senior executives and other employees is into account the scale, scope or responsibility of the role, development determined based on similar principles to Executive Directors. For roles within the role and/or significant market movement. below the main Board, the exact structure and balance are tailored based on various factors including the scale, scope or responsibility Salary increases of Executive Directors in percentage terms are normally of the role, development within the role and/or significant market in line with those of employees in their local jurisdictions. Engagement movement. The Committee reviews and comments on the salary, bonus with employees on executive remuneration and how it aligns with wider and LTIP awards of the senior executives immediately below Board level Company pay policy is undertaken as part of our employee forums held and approves the overall design and distribution of incentive awards in key regional locations. available to all employees, including share-based plans. The Committee receives ongoing regulatory updates and information on The approach in respect of base salary and benefits is generally external market practices from its independent external advisers who consistent across the organisation. Executive Directors’ and other provide additional context for decisions. senior managers’ remuneration includes a greater proportion of Consideration of shareholders’ views performance-related pay when compared to other employees. The Committee is mindful of shareholder views when setting The Committee considers this is essential to differentiate levels of and evaluating ongoing remuneration principles and commits to responsibility and align pay to sustainable long-term performance consulting with shareholders prior to any significant changes to the and shareholders’ interests. remuneration policy. All employees are eligible to participate in the annual bonus plan which is subject to similar metrics to those used for the Executive Directors. 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 Non-Executive Directors receive a Non-Executive Directors receive an appropriate to attract individuals with the necessary experience and ability basic annual fee with additional fees allowance for any Board meeting to make an important contribution to the Group’s affairs. payable for services such as involving intercontinental travel. committee chairmanship. The Chair’s fee is determined by the Remuneration Committee, and the Travel and other appropriate Board is responsible for determining all other Non-Executive Director fees. Certain Non-Executive Directors are expenses with associated taxes also entitled to receive fees from (including fees incurred in obtaining Fees are periodically reviewed to ensure they remain appropriate in the subsidiary companies. professional advice in the context of: the role scope; company size, complexity and global breadth; furtherance of their duties) and wider market conditions. The Committee retains the flexibility to The Non-Executive Chair of the incurred in the course of performing increase, adjust and make one-off payments to Non-Executive Directors Group receives an all-inclusive their duties are reimbursed to based on their remit. fee for the role. Non-Executive Directors. Fees are set taking into account the level of responsibility of each Fees are neither performance-related Non-Executive Directors are Non-Executive Director and fees at other companies of a similar size nor pensionable. covered by the Directors’ and and complexity. Non-Executive Directors are Officers’ insurance and The aggregate fees payable to all Non-Executive Directors combined not eligible to participate in indemnification. (excluding the Chair and excluding fees paid for any appointments on the annual bonus or LTIP plans Non-Executive Directors are subsidiary boards) are capped as set out in the Group’s Articles of and are not entitled to any required to build up share Association as they may be amended by a resolution of shareholders from payments on termination. ownership of at least 1x basic time to time. The current limit on the aggregate fees that are payable is annual fees within three years £1,500,000 per financial year. of appointment. 125 London Stock Exchange Group plc Annual Report 2022 Directors’ Remuneration Report continued ### REMUNERATION POLICY REPORT CONTINUED Non-Executive Directors have letters of appointment with no notice David Schwimmer period except for the Group Chair who has a notice period of 6 months Chief Executive Officer unless he is not re-elected by shareholders in which case his appointment will terminate immediately. The Non-Executive Directors’ Maximum + share price growth £8,000k appointments are for an initial period of 3 years from the date of 16% 28% 37% 19% appointment and are also subject to re-election by shareholders. Maximum £6,500k Amendments to the Remuneration Policy Report The Committee recognises that remuneration arrangements may need 19% 35% 46% to be amended in order to comply with any new regulations which Mid-range £3,875k become applicable to the Group. The Committee reserves the right to make changes to the Policy described above in order to comply with 32% 29% 39% any such regulatory requirements which apply to the Group including Minimum £1,250k any changes required under the UK Corporate Governance Code or for regulatory, exchange control, tax or administrative purposes or to take 100% account of a change in legislation without obtaining shareholder approval for that amendment. Where this results in a major structural Fixed remuneration change, the Committee would expect to present a revised policy to Annual bonus shareholders for approval at the following AGM. Long term incentive plan Share price growth Illustration of the application of the remuneration policy for Executive Directors Anna Manz The chart on the right illustrates how much the current Executive Chief Financial Officer Directors could receive under four different performance scenarios in the first year of this policy taking effect i.e. 2023: minimum, mid-range, Maximum + share price growth £5,754k maximum and maximum assuming a 50% increase in share price for LTIP awards during the vesting period. Note that London Stock 15% 26% 39% 20% Exchange Group plc does not have a stated ‘target’ level for share Maximum £4,629k awards, so we have assumed 50% of maximum awards to illustrate a mid-range scenario. 19% 32% 49% Mid-range £2,754k Element of | remuneration Detail of assumptions | | | 32% | 27% | 41% | | --- | --- | --- | --- | --- | --- | | Fixed | This comprises: | Minimum £879k | | | | | remuneration | — Base salary with effect from 1 January 2023 | | | | | | | — Benefits as they applied on 31 December 2022 | | 100% | | | and are set out in the single figure table in the Annual Remuneration Report. Fixed remuneration — Pension Annual bonus Long term incentive plan Annual Bonus Assumes maximum opportunity of 225% of salary for Share price growth CEO and 200% of salary for the CFO For mid-range scenario: assumes payment of 50% of Legacy arrangements the maximum opportunity The Committee may make any remuneration payments and payments For maximum: assumes payment of 100% of the for loss of office (including exercising any discretions available to it in maximum opportunity 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 Long Term Assumes maximum opportunity of 300% of salary in Incentive Plan conditional shares 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 For mid-range scenario: assumes 50% of the individual becoming a Director of the Group. 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 126 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE Directors’ Remuneration Report continued ### ANNUAL REPORT ON REMUNERATION 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) David Schwimmer Anna Manz FY2022 FY2021 FY2022 FY2021 Single total figure of remuneration £000 % of total £000 % of total £000 % of total £000 % of total Fixed remuneration Salary 1,000 983 650 650 Flexible benefits allowance 15 15 15 15 3 3 4 Benefits 135 161 39 27 5 Other – – – 453 Pay for performance Annual bonus 1,433 1,625 802 939 1 | Long term incentive – performance | | 1,974 2,325 – – | | | | --- | --- | --- | --- | --- | | | 1 | | 2 | | | Long term incentive – share price growth | | 85 1,639 | | – – | 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. 127 London Stock Exchange Group plc Annual Report 2022 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. 128 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: 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. Assessment of strategic objectives ESG | Measure Objective | | alignment Performance against objectives Outcome | | | | --- | --- | --- | --- | --- | | | Accelerate growth within and | | — Delivered 6.6% income growth | Above target | | | across Divisions; identify potential | | (organic, excluding Russia impact). | | | | transformational growth opportunities | | — Delivered run-rate revenue synergies of | | Growth £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. Foster a diverse, inclusive culture S — Significant progress made in embedding an Above target and a sense of pride; connect, create inclusive culture that values a range of opportunity, deliver excellence perspectives and embraces diversity of every kind. Culture — 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. Drive risk-based decisions, improve G — Further enhanced risk, resilience and control Target infrastructure and delivery for frameworks across LSEG. long-term resilience, compliance, — Good progress across various cyber Resilience sustainable growth 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. 129 London Stock Exchange Group plc Annual Report 2022 Directors’ Remuneration Report continued ### ANNUAL REPORT ON REMUNERATION CONTINUED Assessment of strategic objectives continued ESG Measure Objective alignment Performance against objectives Outcome Deliver an exceptional customer S — Customer metrics stable and improving and Above target experience and engagement timely customer-centric migration delivered. through our commitment to open — Investment in automation, self-service & digital Customer approach, partnerships and solutions to improve customer satisfaction with transparent markets; demonstrate time to resolve customer queries reduced. thought leadership, sustainability, — Delivered significant projects relating to Corporate and innovation in our core customer Sustainability Reporting Directive, US Data Privacy and partner value propositions & Protection Act and EU DORA. — Demonstrated thought leadership in ecosystem through focused campaigns on top priority advocacy objectives; strong investor engagement on various topics. | Simplify LSEG’s governance, | S,G — Delivered cost synergies ahead of schedule with | | Above target | | --- | --- | --- | --- | | technology, operations, processes | | £297 million run-rate achieved by end of 2022, | | | and products to enable scalable | | exceeding target of £250 million. | | Efficiency sustainable growth; integrate — Exceeded in-year and run rate cost synergy organisationally, operationally, targets at planned cost-to-achieve; demonstrating and promote learning of our new strong cost control and efficiency. business; connect our products, — Driven agility and customer-centricity through services, and experts to enable an implementation of new ‘Ways of Working’, improved customer experience organisational design and location strategy. — Strong progress made against objectives to simplify operations, processes and products. Establish LSEG as a strategic enabler E,S,G — Our sustainability strategy has launched and is Target of sustainable economic growth being embedded. LSEG became the first global exchange to publish its own Climate Transition Sustainability 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. 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. 130 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE Directors’ Remuneration Report continued Assessment of individual performance Executive Director Commentary David Schwimmer, — David Schwimmer has led the Group’s strong performance in a challenging macroeconomic and geopolitical environment. Chief Executive Officer 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, — Anna Manz has played a pivotal role as the Group continues to grow and has led the Group’s strong financial performance in Chief Financial Officer 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 Compulsory deferral under Remuneration Policy performance, the Remuneration Committee awarded bonuses to each Executive Directors must compulsorily defer 50% of their bonus into of the Executive Directors as follows: shares for a period of 3 years. Dividend equivalents will be paid in respect of deferred shares on vesting. Role Chief Chief Executive Financial Officer Officer Name David Anna Manz Schwimmer Bonus for % of salary 143% of salary 123% of salary FY2022 % of max 64% 62% £ total amount £1,433,250 £802,100 Of which 50% is deferred £716,625 £401,050 | Bonus | Financial Performance (60%) 50% of | | 50% of | | --- | --- | --- | --- | | Component | | maximum | maximum | | | Strategic Objectives (20%) 79% of | | 79% of | | | | maximum | maximum | | | Personal/Divisional Objectives | 90% of | 80% of | | | (20%) | maximum | maximum | 131 London Stock Exchange Group plc Annual Report 2022 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 | % of salary | 300% of salary | | LTIP (conditional award) | Face value | £3,000,000 | | | Share price^{1} | £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. 132 London Stock Exchange Group plc Annual Report 2022 Directors' Remuneration Report continued GOVERNANCE # **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. 133 London Stock Exchange Group plc Annual Report 2022 Directors’ Remuneration Report continued ### ANNUAL REPORT ON REMUNERATION CONTINUED Long Term Incentive Plan: Non-Executive Directors’ fees for 2023 LTIP awards will be granted in 2023 under our 2014 shareholder- During the year, the Board reviewed Non-Executive Director fees. approved plan in line with our policy. The 2023 LTIP awards will be Non-Executive Director base fees and Committee Chair fees were last subject to a two-year holding period in addition to the three-year revised in 2020 and 2016 respectively. vesting period, resulting in a total five year period from the date of grant. The Committee approved the use of conditional share awards in Non-Executive Director fees were not increased at the time of the lieu of nil-cost options to deliver performance shares to participants for Refinitiv transaction, which transformed the Company in terms of awards made from 2021 onwards. global breadth, complexity, business diversification and size, and correspondingly increased the time commitment, scope and global The Committee has given careful consideration to the LTIP target ranges complexity of the Non-Executive Director role. The Investment applicable to the 2023 grant, in particular to ensure that AEPS growth Association’s updated Principles of Remuneration notes that Non- targets are appropriately stretching taking into account both internal and Executive Directors should receive fees that reflect these factors. external forecasts. For the AEPS element (60%), the performance targets The Board has therefore proposed an increase to base fees and will range from 6% to 11.5% growth per annum. Given the materially Committee Chair fees, with effect from 1 January 2023. 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 There are no other changes to fees and the fee schedule for 2023 previous targets based on a lower baseline. To achieve threshold is as follows: vesting, in the region of £500m additional AOP would be required, | incremental to 2022. To achieve maximum vesting, in excess of £1bn of | | With effect | | With effect | | | --- | --- | --- | --- | --- | --- | | incremental AOP would be required, equivalent to incremental income | | from 1 Jan | | from 1 Jan | | | in the region of £2.6bn, relative to 2022. | Fees | | 2022 | | 2023 | Group Chair £625,000 £625,000 For the TSR element (40%), the relative performance targets will Senior Independent Director £150,000 £150,000 continue to range from median to upper quartile versus the UK FTSE Non-Executive Director base fee 100. The Committee continues to review the appropriateness of the UK (inclusive of Committee memberships) £80,000 £95,000 FTSE 100 as the comparator group against which to measure relative Audit/Remuneration/Risk Committee Chair £30,000 £40,000 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 Non-Executive Directors are also required to build up a shareholding in which our shareholders may otherwise invest. requirement of 1x basic annual fees, to be built up within three years of appointment. Malus and clawback provisions will apply to these awards, allowing the Committee to reduce subsisting awards or request the refund of Non-Executive Directors’ Remuneration already paid or vested awards in certain circumstances (e.g. material Non-Executive Directors’ remuneration is determined by the Board misstatement, gross misconduct, misbehaviour or material failure in risk and is neither performance-related nor pensionable. The Chair’s fee management). The 2023 awards will vest three years after the grant is determined by the Remuneration Committee. The fees for Non- date, subject to adjusted EPS and relative TSR performance measures, Executive Directors are set at a level which is intended to recognise applicable to the three financial years prior to vest, as follows. the significant responsibilities of Directors and to attract individuals with the necessary experience and ability to make an important contribution EPS element (60%) – to the Company’s affairs. Comparisons are made with fees paid at FTSE average adjusted EPS TSR element (40%) – Proportion of relevant 30 companies. growth relative TSR growth element which vests Less than 6% p.a. Less than median 0% A travel allowance of £4,000 per intercontinental trip for Non-Executive 6% p.a. Median ranking 25% Directors reflects the global nature of the Company’s business and the additional time commitment required for travel. The Group Chair 11.5% p.a. or more Upper quartile ranking 100% will not be eligible for this allowance as he receives an all-inclusive fee Straight-line pro-rating applies between these points for his role. Awards to be made during 2023 Travel and other appropriate expenses with associated taxes (including Based on the context and an assessment of individual performance, fees incurred in obtaining professional advice) incurred in the course the Remuneration Committee intends to make grants to each of the of performing their duties are reimbursed to the Chair and to the Executive Directors under the 2014 LTIP as set out below. Non-Executive Directors. Role Chief Chief The Chair and the Non-Executive Directors do not participate in any of Executive Financial the Company’s annual bonus or LTIP plans and are not entitled to any Officer Officer payments on termination. | Name David | | | Anna Manz | | | --- | --- | --- | --- | --- | | | | Schwimmer | | Certain Non-Executive Directors are entitled to receive fees from | | 2023 | % of salary 300% of salary 300% of salary | | | subsidiary companies, details of which are set out below. | | LTIP award | Amount £3,000,000 £2,250,000 | | | | (subject to performance) 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. 134 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: LSEG Committee Date Date of letter Date of membership/ Other subsidiaries/ Name Appointed of appointment Time to expiry Notice period resignation chairmanship 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 28/12/2018 28/12/2021 27/12/2024 None Risk Chair, Audit, Kathleen DeRose 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, LCH (Remuneration 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 | | | | | | | | | | FY2021 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | FY2022 | | | FY2022 | | FY2022 | Taxable | | FY2022 | | | FY2021 | | FY2021 | | FY2021 | Taxable | | FY2021 | | | | | | 1 | | | 2 | | | | | | | 1 | | | 2 | | | LSEG Fees | | Other Fees | | | Total Fees | benefits | | | Total | LSEG Fees | | Other Fees | | Total Fees | | benefits | | Total | | | £000 | | £000 | | £000 | £000 | | | £000 | | £000 | | £000 | | £000 | £000 | | £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 3 Tsega Gebreyes 80 – 80 24 104 41 – 41 – 41 3 Ashok Vaswani 80 – 80 44 124 41 – 41 – 41 4 William Vereker 20 – 20 – 20 – – – – – 5 Martin Brand – – – – – – – – – – 5,6 Erin Brown – – – 43 43 – – – 5 5 5 Douglas Steenland – – – 23 23 – – – 5 5 Directors who stood down from the Board during the year: 7 Jacques Aigrain 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. 135 London Stock Exchange Group plc Annual Report 2022 Directors’ Remuneration Report continued ### ANNUAL REPORT ON REMUNERATION CONTINUED Outside appointments value of £100 invested in the FTSE 100 Index over the same period. Executive Directors are allowed to accept appointments as Non- As a member of the FTSE 100, we have chosen the FTSE 100 Index as it Executive Directors of other companies with the prior approval of the is currently the most relevant index for benchmarking our performance Chair. Approval will only be given where the appointment does not over the ten financial periods. represent a conflict of interest with the Company’s activities and where the wider exposure gained will be beneficial to the development of the Total shareholder return individual. Executive Directors may retain fees to encourage them to seek out the development opportunities and valuable experience 800 afforded by these appointments and in recognition of the personal responsibility executives assume in such roles. 700 Anna Manz is a Non-Executive Director of ITV plc and is a member 600 of their Remuneration and Audit and Risk Committees. For FY2022 500 Anna received fees of £75,796 in connection with this appointment. 400 Director changes during the year There have been no Executive Director changes during the year. 300 Alignment between pay and performance 200 Total Shareholder Return (TSR) performance 100 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 | Mar 13 | Mar 14 | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Dec 14 | Dec 15 | Dec 16 | Dec 17 | Dec 18 | Dec 19 | | Dec 21 | | | | | | | | | | | | Dec 20 | | Dec 22 | 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 LSEG FTSE 100 graph represents the value, at 31 December 2022, of £100 invested in London Stock Exchange Group plc on 31 March 2013, compared with the Historic levels of CEO pay | | | Annual bonus payout | | | | Long-term incentive | | --- | --- | --- | --- | --- | --- | --- | | Period ended: | CEO Single total figure | | against maximum | | | vesting rates against | | (12 months unless otherwise stated) CEO | of remuneration (£’000) | | | opportunity % | 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% 3 31 December 2019 David Schwimmer 2,456 75% – 1 3 31 December 2018 David Schwimmer 2,153 76% – 2 29 November 2017 Xavier Rolet 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) The table below shows the ratios of the CEO single total figure of Paying our people fairly relative to their role, skills, experience and remuneration (as disclosed on page 127) to the total pay and benefits of performance is central to our approach to remuneration, and our reward UK people at the 25th, 50th and 75th percentile. framework and policies support us in doing this. The Committee | considers pay ratios as a useful reference point to inform pay decisions, | | | 25th | | 50th | | 75th | | --- | --- | --- | --- | --- | --- | --- | --- | | but also takes into account a number of other internal and external | | percentile | | percentile | | percentile | | | factors when determining executive pay outcomes, including: | Year Method | pay ratio | | pay ratio | | pay ratio | | | — Our reward framework which establishes the compensation structure, | 2022 C 61 40 31 | | | | | | | elements and leverage for each career stage in the organisation, 2021 C 97 63 49 providing the Committee with oversight of workforce remuneration. 2020 C 93 67 49 — The Group’s financial and strategic performance, including 2019 C 31 21 19 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. 136 London Stock Exchange Group plc Annual Report 2022 Directors' Remuneration Report continued GOVERNANCE 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^{6} | 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^{8} | -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. 137 London Stock Exchange Group plc Annual Report 2022 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 Relative importance of spend on pay of the Group on dividends versus total employee costs. These figures are underpinned by amounts from the notes to the financial statements Total employee costs | at the back of this report. | | | * | | | --- | --- | --- | --- | --- | | | | 2022 | | +13% | | | Annual | 2021 | | | | Year-on-year increases (%) FY2022 FY2021 | Increase | | | | Dividends paid In financial period £567m £426m +33% Dividends paid in financial period Total employee costs £2,053m £1,822m +13% 2022 +33% 2021 500 1,000 1,500 2,000 2,500 * Including underlying and non-underlying from continuing operations only 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 Shareholding | | | Unvested | | | | | | | | | | | as at | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | and | | Unvested | | | | | | 31 December | | | | | | | | | subject to | | and subject | | Vested but | | Requirement | | | | | 2022 | | | | | Owned | performance | | | to continued | | | not | | (% salary/ | | | (% salary/ | | Requirement | | | | | | | | | | 1 | | | | | | | | 2,4 | | 3 | | outright | | conditions | | employment | | exercised | | | | fee) | | | fee) | | met | | Executive Directors David Schwimmer 61,762 111,018 29.374 – 400 551% Ye s 5 Anna Manz – 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 6 Cressida Hogg CBE 1,150 – – – 100 55% 7 Dominic Blakemore 928 – – – 100 83% 8 Martin Brand – – – – – N/A N/A 8,9 Erin Brown – – – – – N/A N/A Tsega Gebreyes 1,200 – – – 100 107% Ye s 8 Douglas Steenland – – – – – N/A N/A 10 Ashok Vaswani – – – – 100 – 11 William Vereker – – – – 100 – Directors who stood down from the Board during the year: 12 Jacques Aigrain 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. 138 London Stock Exchange Group plc £m Annual Report 2022 GOVERNANCE Directors’ Remuneration Report continued Directors’ Interests in Ordinary Shares – Beneficial, Family and any Connected Persons Interests (audited) Options/Awards | | | | Options/Awards with | | | | without performance | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | 1 | | | 2,3 | | | | | Ordinary Shares Held | | | performance conditions | | | | | conditions | | | Total Interests | | | | 31 Dec | 31 Dec | | 31 Dec | 31 Dec | | | 31 Dec | 31 Dec | | 31 Dec | 31 Dec | | | 2022 | 2021 | | 2022 | 2021 | | | 2022 | | 2021 | 2022 | 2021 | Executive Directors David Schwimmer 61,762 32,109 111,018 125,219 29,374 25,598 202,154 182,926 4 Anna Manz – – 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 – – – – – – – – 5 Erin Brown – – – – – – – – 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: 6 Jacques Aigrain 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. 139 London Stock Exchange Group plc Annual Report 2022 Directors’ Remuneration Report continued ### ANNUAL REPORT ON REMUNERATION 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 Award | | | | Price at | | during | | Vested | | Lapsed | | | | | Price at | Value at | | | Price at | Value at | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Date of | award | At start | | the | during | | during | | At end | Vesting | | vesting | vesting | Exercise | | exercise | exercise | | | | | award | date £ | of year | | year | | year | | year | of year | | date | date £ | date £ | | date | date £ | date £ Comment | | | David | 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 | | | | | | | | | | | | | | | | | | | | | Schwimmer | | | | | | | | | | | | | | | | | | | | Actual | 22/04/2020 73.50 32,653 – – – 32,653 22/04/2023 76.659 2,058,831 – – – FY2023 1 Estimate 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 1 Estimate 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 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 Warren 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. 140 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 — 2023 Remuneration Policy review — Governance update, including shareholder feedback — Succession planning on FY2021 Directors’ Remuneration Report — Gender pay update — Reward Framework update 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 — Shareholder consultation update — Share plans vesting update — Remuneration Committee terms of reference review | February 2023 | — FY2022 Performance and Bonus approval | — Shareholder consultation feedback | | --- | --- | --- | | Meetings which took place | — FY2023 Bonus considerations | | | during FY2023 will be repeated | — Performance and determination of CEO and Group | | | in next year’s report | Executive Directors’ remuneration | | — FY2023 LTIP grants and anticipated vesting of previous LTIP and DBP schemes — FY2022 Directors’ Remuneration Report 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 Votes cast 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 141 London Stock Exchange Group plc Annual Report 2022 # Directors' Report 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$^{th}$ pence each (excluding treasury shares) (90.2%), which carry one vote each; (ii) 51,124,377 limited-voting ordinary shares of 6$^{th}$ 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. 142 London Stock Exchange Group plc Annual Report 2022 Directors' Report continued GOVERNANCE ### 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$^{7930}$ 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$^{7930}$ 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$^{7930}$ 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. 143 London Stock Exchange Group plc Annual Report 2022 Directors' Report continued 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. 144 London Stock Exchange Group plc Annual Report 2022 Directors' Report continued GOVERNANCE ## 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. 145 London Stock Exchange Group plc Annual Report 2022 Directors' Report continued ## 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 146 London Stock Exchange Group plc Annual Report 2022 # 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 147 London Stock Exchange Group plc Annual Report 2022 GOVERNANCE ## Financial Statements 148 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS 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 149 London Stock Exchange Group plc Annual Report 2022 # 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 USA¹, 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. 150 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Independent Auditor’s Report to the members of London Stock Exchange Group plc continued Conclusions relating to going concern Based on the work we have performed, we have not identified any In auditing the financial statements, we have concluded that the material uncertainties relating to events or conditions that, individually Directors’ use of the going concern basis of accounting in the or collectively, may cast significant doubt on the Group and parent preparation of the financial statements is appropriate. Our evaluation Company’s ability to continue as a going concern for a period of twelve of the Directors’ assessment of the Group and parent Company’s months from when the financial statements are authorised for issue. ability to continue to adopt the going concern basis of accounting for a period of twelve months from the date of signing the financial In relation to the Group and parent Company’s reporting on statements included: how they have applied the UK Corporate Governance Code, — Obtaining an understanding of the Directors’ use of the going we have nothing material to add or draw attention to in relation to concern basis of preparation. This included reviewing their going the Directors’ statement in the financial statements about whether concern assessment and associated underlying forecasts and the Directors considered it appropriate to adopt the going concern assumptions and performing inquiries of management and those basis of accounting. charged with governance; Our responsibilities and the responsibilities of the Directors with — Assessing the appropriateness of key assumptions made in the respect to going concern are described in the relevant sections of this Group’s business plan, together with our valuation specialists, by report. However, because not all future events or conditions can be comparing them to historical performance and challenging the predicted, this statement is not a guarantee as to the Group’s ability achievability of budgeted growth. In assessing the reasonableness to continue as a going concern. of these key assumptions, we considered planned cost and revenue synergies, the trading environment, and the current uncertain Overview of our audit approach geopolitical and economic outlook including the impact of high inflation and increased interest rates, principal risks and appropriate Audit scope — We performed an audit of the complete financial mitigating factors. We performed back-testing by comparing the information of 8 components, specified audit procedures on specific balances for a further budget of prior periods to actual results to assess the historical 11 components and other procedures on the accuracy of the forecasting process; remaining 126 components. — Testing the clerical accuracy of the going concern assessment — The components where we performed full or including the data used in stress testing; specific audit procedures accounted for 93% of — Evaluating the reasonableness of adverse forecasts by benchmarking absolute pre-tax profit, 96% of Revenue and 99.9% the stress testing scenario assumptions against external data; of Total assets. — Evaluating the plausibility of management actions available to mitigate — A component is defined as an entity for which the impact of the reverse stress test by comparing them to our management prepares component financial information understanding of the Group including the ability to refinance debt; that is included in the Group financial statements. — Evaluating the level of liquidity of the Group to support ongoing requirements for a period of 12 months from the date of signing the Key audit — Accounting for acquisitions. financial statements; and matters — Revenue recognition. — Assessing the appropriateness of the going concern disclosures by — Impairment of goodwill and purchased evaluating the consistency with the going concern assessment and intangible assets. for compliance with the relevant reporting requirements. — 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. 151 London Stock Exchange Group plc Annual Report 2022 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 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. 152 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Independent Auditor’s Report to the members of London Stock Exchange Group plc continued Involvement with component teams Climate change In establishing our overall approach to the Group audit, we determined Stakeholders are increasingly interested in how climate change will the type of work that needed to be undertaken at each of the impact the Group. The Group has determined that the most significant components by us, as the primary audit engagement team, or by future impacts from climate change will be from physical risk to component auditors from other Ernst & Young Global Limited network operations and the opportunities and risks associated with market firms and Deloitte USA operating under our instruction. For the 3 full shifts in the transition to a net zero economy. These are explained in scope components where the work was performed by component “Enabling sustainable growth” within the Strategic Report and in the auditors, we determined the appropriate level of involvement to principal risks and uncertainties, where the Group has also explained enable us to determine that sufficient audit evidence had been its climate commitments. All of these disclosures form part of the obtained as a basis for our opinion on the Group as a whole. “Other information,” rather than the audited financial statements. Our procedures on these unaudited disclosures therefore consisted The primary audit team interacted regularly with the component teams solely of considering whether they are materially inconsistent with the during various stages of the audit and were responsible for the scope financial statements or our knowledge obtained in the course of the and direction of the audit process. Physical site visits were undertaken audit or otherwise appear to be materially misstated, in line with our by the Senior Statutory Auditor and other senior members of the primary responsibilities on “Other information”. 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 In planning and performing our audit we assessed the potential impacts and regular virtual meetings involved discussing and challenging the of climate change on the Group’s business and any consequential audit approach with the component team and any findings arising from material impact on its financial statements. their work, meeting with local management, attending planning and closing meetings and reviewing relevant audit working papers on risk The Group has explained in note 1.7 its articulation of how climate areas, through direct access or through the use of shared screen change has been reflected in the financial statements. The principal functionality. This, together with the additional procedures performed areas of consideration by management include going concern and at Group level, gave us appropriate evidence for our opinion on the viability and the valuation of assets and liabilities. Group financial statements and ensured that the Senior Statutory Auditor Our audit effort in considering the impact of climate change on the exercised appropriate oversight of the principal locations of the Group. 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. 153 London Stock Exchange Group plc Annual Report 2022 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. Key observations communicated to the Risk Our response to the risk Audit Committee Accounting for acquisitions — Control assessment: We confirmed our understanding of the business We concluded that the fair During 2022, the Group completed combinations accounting process including process and controls relevant value of net assets acquired, the acquisitions of Global Data to the acquisitions. We held discussions with management to understand and the resulting goodwill are Consortium, Inc. (GDC), MayStreet, the governance structures and oversight of the accounting for each of reasonable and fall within our Inc. (MayStreet), TORA Holdings, Inc. the transactions. independently developed range (TORA) and Quantile Group Limited — Technical accounting: Together with our technical accounting specialists, for each transaction. (Quantile), together the ‘acquirees’. we reviewed management’s business combinations accounting papers We are satisfied that the material and management’s assessment of the acquirees’ accounting policies, acquisitions and the related Net assets Goodwill understanding the differences with the Group and resulting impact. disclosures are reasonable and Entity acquired recognised — Net assets acquired and resulting goodwill: We verified the completeness are in accordance with IFRS 3 GDC £88 million £153 million and accuracy of the carrying value of acquired net assets. This included ‘Business Combinations’. MayStreet £45 million £108 million tests of detail and analytical review procedures over significant balance sheet accounts at the acquisition date. We also assessed the TORA £85 million £173 million reasonableness of the fair values of identifiable assets and liabilities Quantile £70 million £135 million assumed, and resulting goodwill at each acquisition date with our valuation There is a complexity in auditing specialists. We assessed the appropriateness of intangible asset valuation the accounting for these acquisitions models, tested the accuracy and completeness of the key inputs used as there are significant judgements and the reasonableness of the key assumptions including discount rates, and assumptions required in the royalty rates, attrition rates, contributory asset charge rates, long-term determination of the fair value growth rates and cash flow forecasts. This included developing of net assets acquired and the independent valuation ranges for net assets acquired for each acquisition. resulting goodwill. We involved our Tax specialists to evaluate the appropriateness of deferred Refer to the Report of the Audit taxes related to the assets acquired and liabilities assumed and to assess Committee; Accounting policies); and the appropriateness of the tax rate used in relation to each acquisition. Note 12 of the Financial Statements — Disclosure: We assessed the adequacy of the disclosures made in 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. 154 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Independent Auditor’s Report to the members of London Stock Exchange Group plc continued Key observations communicated to the Risk Our response to the risk Audit Committee Revenue recognition — Control assessment: We confirmed our understanding of the processes We are satisfied that revenue The Group reported £7,454 million and controls relevant to the material revenue streams of the Group. related to subscription revenue of revenue from external customers, We also evaluated the design effectiveness and tested operating and FTSE Russell revenue which consisted of £5,259 million effectiveness of key controls including IT systems and related IT controls accruals within the Data & in Data & Analytics, £1,459 million in for certain revenue streams. Analytics business are Capital Markets and £736 million in — Overall procedures: We evaluated the appropriateness of the revenue reasonable and recorded in Post Trade. recognition policy in accordance with IFRS 15 ‘Revenue from Contracts accordance with IFRS 15 with Customers’. Additionally, we benchmarked the accounting policies ‘Revenue from Contracts Auditing revenue recorded is with industry peers to ensure they are in line with industry standards. with Customers’. complex due to the complexity of We performed cut-off testing to verify that revenue was recognised in the IT systems used in the initiation, the correct period. processing and recording of We performed analytical procedures and journal entry testing in order transactions and the manual to identify and test the risk of misstatement arising from management nature of certain revenue streams. override of controls. This includes: — Subscription revenue in Data & Analytics: For a sample of significant — recognising revenue in contracts, we obtained the executed contract and performed a review of accordance with the non-standard the contract terms against the requirements of IFRS 15 ‘Revenue from terms present in subscription Contracts with Customers’ and verified the invoices raised and cash revenue agreements in Data & collected as applicable. Analytics; and We used artificial intelligence looking for discrepancies and anomalies in — the level of judgement used in contracts to identify potential issues related to the authenticity of contracts estimating FTSE Russell revenue to mitigate the risk of falsified contracts. accruals presented within fees — FTSE Russell revenue accruals: We selected a sample of revenue accruals receivable based on historic and obtained appropriate supporting evidence such as tying the basis billing and expected assets for the accrued amounts to third party sources or prior period billings. under management (AUM). We also agreed to invoices raised post year-end and cash collected Refer to the Report of the where applicable. Audit Committee; Accounting We also performed substantive analytical procedures over revenue policies; Notes 2 and 3 of the accruals recognised across the period, in comparison to total revenue Financial Statements recognised by month and counterparty to identify outliers on which to The risk has remained consistent perform further procedures. with the prior year. 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. 155 London Stock Exchange Group plc Annual Report 2022 Independent Auditor’s Report to the members of London Stock Exchange Group plc continued Key observations communicated to the | Risk Our response to the risk | | Audit Committee | | --- | --- | --- | | Impairment of goodwill and | — Control assessment: We confirmed our understanding of the impairment | We are satisfied that the | | purchased intangible assets | assessment process and assessed the design effectiveness of | carrying values of goodwill and | | The Group reported goodwill of | key controls. | purchased intangible assets | | £19,829 million (2021: £17,486 million) | — Carrying value of goodwill: For material cash generating units (CGUs), | are reasonable and the related | | and net purchased intangible | we examined the cash flow forecasts and tested compliance with the | disclosures are compliant with | | assets of £12,584 million | requirements of IAS 36 ‘Impairment of Assets’. | IAS 36 ‘Impairment of Assets’ | | (2021: £11,920 million). | We tested the clerical accuracy of these forecasts and compared them | and IAS 38 ‘Intangible Assets’. | to the three-year business plans approved by the Board. The complexity in auditing goodwill We evaluated the reasonableness of the cash flow forecasts using our and purchased intangible assets understanding of the CGU and analysing the budgeted growth rates, relates to the use of judgement its historical growth rates and other relevant market expectations and in the impairment assessment. Both developments including changes in inflation and increasing interest rates. goodwill and purchased intangible We compared prior periods’ cash flow forecasts to actual results to assess assets are sensitive to a number management’s forecasting accuracy. of judgements and estimates; in We tested the discount rates used by each of the CGUs, as well as the particular cash flow forecasts, LTGRs, with involvement of our valuation specialists; we evaluated these long-term growth rates (LTGR), model inputs within each impairment model, by comparing them to a range discount rates, amortisation periods of economic and industry forecasts and market data where appropriate, for purchased intangible assets, as well as to other similar companies. customer retention rates We also performed sensitivity analysis on the key assumptions (including and royalty rates. the model inputs, cash flow forecasts, royalty rates and customer retention Refer to the Report of the Audit rates) to understand the impact that reasonably possible changes Committee; Accounting policies; and would have on the overall carrying value of the goodwill and purchased Note 14 of the Financial Statements intangible assets. The risk has increased in the — Purchased intangible assets: We evaluated management’s assessment current year due to the increase of impairment indicators by considering internal and external factors in economic uncertainty linked to specific to each class of assets and our understanding of the business. the impact of higher interest rates This included performing back-testing of customer retention rates within on discount rates. 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. 156 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Independent Auditor’s Report to the members of London Stock Exchange Group plc continued Key observations communicated to the Risk Our response to the risk Audit Committee Internally developed software — Control assessment: We confirmed our understanding of both the We are satisfied that the capitalisation and impairment capitalisation and impairment assessment processes and assessed the capitalisation of and carrying The Group reported capitalised design and operating effectiveness of key controls. value of internally developed internally developed software of — Additions testing: For a sample of additions, we have agreed amounts software and the related £2,653 million (2021: £2,318 million) capitalised to supporting documentation to verify whether the costs were disclosures are reasonable and an impairment charge of incurred and meet the capitalisation criteria of IAS 38 ‘Intangible Assets’. and compliant with IAS 36 £11 million (2021: £13 million) — Impairment assessment: To assess the completeness of indicators of ‘Impairment of Assets’ impairment identified by management, we selected a sample of assets, and IAS 38 ‘Intangible Assets’. Auditing the capitalisation of including those not yet brought into use or projects put on hold, and tested expenses to internally developed and challenged management’s assessment of indicators of impairment. software is complex as it involves This included analysis against budgeted spend and identifying projects management judgement when with no recent spend. making the assessment of Where an impairment has been recognised, we tested the key assumptions capitalisation against criteria set used within the assessment, such as the discount rates, LTGR and cash out in IAS 38 ‘Intangible Assets’. flow forecasts with involvement of our valuation specialists as needed. This includes identifying when We also assessed the sensitivity analysis performed by management and events or changes in circumstances performed independent additional sensitivity analysis on the impairment indicate that the carrying amounts model inputs, to understand the impact that reasonably possible changes may not be recoverable and involves to key assumptions would have on the overall carrying value of the key judgements and estimates in internally developed software. the annual impairment assessments. — Disclosure: We assessed the adequacy of the disclosures made in the These include discount rates, financial statements. 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. 157 London Stock Exchange Group plc Annual Report 2022 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 - Profit before tax from continuing operations (£1,241 million) and discontinued operations to the point of disposal (£74 million – Note 13.1) #### Adjustments - 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. #### Adjusted basis - Adjusted profit before tax from continuing operations #### Materiality - Materiality of £61 million (5% of materiality basis) 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. 158 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 Corporate Governance Statement The other information comprises the information included in the annual We have reviewed the Directors’ statement in relation to going concern, report, including the Strategic Report, Governance information and longer-term viability and that part of the Corporate Governance disclosures (including Board of Directors, Corporate governance, Statement relating to the Group and parent Company’s compliance Complying with the provisions of the Code, Report of the Nomination with the provisions of the UK Corporate Governance Code specified Committee, Report of the Audit Committee, Report of Risk Committee, for our review by the Listing Rules. Directors’ Remuneration Report, Directors’ Report and Statement of Directors’ responsibilities), other than the financial statements and our Based on the work undertaken as part of our audit, we have concluded auditor’s report thereon. The Directors are responsible for the other that each of the following elements of the Corporate Governance information contained within the annual report. Statement is materially consistent with the financial statements or our knowledge obtained during the audit: Our opinion on the financial statements does not cover the other — Directors’ statement with regards to the appropriateness of information and, except to the extent otherwise explicitly stated in this adopting the going concern basis of accounting and any material report, we do not express any form of assurance conclusion thereon. uncertainties identified; — Directors’ explanation as to its assessment of the Group’s prospects, Our responsibility is to read the other information and, in doing so, the period this assessment covers and why the period is appropriate; consider whether the other information is materially inconsistent with — Director’s statement on whether it has a reasonable expectation that the financial statements or our knowledge obtained in the course of the the group will be able to continue in operation and meets its liabilities; audit, or otherwise appears to be materially misstated. If we identify — Directors’ statement on fair, balanced and understandable; such material inconsistencies or apparent material misstatements, — Board’s confirmation that it has carried out a robust assessment we are required to determine whether this gives rise to a material of the emerging and principal risks; misstatement in the financial statements themselves. If, based — The section of the annual report that describes the review of on the work we have performed, we conclude that there is a effectiveness of risk management and internal control systems; and material misstatement of the other information, we are required to — The section describing the work of the audit committee. report that fact. Responsibilities of directors We have nothing to report in this regard. As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial statements Opinions on other matters prescribed by the Companies Act 2006 and for being satisfied that they give a true and fair view, and for such In our opinion, the part of the Directors’ Remuneration Report to be internal control as the Directors determine is necessary to enable the audited has been properly prepared in accordance with the Companies preparation of financial statements that are free from material Act 2006. misstatement, whether due to fraud or error. In our opinion, based on the work undertaken in the course of the audit: In preparing the financial statements, the Directors are responsible for — the information given in the Strategic Report and the Directors’ assessing the Group and parent Company’s ability to continue as a Report for the financial year for which the financial statements are going concern, disclosing, as applicable, matters related to going prepared is consistent with the financial statements; and concern and using the going concern basis of accounting unless the — the Strategic Report and the Directors’ Report have been prepared Directors either intend to liquidate the Group or the parent Company in accordance with applicable legal requirements. or to cease operations, or have no realistic alternative but to do so. Matters on which we are required to report by exception Auditor’s responsibilities for the audit of the financial statements In the light of the knowledge and understanding of the Group and the Our objectives are to obtain reasonable assurance about whether the parent Company and its environment obtained in the course of the financial statements as a whole are free from material misstatement, audit, we have not identified material misstatements in the Strategic whether due to fraud or error, and to issue an auditor’s report that Report or the Directors’ Report. includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with We have nothing to report in respect of the following matters in ISAs (UK) will always detect a material misstatement when it exists. relation to which the Companies Act 2006 requires us to report to Misstatements can arise from fraud or error and are considered material you if, in our opinion: if, individually or in the aggregate, they could reasonably be expected to — adequate accounting records have not been kept by the parent influence the economic decisions of users taken on the basis of these Company, or returns adequate for our audit have not been received financial statements. 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 159 London Stock Exchange Group plc Annual Report 2022 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 160 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS ## Consolidated income statement 1 2022 2021 (Re-presented) | | | | | Non- | | | | | Non- | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Underlying | | underlying | | Total | Underlying | | underlying | | Total | | Year ended 31 December Notes | | £m | | £m | £m | | £m | | £m | £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 9 141.8p 85.8p Diluted earnings per share 9 141. 1p 85.2p Adjusted basic earnings per share 9 317 .8p 272.4p Adjusted diluted earnings per share 9 316. 1p 270.7p Total operations Basic earnings per share 9 233.8p 581.7p Diluted earnings per share 9 232.5p 578.1p Adjusted basic earnings per share 9 328.4p 301.4p Adjusted diluted earnings per share 9 326.6p 299.5p Dividend per share in respect of the financial year Dividend per share paid during the year 10 31. 7p 25.0p Dividend per share declared for the year 10 75.3p 70.0p 1 The 2021 results have been re-presented to exclude the results of the discontinued operations (see note 13). 161 London Stock Exchange Group plc Annual Report 2022 # Consolidated statement of comprehensive income | Year ended 31 December | Notes | 2022 £m | 2021 (Re- presented) £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 | | | | 2,525 | 119 | | **Other comprehensive income net of tax from continuing operations** | | 2,300 | 254 | | **Total comprehensive income from continuing operations** | | 3,279 | 846 | | **Discontinued operations** | | | | | Total comprehensive income from discontinued operations | 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). 162 London Stock Exchange Group plc Annual Report 2022 # Balance sheet FINANCIAL STATEMENTS | 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 | – | | | | **37,365** | **34,212** | **25,007** | **24,886** | | **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 | – | – | | | | **797,791** | **752,897** | **1,384** | **1,648** | | **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 | – | – | | | | **796,469** | **750,767** | **1,494** | **649** | | **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 | – | – | | | | **10,536** | **10,823** | **2,087** | **1,985** | | **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. The financial statements on pages 161-245 were approved by the Board on 1 March 2023 and signed on its behalf by: **David Schwimmer** Chief Executive Officer 14 March 2023 London Stock Exchange Group plc Registered number 5369106 **Anna Manz** Chief Financial Officer 163 London Stock Exchange Group plc Annual Report 2022 ## Cash flow statements Group Company | | | | 2021 | | | | 2021 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | (Re- | | | | (Re- | | | | | | | 1 | | | | 3 | | | 2022 | presented) | | | 2022 | presented) | | | | Year ended 31 December Notes | £m | | £m | | £m | | £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) – – 2 Net cash flows from continuing operations 2, 700 2,492 (113) (115) 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 3 Loans made to subsidiary companies – – (384) (672) 3 Repayment of loans made to subsidiary companies – – 561 256 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. 164 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS ## Statement of changes in equity Group | | | | Attributable to equity holders | | | | | | | | | | Non- | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | Total | controlling | | | | | | Ordinary | | | | | | | | attributable | | | interests | | | | | | | share | Share | | Retained | | Other | | | to equity | | | (Re- | | Total | | | | | | | | | | | 1 | | | | | 2 | | | | | capital | premium | | earnings | | reserves | | | holders | | presented) | | | equity | | Year ended 31 December Notes | | £m | | £m | | £m | | £m | | | £m | | £m | | £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) 3 Tradeweb share buyback – – – – – (55) (55) Shares withheld from employee options 4 exercised (Tradeweb) – – – – – (52) (52) Tax benefit on investment in partnerships 8.1 – – – – – 25 25 Adjustments to non-controlling interest – – – – – 59 59 31 December 2021 39 978 3,816 18,807 23,640 1,879 25,519 Total comprehensive income for the year – – 1,069 2,332 3,401 390 3, 791 Share buyback by Parent Company 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) 3 Tradeweb share buyback – – – – – (80) (80) Shares withheld from employee options 4 exercised (Tradeweb) – – – – – (82) (82) Tax benefit on investment in partnerships 8.1 – – – – – 100 100 Adjustments to non-controlling interest – – – – – (16) (16) 31 December 2022 39 978 3,840 21, 139 25,996 2, 155 28, 151 1 Movements in other reserves are detailed in note 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 Attributable to equity holders | | | | | | | | | | Other reserves | | | | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Ordinary | | | | | | | | Capital | | | | attributable | | | | | share | | Share | | Retained | | redemption | | | Merger | | to equity | | | | | capital | premium | | | earnings | | | reserve | | reserve | | | holders | | Year ended 31 December Notes | | £m | | | £m | | £m | | | £m | | £m | | £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 22,810 165 London Stock Exchange Group plc Annual Report 2022 # Notes to the financial statements ## Reporting entity These financial statements have been prepared for London Stock Exchange Group plc (the Company) and its subsidiaries (the Group). The Group is a diversified global financial markets infrastructure and data business. The Company is a public company, incorporated and domiciled in England and Wales. The address of its registered office is 10 Paternoster Square, London, EC4M 7LS. During 2022, the Group acquired the businesses listed below. The results of these businesses have been consolidated since the date of acquisition (see note 12). | Acquired business | Acquisition date | Segment | | --- | --- | --- | | Global Data Consortium, Inc. (GDC) | 31 May 2022 | Data & Analytics | | MayStreet Inc. (MayStreet) | 31 May 2022 | Data & Analytics | | Tora Holdings, Inc. (TORA) | 9 August 2022 | Data & Analytics | | Quantile Group Limited (Quantile) | 30 November 2022 | Post Trade | On 1 July 2022, the Group disposed of the BETA, Maxit and Digital Investor businesses (collectively BETA) (see note 13). On 21 March 2022, the disposal of BETA was assessed to be highly probable and the business was treated as a disposal group from that date. BETA is also deemed to be a discontinued operation as it represented a separate major line of business of the Group. Its profits, losses and cash flows have therefore been separated from the Group's continuing operations and are shown as discontinued operations. The comparative period has been re-presented accordingly. ## 1. Accounting policies *This section describes the Group's significant policies and critical accounting judgements and estimates that relate to the financial statements and notes as a whole. Where an accounting policy or a significant accounting judgement or estimate relates to a particular note, it is disclosed in that note. These policies have been consistently applied to all the periods presented, unless otherwise stated. We have also detailed below the new accounting pronouncements that we will adopt in future years and how we have assessed the impact of climate change on our financial statements.* ### 1.1 Compliance with International Financial Reporting Standards (IFRS) The Group's consolidated and the Company's financial statements are prepared in accordance with UK-adopted international accounting standards and endorsed by the UK Endorsement Board. ### 1.2 Basis of preparation The financial statements are prepared on a historical cost basis except for derivative financial instruments, debt and equity financial assets and contingent consideration which are measured at fair value. ### Going concern The financial statements have been prepared on a going concern basis. The Group's business activities (together with the factors likely to affect its future development, performance and position), its objectives, policies in managing risk and its capital are set out in the Strategic Report on pages 2-85. In addition: - the Group's borrowing facilities and respective repayment dates, and the net debt position of the Group, are included in note 22 - the financial risk management objectives and policies of the Group, together with its exposure to capital, credit and concentration, country, liquidity, settlement, custodial and market risk are discussed in note 23.5 ### Business planning process The Group's forecasting and planning process includes the Group's three-year business plan. The business plan makes certain assumptions about the performance of the core revenue streams and segments, the use of existing product lines as well as the take up of new product lines. It also makes assumptions on appropriate levels of investment to support expected performance, known inorganic activity, the ability to refinance debt as required, and expected returns to shareholders. ### Performance management The Group's performance is analysed monthly by management, when the monthly results are reviewed and compared with the plan as well as, together with prior and updated full year forecasts. The key variances and associated drivers are reviewed and reported, as necessary. ### Cash flows and liquidity headroom The Group's cash-flow and liquidity headroom are outputs of the business plan and are the main factors considered in the going concern assessment. The business plan is stress tested using severe but plausible downside scenarios as determined by the Financial Risk Committee, over the full three-year plan period. Impacts on the performance of core revenue streams and segments are modelled, with appropriate mitigating factors also considered. The output of this stress-testing on the Group's cash flow and liquidity are then tested against thresholds set by the Group's risk appetite. These thresholds include liquidity headroom (cash less credit facilities), leverage ratio (net debt to adjusted earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) and before foreign exchange gains or losses) and interest cover (adjusted EBITDA to interest expense). No scenario over the three-year period leads to a breach in the Group's risk appetite thresholds or would mean the Group is unable to meet its obligations as a result of insufficient liquidity. A reverse stress test has also been completed, to evaluate the financial impacts that would breach the Group's risk appetite thresholds. The scenarios required to breach the thresholds are all deemed improbable. 166 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued ## 1. Accounting policies continued 1.4 Foreign currencies 167 London Stock Exchange Group plc Annual Report 2022 Conclusion The Directors, therefore, consider there to be no material uncertainties that may cast significant doubt on the Group and Company’s ability to continue to operate as a going concern. The Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for 12 months from the date when these financial statements are authorised for issue. Accordingly, the going concern basis has been adopted in the preparation of these financial statements. Presentation of income statement The Group uses a columnar format for the presentation of its consolidated income statement to separately identify results before non-underlying items (“adjusted”). This is consistent with the way that financial performance is measured by management and reported to the Executive Committee and Board (see note 2). The “adjusted” measures reported by the Group include: — Adjusted operating expenses before depreciation, amortisation and impairment — Adjusted EBITDA — Adjusted depreciation, amortisation and impairment — Adjusted operating profit — Adjusted earnings per share (EPS) These measures are not measures of performance under IFRS and should be considered in addition to, and not as a substitute for, IFRS measures of financial performance and liquidity. Adjusted performance measures provide supplemental data relevant to an understanding of the Group’s financial performance and exclude non-underlying items of income and expense that are material by their size and/or nature. The “profit before non-underlying items” measure is used to calculate adjusted EPS. Profit before non-underlying items is reconciled to profit before taxation on the face of the income statement. Non-underlying items are disclosed in note 6. Non-underlying items include: — Amortisation and impairment of goodwill and other purchased intangible assets — Incremental amortisation and impairment of the fair value adjustments of intangible assets recognised as a result of acquisitions — Other income or expenses not considered to drive the operating results of the Group (including transaction, integration and separation costs related to acquisitions and disposals of businesses), as well as restructuring costs — Tax on non-underlying items As permitted by Section 408 of the Companies Act 2006, the Company’s income statement has not been included in these financial statements. Current and non-current classification The Group presents assets and liabilities in the balance sheet based on current and non-current classification. An asset is current when it is: — Held primarily for trading purposes; — Expected to be realised within one year from the reporting period; — Expected to be realised or intended to be sold or consumed in the course of the Group’s operating cycle; or — Cash or cash equivalents. All other assets are classified as non-current. A liability is current when it is: — Held primarily for trading purposes; — Expected to be settled in the course of the Group’s operating cycle; or — Due to be settled within one year from the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities. 1.3 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. Subsidiaries are consolidated from the date on which control is obtained by the Group. They are deconsolidated from the date on which control ceases. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The results of subsidiaries are consolidated for the period to 31 December, even if the subsidiary’s financial year-end is different. The acquisition method of accounting is used by the Group to account for business combinations (see note 12). Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of comprehensive income, balance sheet and statement of changes in equity (see note 11). Intercompany transactions and balances between group companies are eliminated on consolidation. Where necessary, adjustments are made to the results of subsidiaries and associates to bring their accounting policies in line with those of the Group. Functional and presentation currency The consolidated financial statements are presented in sterling, which is also the functional currency of London Stock Exchange Group plc, the Parent Company. The Group determines the functional currency for each of its subsidiary entities and items included in the financial statements of each entity are measured using that functional currency. Notes to the financial statements continued ## 1. Accounting policies continued Transactions and balances in foreign currencies 1.5 New and amended standards and interpretations Transactions in foreign currencies are initially recorded and translated Standards, interpretations and amendments to published into the functional currency of the relevant Group entity at the exchange standards effective for the year ended 31 December 2022 rate ruling at the date of the transaction. Monetary assets and liabilities During the year, the following amendments to standards became denominated in foreign currencies are translated into the respective effective. These have not had a material impact on the Group’s functional currency of the entity at the exchange rate prevailing at the financial statements: reporting date. — Amendments to IFRS 3 Business Combinations: reference to the Conceptual Framework Foreign exchange gains and losses resulting from the settlement of — Amendments to IAS 16 Property, Plant and Equipment: proceeds such foreign currency transactions or from the translation of monetary before intended use assets and liabilities denominated in foreign currencies are recognised — Amendments to IAS 37 Provisions, Contingent Liabilities and in the income statement within operating expenses. Contingent Assets: onerous contracts – cost of fulfilling a contract — Annual Improvements to IFRS 2018-2020 Non-monetary items that are measured in terms of historical cost in a foreign currency are translated at the exchange rate at the date of the Standards, interpretations and amendments to published standards initial transaction. Non-monetary items that are measured at fair value which are not yet effective in a foreign currency are translated using the exchange rate at the date New and amended standards that have been issued, but are not yet when the fair value was determined. The foreign exchange gain or loss effective, up to the date of the Group’s financial statements are on assets and liabilities carried at fair value are reported as part of the disclosed below. We intend to adopt these, if applicable, when they fair value gain or loss. This means foreign exchange gains and losses become effective. We are currently assessing their impact, but this is on non-monetary assets and liabilities held at fair value through profit not expected to be material to the Group’s financial statements: or loss are recognised in the income statement (within operating expenses), and foreign exchange gains and losses on non-monetary International accounting standards and interpretations Effective date assets classified as at fair value through other comprehensive income IFRS 17 Insurance Contracts, including amendments 1 January 2023 are recognised in other comprehensive income. to IFRS 17 (and initial application of IFRS 17 and IFRS 9 Financial Instruments – comparative information) Translation of non-sterling entities on consolidation Amendments to IAS 1 and IFRS Practice Statement 2: 1 January 2023 The results and financial position of all Group entities that have a disclosure of accounting policies non-sterling functional currency are translated into sterling on Amendments to IAS 8 Accounting Policies, Changes 1 January 2023 consolidation into the Group’s results as follows: in Accounting Estimates and Errors: definition of — assets and liabilities (including goodwill, purchased intangible | | 1 | accounting estimate | | | --- | --- | --- | --- | | assets and fair value adjustments | ) are translated at the reporting | | | | date exchange rates | | Amendments to IAS 12 Income Taxes: deferred tax related | 1 January 2023 | | — income and expenses and other comprehensive income are | | to assets and liabilities arising from a single transaction | | 1 | translated at the average exchange rate for the year. Where this | Amendments to IFRS 16 Leases: lease liability in a sale | 1 January 2024 | | | | --- | --- | --- | --- | --- | | average is not a reasonable approximation of the rate prevailing | and leaseback | | | | | on the date of a material transaction, these items are translated | | | | 1 | | | Amendments to IAS 1 Presentation of Financial Statements: | 1 January 2024 | | | | at the rate on the date of the transaction | non-current liabilities with covenants and classification | | | | | — all resulting exchange differences are recognised in other | of liabilities as current or non-current | | | | | comprehensive income | | | | 1 | | | Amendments to IFRS 10 Consolidated Financial Statements | | Deferred | | and IAS 28 Investments in Associates and Joint Ventures: On consolidation, exchange differences arising from the translation of sale or contribution of assets between an investor and its net investments in foreign operations, borrowings and other currency associate or joint venture instruments designated as hedging instruments (see note 23) are 1 Not yet endorsed by UK Endorsement Board . recognised in other comprehensive income. On disposal of a foreign currency operation, the cumulative exchange differences previously recognised in other comprehensive income relating to that operation are reclassified to the income statement as part of the profit or loss on disposal. 1 Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the reporting date exchange rate. 168 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued ## 1. Accounting policies continued 169 London Stock Exchange Group plc Annual Report 2022 1.6 Significant accounting estimates, assumptions and judgements Estimates, assumptions and judgements are regularly reviewed based on historical experience, current circumstances and expectations of future events. Significant accounting estimates and assumptions are those that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Significant judgements are those made by management in applying the Group’s significant accounting policies that have a material impact on the amounts presented in the financial statements. Significant judgement may be exercised in management’s accounting estimates and assumptions. Estimates, assumptions and judgements are described in the relevant notes to the financial statements (identified by the following symbol/icon ) Note Significant estimates and assumptions Significant judgement 6 Non-underlying items ● 8.3 Uncertain tax positions ● ● 12 Business combinations ● 14 Intangible assets ● 17 Pension and other retirement benefit schemes ● ● Management has discussed significant accounting estimates, assumptions and judgements with the Audit Committee. 1.7 Climate change We have considered the impact of climate change on the Group’s operations as outlined in the risks disclosed on pages 24-84 of the Strategic Report as well as in the Climate Report. We have also reviewed the potential impact of climate change on the Group’s financial results and position. The areas that are deemed to be most relevant to climate change are set out below. Based on an assessment in each area, we have concluded that climate change is not expected to have a material impact on the Group’s financial position, estimates or judgements. The directors monitor this on an on-going basis. — Going concern and viability – The Group has committed to a long-term ambition to achieve net zero by 2040 and set targets to reduce selected carbon emissions by 50% by 2030. There is no other direct impact on the viability period of the Group. There is no climate-related scenario that is deemed to have a probable likelihood of occurring which could also impact the Group’s going concern assessment. — Impairment of goodwill and intangible assets – Forecasted cash flows are not expected to be impacted by climate change over the period for which forecasts have been prepared, due to the nature of the Group’s revenue streams. The impact on costs mainly relates to reducing our carbon footprint by encouraging responsible employee travel. — Useful lives of assets – The Group’s assets consist mainly of property and IT equipment. Given the type of IT equipment owned by the Group, there is no expected impact of climate change on the future useful lives of these assets. The useful lives of our property could be impacted by climate change in the form of physical obsolescence of assets or because of a natural disaster (such as flooding), however any such impact on the carrying value of related assets is not deemed material. — Deferred tax assets – Deferred tax asset recoverability can be affected by climate if there is an expectation that it will impact on the future taxable profits that are expected to be generated. The revenue of the Group is of such a nature that it is not expected to be impacted by climate change over the period for which forecasts are prepared. There is a potential reduction in costs as we reduce our carbon footprint and encourage responsible employee travel. — Pension scheme asset valuation and defined benefit liability – Changes in interest rates, as a result of climate change, could impact the future valuation of defined benefit liabilities and pension asset valuations. While these are considered in the valuation, there was no discernible impact from climate change on the current year’s valuation. — Trade and other receivables – The Group has a diverse client base that operates in various industries. The Group’s expected credit loss provision considers the credit risk of its client base, which could be impacted by the assessment of climate change in a particular market or industry. Given that receivables are mainly due within one year, the impact of climate change on the short term is unlikely to be material. Notes to the financial statements continued ## 2. Segment information The Group reports three main operating segments: - Data & Analytics includes the core Refinitiv business and the FTSE Russell businesses - Capital Markets includes the London Stock Exchange, Tradeweb, FXall and Turquoise - Post Trade includes the Group's CCPs (LCH) and other post trade services Selected financial data is presented for our operating segments below. # Accounting policy IFRS 8 Operating Segments requires operating segments to be identified on the same basis as is reported internally for the review of performance and allocation of resources by the "chief operating decision maker". For the Group, this is the Executive Committee. The Executive Committee uses a measure of adjusted EBITDA to assess the profitability and performance of the operating segments. During the year, some revenue items were reallocated between business lines to better reflect our operating model. The comparative results have been re-presented to reflect this. At a divisional level, the impact on the 2021 results previously reported is: - £6 million of revenue from Capital Markets to Data & Analytics - £7 million of revenue from Post Trade to Data & Analytics Results by operating segment for the year ended 31 December 2022 are as follows: | Continuing operations | Notes | Data & Analytics £m | Capital Markets £m | Post Trade £m | Other £m | Group £m | | --- | --- | --- | --- | --- | --- | --- | | **Revenue from external customers^{1}** | 3.1 | 5,259 | 1,459 | 736 | – | 7,454 | | **Net treasury income from CCP clearing business** | 3.1 | – | – | 255 | – | 255 | | **Other income** | 3.1 | – | – | – | 34 | 34 | | **Total income** | | 5,259 | 1,459 | 991 | 34 | 7,743 | | Cost of sales | | (879) | (34) | (150) | (1) | (1,064) | | **Gross profit** | | 4,380 | 1,425 | 841 | 33 | 6,679 | | Adjusted operating expenses before depreciation, amortisation and impairment | 4 | (2,142) | (665) | (324) | (9) | (3,140) | | Income from equity investments | | – | – | – | 12 | 12 | | Share of loss after tax of associates | | – | – | – | (1) | (1) | | **Adjusted EBITDA** | | 2,238 | 760 | 517 | 35 | 3,550 | | Underlying depreciation, amortisation and impairment | 14, 15 | (607) | (103) | (112) | – | (822) | | **Adjusted operating profit (before non-underlying items)** | | 1,631 | 657 | 405 | 35 | 2,728 | | Non-underlying depreciation, amortisation and impairment | 6, 14, 15 | | | | | (1,078) | | Other non-underlying items excluding net finance expense | 6 | | | | | (233) | | **Operating profit** | | | | | | 1,417 | | Net finance costs (including non-underlying items) | 7 | | | | | (176) | | Profit before tax from continuing operations | | | | | | 1,241 | | Profit before tax from discontinued operations | 13 | | | | | 692 | | **Profit before tax** | | | | | | 1,933 | 1 Data & Analytics revenue includes recoveries of £315 million. Post Trade revenue includes net settlement and similar expenses recovered through the CCP clearing businesses of £12 million which comprises gross settlement income of £47 million less gross settlement expenses of £35 million. 170 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 2. Segment information continued Re-presented results by operating segment for the year ended 31 December 2021 are as follows: | | Notes | Data & Analytics £m | Capital Markets £m | Post Trade £m | Other £m | Group £m | | --- | --- | --- | --- | --- | --- | --- | | **Continuing operations** | | | | | | | | **Revenue from external customers^{1}** | 3.1 | 4,427 | 1,171 | 699 | – | 6,297 | | **Net treasury income from CCP clearing business** | 3.1 | – | – | 207 | – | 207 | | **Other income** | 3.1 | – | – | – | 31 | 31 | | **Total income** | | 4,427 | 1,171 | 906 | 31 | 6,535 | | Cost of sales | | (709) | (27) | (123) | – | (859) | | **Gross profit** | | 3,718 | 1,144 | 783 | 31 | 5,676 | | Adjusted operating expenses before depreciation, amortisation and impairment | 4 | (1,857) | (536) | (329) | (3) | (2,725) | | Income from equity investments | | – | – | – | 22 | 22 | | Share of loss after tax of associates | | – | – | – | (4) | (4) | | **Adjusted EBITDA** | | 1,861 | 608 | 454 | 46 | 2,969 | | Underlying depreciation, amortisation and impairment | 14, 15 | (481) | (110) | (96) | – | (687) | | **Adjusted operating profit (before non-underlying items)** | | 1,380 | 498 | 358 | 46 | 2,282 | | Non-underlying depreciation, amortisation and impairment | 6, 14, 15 | | | | | (883) | | Other non-underlying items excluding net finance expense | 6 | | | | | (334) | | **Operating profit** | | | | | | 1,065 | | Net finance costs (including non-underlying items) | 7 | | | | | (171) | | Profit before tax from continuing operations | | | | | | 894 | | Profit before tax from discontinued operations | 13 | | | | | 2,702 | | **Profit before tax** | | | | | | 3,596 | 1 Data & Analytics revenue includes recoveries of £324 million. Post Trade revenue includes net settlement and similar expenses recovered through the CCP clearing businesses of £12 million which comprises gross settlement income of £46 million less gross settlement expense of £34 million. 171 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued 172 London Stock Exchange Group plc Annual Report 2022 3. Total income and contract liabilities We report total income, which is made up of revenue, net treasury income and other income. Most of the Group’s revenue is generated in the Data & Analytics division. By geographic location, two-thirds of the Group’s revenue is earned in the UK and USA. We report contract liabilities where amounts received or receivable from a customer exceed revenue recognised for a contract, for example if the Group receives an advance payment from a customer. 3.1. Total income Accounting policy The Group reports total income, which is made up of: — Revenue — Net treasury income — Other income Revenue The main source of the Group’s revenue is fees for services provided. Revenue is measured based on the consideration specified in a contract with a customer. The following are excluded from revenue: — value added tax and other sales related taxes — certain revenue share arrangements (whereby as part of an agreement amounts are due back to the customer) — certain pass-through costs where the Group acts as an agent and has arrangements to recover specific costs from its customers with no mark-up The Group recognises revenue as services are performed and as it satisfies its obligations to provide a product or service to a customer. The Group’s revenue accounting policies are set out below: Data & Analytics The Data & Analytics division generates revenue by providing information and data products including indexes, benchmarks, real-time pricing data and trade reporting and reconciliation services. Data subscription and index licence fees are recognised over the licence or usage period in line with the Group’s obligation to deliver data consistently throughout the licence period. Services are billed on a monthly, quarterly or annual basis. Other information services include licences to the regulatory news service and reference data businesses. Revenue from licences that grant the right to access intellectual property are recognised over time, consistent with the pattern of the service provision and how the performance obligation is satisfied throughout the licence period. Revenues from other information services, including from the sale of right to use licences, are recognised at the point the licence is granted or service is delivered. Various brokerage processing, risk solutions and professional services, which are generally billed in arrears, are recognised as revenue at the point in time when the Group meets its obligation to complete the transaction or service. Recoveries consist of fees for third-party content, such as exchange data that is distributed directly to customers, and communications fees. Recoveries are generally recognised over the contract term. Capital Markets Revenue in the Capital Markets division is generated from: Primary and Secondary market services; contracts to develop capital market technology solutions; software licences; network connections; and hosting services. We have assessed that primary market initial admission and the ongoing listing services represent one performance obligation. The Group therefore recognises revenue from initial admission and any subsequent issues over the period that the Group provides the listing services. All admission fees are billed to the customer at the time of admission to trading and become payable when invoiced. The estimated period for admission services (over which initial admission fees are spread) is determined using historical analysis of listing durations in respect of the companies on our markets. The estimated service period inherently incorporates an element of uncertainty in relation to the length of a customer listing, which is subject to factors outside the Group’s control. We reassess the estimated service periods at each reporting date. The current estimated deferral period is five years or seven years, depending on the market. We estimate that a one-year decrease in the deferral period would cause an estimated £24 million increase in revenue and a one-year increase in the deferral period would cause an estimated £24 million decrease in revenue recognised in the year. Primary market annual fees, secondary market membership and subscription fees are generally paid in advance on the first day of membership or the subscription period. The Group recognises revenue on a straight-line basis over the period to which the fee relates, as this reflects the extent of the Group’s progress towards completion of the performance obligation under the contract. Revenue from secondary market trading and associated capital market services is recognised on a per transaction basis at the point that the service is provided. Capital markets software licence contracts contain multiple deliverables including: providing licences; installing software; and ongoing maintenance services. The transaction price for each contract is allocated to these performance obligations based upon the relative standalone selling price. Revenue is recognised based on the actual service provided during the reporting period as a proportion of the total services to be provided. This is determined by measuring the inputs consumed in delivering the service (for example material and labour) relative to the total expected input consumption over the contract. This best reflects the transfer of economic benefits to the customer which generally occurs as the Group incurs costs on the contract. Network connection and hosting services revenues are recognised on a straight-line basis over the period to which the fee relates as this reflects the continuous transfer of technology services and measures the extent of progress towards the completion of the performance obligation. FINANCIAL STATEMENTS Notes to the financial statements continued ## 3. Total income and contract liabilities continued 173 London Stock Exchange Group plc Annual Report 2022 Post Trade Revenue in the Post Trade division is generated from clearing, settlement and other post trade services. Over-the-counter (OTC) derivatives, and securities clearing and reporting generate fees from: individual transactions or contracts cleared and settled; transaction reporting; risk management; and other financial resources management services. These revenues are earned at the point in time when the Group meets its obligations to complete the transaction or service. Revenue is recognised and billed monthly in arrears. Non-cash collateral fees are earned from handling non-cash collateral balances. These are recognised on a straight-line basis over the service period, representing the continuous transfer of services during that time. Fees received for third-party content or services, such as settlement fees, are recognised net within revenue on the date of the transaction. Customer contracts across the Group that contain a single performance obligation at a fixed price do not require variable consideration to be calculated. Some businesses in the Group provide services to customers under a tiered or tariff pricing structure that generates a degree of variability in the revenue streams from the contract as a result of additional charges or discounts given. Where the future revenue from a contract varies due to factors that are outside the Group’s control, the Group limits the total transaction price at contract inception and recognises the minimum expected revenue guaranteed by the terms of the contract over the contract period. Any variable element is subsequently recognised in the period in which the variable condition is satisfied and there is no significant risk of reversal of that revenue. Rebates given to customers as part of an operating agreement are calculated on a pro rata basis on revenue earned and recognised as they fall due. The Group does not have any contracts where the period between the transfer of services to a customer and when the customer is expected to pay for that service is longer than one year. As a result, no adjustments are made to revenue for any financing component. Net treasury income The CCP businesses securely invest the cash collateral lodged with them and earn treasury income from various investments (including government debt and reverse repos) and cash deposits with central banks. At the same time, the CCPs pay interest at an overnight benchmark rate to their members on the collateral placed with the business, whilst charging a spread on that rate as a fee. The resulting net treasury income is recognised within total income and disclosed separately from revenue. Other income Other income typically relates to operating lease income and fees from service agreements. Fees are generated from the provision of events and media services, which are typically recognised as revenue at the point the service is rendered. Cost of sales Cost of sales comprises: — Data and licence fees — Data feed costs — Royalties — Expenses incurred in respect of profit share arrangements — Costs directly attributable to the construction and delivery of goods or services — Any other costs linked and directly incurred to generate revenues and provide services to customers Profit share expenses recognised as cost of sales relate to arrangements with certain customers where the payment to the customer is linked to the total profit of the particular business concerned. Notes to the financial statements continued ### 3. Total income and contract liabilities continued The Group's revenue from contracts with customers disaggregated by segment, major product and service line, and timing of revenue recognition for the year ended 31 December 2022 is shown below: | Continuing operations | Data & Analytics £m | Capital Markets £m | Post Trade £m | Other £m | Group £m | | --- | --- | --- | --- | --- | --- | | **Revenue from external customers** | | | | | | | **Major product and service lines** | | | | | | | Trading & banking solutions | 1,612 | – | – | – | 1,612 | | Enterprise data solutions | 1,307 | – | – | – | 1,307 | | Investment solutions | 1,325 | – | – | – | 1,325 | | Wealth solutions | 275 | – | – | – | 275 | | Customer & third-party risk solutions | 425 | – | – | – | 425 | | Recoveries | 315 | – | – | – | 315 | | Equities | – | 248 | – | – | 248 | | FX | – | 258 | – | – | 258 | | Fixed income, derivatives and other | – | 953 | – | – | 953 | | OTC derivatives | – | – | 402 | – | 402 | | Securities & reporting | – | – | 234 | – | 234 | | Non-cash collateral | – | – | 100 | – | 100 | | **Total revenue** | **5,259** | **1,459** | **736** | **–** | **7,454** | | Net treasury income^{1} | – | – | 255 | – | 255 | | Other income | – | – | – | 34 | 34 | | **Total income** | **5,259** | **1,459** | **991** | **34** | **7,743** | | **Timing of revenue recognition** | | | | | | | Services satisfied at a point in time | 173 | 1,015 | 721 | – | 1,909 | | Services satisfied over time | 5,086 | 444 | 15 | – | 5,545 | | **Total revenue** | **5,259** | **1,459** | **736** | **–** | **7,454** | $^{1}$ Net treasury income is earned from instruments held at amortised cost or fair value as follows: – A net loss of £69 million was recognised from financial assets and financial liabilities held at amortised cost (£1,158 million income and £1,227 million expense) 174 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ### 3. Total income and contract liabilities continued The Group's re-presented revenue from contracts with customers disaggregated by segment, major product and service line, and timing of revenue recognition for the year ended 31 December 2021 is shown below: | | Data & Analytics £m | Capital Markets £m | Post Trade £m | Other £m | Group £m | | --- | --- | --- | --- | --- | --- | | **Continuing operations** | | | | | | | **Revenue from external customers** | | | | | | | **Major product and service lines** | | | | | | | Trading & banking solutions | 1,369 | – | – | – | 1,369 | | Enterprise data solutions | 1,058 | – | – | – | 1,058 | | Investment solutions | 1,119 | – | – | – | 1,119 | | Wealth solutions | 227 | – | – | – | 227 | | Customer & third-party risk solutions | 330 | – | – | – | 330 | | Recoveries | 324 | – | – | – | 324 | | Equities | – | 241 | – | – | 241 | | FX | – | 204 | – | – | 204 | | Fixed income, derivatives and other | – | 726 | – | – | 726 | | OTC derivatives | – | – | 358 | – | 358 | | Securities & reporting | – | – | 246 | – | 246 | | Non-cash collateral | – | – | 95 | – | 95 | | **Total revenue** | **4,427** | **1,171** | **699** | **–** | **6,297** | | Net treasury income^{1} | – | – | 207 | – | 207 | | Other income | – | – | – | 31 | 31 | | **Total income** | **4,427** | **1,171** | **906** | **31** | **6,535** | | **Timing of revenue recognition** | | | | | | | Services satisfied at a point in time | 154 | 790 | 670 | – | 1,614 | | Services satisfied over time | 4,273 | 381 | 29 | – | 4,683 | | **Total revenue** | **4,427** | **1,171** | **699** | **–** | **6,297** | 1 Net treasury income is earned from instruments held at amortised cost or fair value as follows: - – A net gain of £195 million was earned from financial assets and financial liabilities held at amortised cost (£399 million income and £204 million expense) - – A net gain of £12 million was earned from assets held at fair value (£23 million income and £11 million expense) 175 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued ### 3. Total income and contract liabilities continued #### Total revenue by geographical location The Group's revenue from continuing operations disaggregated by geographical location of service provided is as follows: | Continuing operations | 2022 £m | 2021 (Re- presented) £m | | --- | --- | --- | | UK | **2,292** | 2,035 | | USA | **2,685** | 2,120 | | EU countries | **982** | 875 | | Asia | **963** | 787 | | Other | **532** | 480 | | **Total revenue** | **7,454** | 6,297 | #### 3.2. Contract liabilities ##### Accounting policy Revenue relating to future periods is classified as a contract liability on the balance sheet to reflect the Group's obligation to transfer goods or services to a customer in the future for which it has received consideration, or an amount of consideration is due, from the customer. Contract liabilities are amortised and recognised as revenue over the period the services are rendered. The Group has the following contract liabilities: | Group | 2022 £m | 2021 £m | | --- | --- | --- | | Current | **257** | 245 | | Non-current | **89** | 101 | | **Total contract liabilities** | **346** | 346 | The changes in the Group's contract liabilities during the year are as follows: | | Notes | 2022 £m | 2021 £m | | --- | --- | --- | --- | | 1 January | | **346** | 262 | | Contract liabilities assumed on acquisition of subsidiaries | 12 | **4** | 612 | | Disposal of business | 13 | **(11)** | (14) | | Recognised as revenue during the year | | **(249)** | (764) | | Deferred during the year | | **243** | 254 | | Foreign exchange translation | | **13** | (4) | | **31 December** | | **346** | 346 | ### 4. Operating expenses before depreciation, amortisation and impairment Operating expenses mainly relate to staff costs, IT costs and professional fees. ##### Accounting policy Costs are recognised in the income statement as incurred and measured after deducting any time- and value-limited discounts from suppliers. Other discounts are spread over the contract term. | Continuing operations | Notes | 2022 £m | 2021 (Re- presented) £m | | --- | --- | --- | --- | | Staff costs | 5 | **1,896** | 1,666 | | IT costs | | **567** | 447 | | Professional fees | | **420** | 327 | | Short-term lease costs | | **13** | 43 | | Other costs | | **243** | 252 | | Foreign exchange losses/(gains) | | **1** | (10) | | Underlying operating expenses before depreciation, amortisation and impairment | | **3,140** | 2,725 | | Non-underlying operating expenses before depreciation, amortisation and impairment | 6 | **389** | 334 | | **Total operating expenses before depreciation, amortisation and impairment** | | **3,529** | 3,059 | 176 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued 5.2. Employees 1 ## 5. Staff costs and employees The average number of employees , including executive directors, in the Group from continuing operations was: This note shows amounts earned by employees (including Executive Directors), the average number of employees during the year and their 2021 location and amounts paid to “key management personnel” as defined (Re- by IAS 24 Related Party Disclosures. Key management personnel are Continuing operations 2022 presented) those employees that have authority for planning, directing and UK 4,559 4,416 controlling the activities of the Group. The Group recognises all USA 3,127 3,664 executive directors and the Executive Committee (see pages 90-93) India 6,113 5,737 as its key management personnel. EU countries 2,292 2,132 | 5.1. Staff costs | | | | Philippines 2,090 1,974 | | --- | --- | --- | --- | --- | | | | | 2021 | Sri Lanka 1,572 1,423 | | | | | (Re- | Mainland China 1,452 1,373 | | | 2022 | presented) | | | Other Asia 1,860 1,717 Continuing operations Notes £m £m Africa and Middle East 623 640 Salaries and other benefits 1,905 1,626 Other 753 792 Social security costs 191 164 Average number of employees 24,441 23,868 Pension costs 17.1 81 81 1 Average employee numbers represent full time equivalent members of staff. They are Share-based payment expense 25 158 141 calculated from the date of acquisition of subsidiary companies purchased in the year and Total payments made to employees 2,335 2,012 up to the date of disposal of businesses sold in the year. The average number of employees from discontinued operations during the year was 285 (2021: 1,000). Employees from Amounts capitalised as discontinued operations in 2022 were located in the USA and India (2021: USA, India, UK, development costs 14 (281) (190) and EU countries). Total staff costs from The Company had no employees in the year (2021: nil). continuing operations 2,054 1,822 Underlying staff costs 1,896 1,666 ## Non-underlying staff costs 158 156 6. Non-underlying items Total staff costs from The Group separately identifies results before non-underlying items (we continuing operations 2,054 1,822 refer to these results as ‘adjusted’). These measures are not measures of performance under IFRS and should be considered in addition to, 2021 and not as a substitute for, IFRS measures of financial performance and (Re- liquidity. This note explains the main non-underlying items in the year, 1 2022 presented) most of which have arisen as a result of acquisition or disposal activity. Discontinued operations Note £m £m Salaries and other benefits 18 53 Social security costs 2 7 Pension costs 1 3 Share-based payment expense – 3 Total payments made to employees 21 66 Amounts capitalised as development costs 14 (1) (2) Total staff costs from discontinued operations 20 64 Underlying staff costs 20 62 Non-underlying staff costs – 2 Total staff costs from discontinued operations 20 64 1 The 2021 discontinued operations staff costs have been re-presented to include the costs from BETA and the Borsa Italiana group (see note 13). 177 London Stock Exchange Group plc Annual Report 2022 Compensation for key management personnel 2022 £m 2021 £m Salaries and other benefits 16 19 Pension costs 1 1 Share-based payments 8 9 Total compensation 25 29 Details of Directors’ emoluments are included in the Remuneration Report on pages 113-141. Significant accounting judgements The Group uses its judgement to classify items as non-underlying. They include: — Amortisation and impairment of goodwill and purchased intangible assets. Purchased intangible assets include customer relationships, trade names, and databases and content, all of which are as a result of acquisitions — Incremental amortisation and impairment of any fair value adjustments of intangible assets recognised as a result of acquisitions — Other income or expenses not considered to drive the operating results of the Group (including transaction, integration and separation costs related to acquisitions and disposals of businesses), as well as restructuring costs — Tax on non-underlying items Notes to the financial statements continued ## 6. Non-underlying items continued | Continuing operations | Notes | 2022 £m | 2021 (Re- presented) £m | | --- | --- | --- | --- | | **Non-underlying operating expenses before interest, tax, depreciation, amortisation and impairment** | | | | | Transaction costs | | **85** | 109 | | Integration and separation costs | | **278** | 225 | | Restructuring and other costs | | **26** | – | | | | **389** | 334 | | Profit on disposal of property, plant and equipment | | **(133)** | – | | Remeasurement gain | 12.1 | **(23)** | – | | | | **(156)** | – | | **Non-underlying operating expenses before interest, tax, depreciation, amortisation and impairment** | | **233** | 334 | | **Non-underlying depreciation, amortisation and impairment** | | | | | Amortisation and impairment of purchased intangible assets | 14 | **1,044** | 851 | | Depreciation of property, plant and equipment | 15 | **15** | 10 | | Impairment of property, plant and equipment | 15 | **12** | 22 | | Impairment of other non-current assets | | **7** | – | | | | **1,078** | 883 | | **Non-underlying items before interest and tax** | | **1,311** | 1,217 | | Non-underlying finance costs | 7.2 | **16** | 5 | | **Non-underlying items before tax** | | **1,327** | 1,222 | | Non-underlying tax | | **(278)** | (130) | | **Non-underlying items after tax** | | **1,049** | 1,092 | The main non-underlying items are as follows: ### Transaction costs Transaction costs mainly relate to the following acquisitions: - — Refinitiv – mainly fair value adjustment to the outstanding Tradeweb equity-settled awards (as if the acquisition date were the grant date) of £26 million (2021: £36 million) and post-acquisition Management Incentive Plan (MIP) share-based payment expense of £16 million (2021: £10 million) - — GDC, MayStreet, TORA and Quantile (see note 12.4) ### Integration and separation costs Integration and separation costs relate to activities to: - — Integrate acquired businesses with the Group and mainly consist of Refinitiv integration costs of £242 million (2021: £201 million) - — Separate disposed businesses and mainly consists of BETA separation costs of £12 million (2021: £24 million to separate the Thomson Reuters Financial & Risk Business from Thomson Reuters and then restructure it) ### Profit on disposal of property, plant and equipment On 5 January 2022, the Group completed the sale of one of its freehold properties in the UK for a cash sum of £153 million realising a gain on disposal of £133 million. ### Remeasurement gain Prior to the acquisition of GDC on 31 May 2022, LSEG held an 11% equity interest in GDC. The acquisition date fair value of the previously held interest resulted in a remeasurement gain of £23 million. ### Depreciation, amortisation and impairment Amortisation of intangibles of £1,044 million (2021: £851 million) mainly relates to the amortisation of intangible assets recognised as a result of the acquisition of Refinitiv. We have continued to review our property needs following the acquisition of Refinitiv. The decision to exit and sub-lease some of our property has resulted in £27 million of accelerated depreciation and impairment (2021: £32 million) to right-of-use property assets and some fixtures and fittings. ### Taxation We have recognised a £278 million (2021: £130 million) non-underlying tax benefit which mainly reflects the tax impact of the Group's non-underlying items computed based on the tax rates applicable to the respective territories. ## 7. Net finance costs Finance income includes interest on cash deposits and interest income on retirement benefit assets. Finance costs include interest on borrowings, interest costs on retirement benefit obligations and lease interest expense. ### Accounting policy The accounting policies for the following finance income and finance costs are described in the relevant notes to the financial statements: | | Note | | | --- | --- | --- | | — Interest income on retirement benefit assets | 17 | Pension and other retirement benefit schemes | | — Interest costs on retirement benefit obligations | | | | — Lease interest income | 21 | Lease liabilities and net investments in leases | | — Lease interest expense | | | | — Interest on borrowings | 22 | Borrowings and net debt | Interest earned on cash deposited with financial counterparties and interest paid on borrowings, which reflect the agreed market-based or contractual rate for each transaction, are calculated using the effective interest rate method. Where negative interest rates apply, the Group recognises interest paid on cash deposits as an expense and interest received on borrowings as income. Recurring fees and charges levied on committed bank facilities, cash management transactions and the payment services provided by the Group's banks are charged as accrued in other finance expenses. Credit facility arrangement fees are capitalised and then amortised over the term of the facility based on the projected utilisation of the facility. 178 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 7. Net finance costs continued ### 7.1 Finance income | Continuing operations | Note | 2022 £m | 2021 £m | | --- | --- | --- | --- | | Bank deposit and other interest income | | **29** | 3 | | Lease interest income | | **1** | 2 | | Interest income on retirement benefit assets | 17.1 | **81** | 41 | | **Underlying finance income** | | **111** | 46 | ### 7.2 Finance costs | Continuing operations | Notes | 2022 £m | 2021 £m | | --- | --- | --- | --- | | Interest payable on bank and other borrowings^{1} | | **(156)** | (151) | | Amortisation of arrangement fees | | **(10)** | (12) | | Lease interest expense | 21 | **(15)** | (12) | | Other finance expenses | | **(20)** | (2) | | Interest cost on retirement benefit obligations | 17.1 | **(70)** | (35) | | **Underlying finance costs** | | **(271)** | (212) | | **Non-underlying finance costs** | 6 | **(16)** | (5) | | **Total finance costs** | | **(287)** | (217) | 1 Interest payable on bank and other borrowings includes amounts where the Group suffers negative interest on its cash deposits. It is not of amortisation of the realised gain on interest rate derivatives held in the hedging reserve. ## 8. Taxation *This note explains how our Group tax charge arises. The note also provides information on deferred tax and uncertain tax positions.* ### Accounting policy Income tax comprises current and deferred tax. Current and deferred tax charges and benefits are recognised in the income statement except to the extent that they relate to items recognised directly in equity or in other comprehensive income. **Current income tax** is calculated based on the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group operates and generates taxable income. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities. When applicable tax regulation is subject to interpretation, management evaluates the positions taken in tax returns and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Group measures such tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty. **Deferred tax** is recognised using the liability method for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Deferred tax is determined using tax rates that are substantively enacted and expected to apply in the period when the asset is realised or the liability settled. Deferred tax is not recognised for: - Taxable temporary differences arising on the initial recognition of goodwill; - Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither the accounting profit nor taxable profit or loss; and - Temporary differences associated with interests in subsidiaries and associates to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which these can be utilised, except: - When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and - In respect of deductible temporary differences associated with interests in subsidiaries and associates, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority on either the same taxable entity or on different taxable entities which intend to settle the current tax assets and liabilities on a net basis. 179 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued ## 8. Taxation continued ### 8.1 Income tax #### Tax recognised in the income statement | Continuing operations | Note | 2022 £m | 2021 (Re- presented) £m | | --- | --- | --- | --- | | **Current tax** | | | | | UK corporation tax for the year at 19% (2021: 19%) | | 67 | 49 | | Overseas tax for the year | | 125 | 79 | | Adjustments in respect of previous years | | 81 | 2 | | **Total current tax** | | **273** | **130** | | **Deferred tax** | | | | | Deferred tax (benefit)/expense for the year | | (29) | 214 | | Adjustments in respect of previous years | | (4) | (9) | | Deferred tax expense/(benefit) on amortisation and impairment of purchased intangible assets | | 22 | (33) | | **Total deferred tax** | 8.2 | **(11)** | **172** | | **Total tax** | | **262** | **302** | #### Factors affecting the tax charge for the year The tax charge for the year differs from that derived from the standard rate of corporation tax in the UK of 19% (2021: 19%) as explained below: | Continuing operations | 2022 £m | 2021 (Re- presented) £m | | --- | --- | --- | | **Profit before tax from continuing operations** | **1,241** | **894** | | **Profit multiplied by standard rate of corporation tax in the UK** | **236** | **170** | | Overseas earnings taxed at higher rate | 4 | 8 | | Adjustment arising from changes in tax rates | (3) | 171 | | Income not taxable | (53) | (36) | | Adjustments in respect of previous years | 77 | (7) | | Deferred tax not recognised | 1 | (4) | | **Total tax** | **262** | **302** | #### Tax on items recognised in other comprehensive income | Continuing operations | 2022 £m | 2021 £m | | --- | --- | --- | | **Deferred tax benefit/(expense) on:** | | | | — Actuarial (losses)/gains on retirement benefit obligations | 98 | (25) | | — Gains/losses of financial assets (at fair value through other comprehensive income) | (13) | 1 | | **Total tax recognised in other comprehensive income** | **85** | **(24)** | #### Tax on items recognised in equity | | 2022 £m | 2021 £m | | --- | --- | --- | | **Current tax benefit on:** | | | | — Share-based payments in excess of expense recognised | 14 | 12 | | **Total current tax recognised in equity** | **14** | **12** | | **Deferred tax benefit/(expense) on:** | | | | — Share-based payments less than/in excess of expense recognised | (92) | 18 | | — Investment in partnerships (recognised in non-controlling interests) | 100 | 25 | | **Total deferred tax recognised in equity** | **8** | **43** | | **Total tax recognised in equity** | **22** | **55** | On 24 May 2021, the UK Finance Act 2021 was substantively enacted, increasing the corporation tax rate to 25% with effect from 1 April 2023. #### Global Minimum Tax To address concerns about uneven profit distribution and the tax contributions of large multinational corporations, various agreements have been reached at the global level, including an agreement by over 135 countries to introduce a global minimum tax rate of 15%. In December 2021, the Organisation for Economic Co-operation and Development (OECD) released a draft legislative framework, followed by detailed guidance in March 2022. This is expected to be used by individual jurisdictions that signed the agreement to amend their local tax laws. Enactment is currently expected to occur with effect from 1 January 2024. Once changes to the tax law in any jurisdiction are enacted or substantively enacted, the Group may be subject to the 15% minimum tax rate. We are closely monitoring these developments. ### 8.2 Net deferred tax liabilities | | 2022 £m | 2021 £m | | --- | --- | --- | | Deferred tax assets | 622 | 508 | | Deferred tax liabilities | (2,200) | (1,835) | | **Net deferred tax liabilities** | **(1,578)** | **(1,327)** | 180 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 8. Taxation continued The movements in deferred tax assets and liabilities during the year are shown below: | Group | Goodwill and intangible assets^{1} £m | Tax losses and other carry- forward attributes £m | Property, plant and equipment £m | Share schemes £m | Retirement benefit obligations £m | Investment in partner- ships^{2} £m | Provisions and other temporary differences £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 1 January 2021 | (398) | 27 | 5 | 27 | (28) | – | 7 | (360) | | Deferred tax on acquisition of subsidiaries | (1,738) | 322 | 102 | 62 | (49) | 425 | 43 | (833) | | Deferred tax derecognised on disposal of business | 79 | – | – | – | – | – | 4 | 83 | | Tax recognised in the income statement | (184) | 94 | 20 | 15 | (28) | (99) | (12) | (194) | | Tax recognised in other comprehensive income | – | – | – | – | (25) | – | 1 | (24) | | Tax recognised in equity | – | – | – | 18 | – | 25 | – | 43 | | Foreign exchange translation and other | (41) | 1 | 2 | 1 | – | – | (5) | (42) | | 31 December 2021 | (2,282) | 444 | 129 | 123 | (130) | 351 | 38 | (1,327) | | Deferred tax on acquisition of subsidiaries (note 12.2) | (87) | 24 | – | – | – | – | – | (63) | | Tax recognised on discontinued operations (note 13) | (77) | (69) | – | – | – | – | 9 | (137) | | Tax recognised in the income statement | (79) | 153 | (46) | 12 | (13) | (43) | 27 | 11 | | Tax recognised in other comprehensive income | – | – | – | – | 98 | – | (13) | 85 | | Tax recognised in equity | (3) | – | – | (92) | – | 102 | 1 | 8 | | Foreign exchange translation and other | (288) | 65 | 4 | 10 | – | 44 | 10 | (155) | | **31 December 2022** | **(2,816)** | **617** | **87** | **53** | **(45)** | **454** | **72** | **(1,578)** | 1 The intangible assets have mainly arisen from acquired subsidiaries, creating a deferred tax liability due to the difference between their accounting and tax treatment. On 31 December 2022 this liability was £2,816 million (2021: £2,282 million), primarily relating to the Refinitiv acquisition. 2 Tradeweb Markets LLC is a multiple member limited liability company taxed as a partnership and accordingly, any taxable income generated by Tradeweb Markets LLC is passed through to its members. The investment in partnership deferred tax asset is the difference between the financial statement amount and the tax basis of the Tradeweb Markets Inc. investment in Tradeweb Markets LLC. ### Unrecognised deferred tax assets On 31 December 2022, the gross amount of unrecognised temporary differences in respect of losses available for carry forward was £122 million (2021: £115 million), all with unlimited expiration. The assets will be recognised in the future only if suitable taxable profit arises within the Group. ### 8.3. Uncertain tax positions$^{1}$ #### Significant accounting judgements and estimates ##### Uncertain tax positions The Group is subject to taxation in the many countries in which it operates. The tax legislation of these countries differs, is often complex and is subject to interpretation by management and government authorities. These matters of judgement sometimes give rise to the need to create provisions for tax payments that may arise in future years with respect to transactions already undertaken. Provisions are made against individual exposures and take into account the specific circumstances of each case, including the strength of technical arguments, recent case law decisions or rulings on similar issues and relevant external advice. In accordance with IFRIC 23 *Uncertainty over Income Tax Treatments*, provisions are estimated based on one of two methods: the expected value method (the sum of the probability weighted amounts in a range of possible outcomes) or the single most likely amount method. The method chosen depends on which is expected to better predict the resolution of the uncertainty. Due to the uncertainty associated with tax audits it is possible that, at some future date, liabilities resulting from such audits or related litigation could vary significantly from our provisions. This would require the Group to make an adjustment in a subsequent period which could have a material impact on the Group's results. 1 Amounts presented exclude interest and penalties. 181 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 8. Taxation continued ### EU State Aid The Group continues to monitor developments in relation to EU State Aid investigations. On 25 April 2019, the EU Commission's final decision regarding its investigation into the UK's Controlled Foreign Company (CFC) regime was published. It concluded that the Finance Company Partial Exemption (FCPE) rules in the UK tax legislation partially represent illegal State Aid. The Group had financing arrangements that utilised the FCPE during this period. In December 2019 and the beginning of 2021, HMRC issued determinations to the Group totalling £10.5 million which the Group paid. The Group, several other UK PLCs and the UK Government submitted appeals to the EU General Court to annul the EU Commission's findings. On 8 June 2022, the EU General Court rejected the appeals. The Group has appealed this decision to the Court of Justice of the European Union (CJEU). It will be some time before the issues are conclusively determined by the CJEU. Until then, the UK Government is required to continue recovering amounts determined to be State Aid. The Group's view is that no provision is required. Additionally, and in accordance with IFRIC 23 *Uncertainty over Income Tax Treatments*, the Group continues to recognise a receivable against the HMRC determinations paid to date of £10.5 million. The maximum potential exposure remains between nil and £65 million. ### IRS Audit The Group has been under audit in the USA by the Internal Revenue Service (IRS) in relation to the interest rate applied on certain cross border intercompany loans from the UK to the USA for the 2014-2021 period. During the year, the Group reached a settlement with the IRS on this matter for the 2014-2015 period. This resulted in additional tax of £1 million ($1 million) for this period and a £4 million ($5 million) increase in the uncertain tax liability resulting from the remeasurement of the open period. ### HMRC audit of intellectual property valuation HMRC is auditing the value of certain intellectual property purchased from Thomson Reuters as part of the formation of Refinitiv. Intellectual property valuation is complex and significantly affected by multiple inputs of assumptions. As the outcome is uncertain, especially given the inherent subjectivity of the topic, the Group has recorded an uncertain tax liability in accordance with the requirements of IFRS. Management believes that resolution of this matter will not have a material impact on the Group's financial position. Management and HMRC continue to actively discuss this topic. ### Diverted Profits Tax to Thomson Reuters HMRC continues to issue notices of assessment under the Diverted Profits Tax (DPT) regime to Thomson Reuters largely related to its Financial & Risk Business for years prior to the sale of the business to Refinitiv. As required by the notices and as directed by Thomson Reuters, the Group makes payments to HMRC which are immediately reimbursed by Thomson Reuters in accordance with an indemnity agreement. Thomson Reuters does not agree with the assessments and will continue to defend their position by contesting the assessments through all available administrative and judicial remedies. ### Russian tax audit The Group is under audit by the Russian Tax Authorities for the 2018-2020 period, which could result in additional taxes being paid locally. We do not agree with the Tax Authorities' view and will continue to defend our position through all available administrative and judicial remedies. We have recorded an uncertain tax liability in accordance with the requirements of IFRS. Management believes that resolution of this matter will not have a material impact on the Group's financial position$^{1}$. $^{1}$ Amounts presented exclude interest and penalties. 182 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 9. Earnings per share *Earnings per share is presented on four bases: basic earnings per share, diluted earnings per share, adjusted basic earnings per share and adjusted diluted earnings per share. Earnings per share is calculated as the Group's profit for the financial year divided by the weighted average number of shares in issue during the year.* ### Accounting policy Basic earnings per share is in respect of all activities. Diluted earnings per share takes into account the dilutive effect that would arise on conversion or vesting of all outstanding share options and share awards under the Group's share option and award schemes. Adjusted basic earnings per share and adjusted diluted earnings per share exclude non-underlying items from earnings. | | 2022 | | | 2021 Re-presented | | | | --- | --- | --- | --- | --- | --- | --- | | | Continuing | Discontinued | Total | Continuing | Discontinued | Total | | **Basic earnings per share** | **141.8p** | **91.9p** | **233.8p** | 85.8p | 495.9p | 581.7p | | **Diluted earnings per share** | **141.1p** | **91.4p** | **232.5p** | 85.2p | 492.9p | 578.1p | | **Adjusted basic earnings per share** | **317.8p** | **10.6p** | **328.4p** | 272.4p | 29.0p | 301.4p | | **Adjusted diluted earnings per share** | **316.1p** | **10.5p** | **326.6p** | 270.7p | 28.8p | 299.5p | ### Profit and adjusted profit for the year attributable to the Company's equity holders | | Note | 2022 | | | 2021 Re-presented | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Continuing £m | Discontinued £m | Total £m | Continuing £m | Discontinued £m | Total £m | | Profit for the financial year attributable to the Company's equity holders | | 790 | 512 | 1,302 | 461 | 2,668 | 3,129 | | Adjustments: | | | | | | | | | — Total non-underlying items net of tax | 6 | 1,049 | (453) | 596 | 1,092 | (2,511) | (1,419) | | — Non-underlying items attributable to non-controlling interests | | (69) | – | (69) | (88) | (1) | (89) | | **Adjusted profit for the year attributable to the Company's equity holders** | | **1,770** | **59** | **1,829** | **1,465** | **156** | **1,621** | ### Weighted average number of shares | | 2022 millions | 2021 millions | | --- | --- | --- | | **Weighted average number of shares^{1}** | **557** | **538** | | Effect of dilutive share options and awards | 3 | 3 | | **Diluted weighted average number of shares** | **560** | **541** | $^{1}$ The weighted average number of shares excludes those held in the Employee Benefit Trust. 183 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 10. Dividends We seek to reward our shareholders through the payment of dividends. The interim dividend is generally paid in September and the final dividend in May. Under the Group's dividend policy, the interim dividend is calculated as one-third of the prior full year dividend. ### Accounting policy Dividend distributions to the Company's equity holders are recognised as a liability in the Group financial statements in the period in which the dividends are approved by the Company's shareholders. | | 2022 £m | 2021 £m | | --- | --- | --- | | Final dividend for 31 December 2020 paid 26 May 2021: 51.7p per ordinary share | – | 287 | | Interim dividend for 31 December 2021 paid 21 September 2021: 25.0p per ordinary share | – | 139 | | Final dividend for 31 December 2021 paid 25 May 2022: 70.0p per ordinary share | 390 | – | | Interim dividend for 31 December 2022 paid 20 September 2022: 31.7p per ordinary share | 177 | – | | | **567** | **426** | Dividends are only paid out of available distributable reserves of the Company. The Board has proposed a final dividend in respect of the year ended 31 December 2022 of 75.3p per share, which amounts to an expected payment of £417 million on 24 May 2023. This is not reflected in the financial statements. ## 11. Group companies and non-controlling interests Subsidiaries are entities controlled by the Company. The financial results of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. A non-controlling interest arises when the Group does not own all of a subsidiary, but the Group retains control. The principal operating subsidiaries of the Group are given below and a full list of subsidiaries is given in note 29.2. ### 11.1 Principal operating subsidiaries | Name | Principal activity | Country of incorporation and principal operations | Group ultimate economic interest % | | --- | --- | --- | --- | | Banque Centrale De Compensation SA (LCH SA) | CCP clearing services | France | 73.45 | | Financial & Risk Organisation Limited | IP owner | England & Wales | 100.00 | | Frank Russell Company | Market indices provider | USA | 100.00 | | FTSE International Limited | Market indices provider | England & Wales | 100.00 | | LCH Limited | CCP clearing services | England & Wales | 82.61 | | London Stock Exchange plc | Recognised investment exchange | England & Wales | 100.00 | | Refinitiv Asia Pte. Ltd | Market and financial data provider | Singapore | 100.00 | | Refinitiv France SAS | Market and financial data provider | France | 100.00 | | Refinitiv Germany GmbH | Market and financial data provider | Germany | 100.00 | | Refinitiv Hong Kong Limited | Market and financial data provider | Jersey^{1} | 100.00 | | Refinitiv Japan K.K. | Market and financial data provider | Japan | 100.00 | | Refinitiv Limited | Market and financial data provider | England & Wales | 100.00 | | Refinitiv US LLC | Market and financial data provider | USA | 100.00 | | Tradeweb Markets LLC | Multilateral trading facility | USA | 51.24 | $^{1}$ Operates in Hong Kong. 184 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued ## 11. Group companies and non-controlling interests continued 11.2 Non-controlling interests The Tradeweb group’s summarised financial information below differs from that reported by Tradeweb. The numbers disclosed here include adjustments to bring their accounting policies in line with those used by the Group and to include the impact of acquisition accounting. Summarised financial information 2022 2021 1 attributable to non-controlling interests £m £m Profit for the year attributable to non-controlling interests 116 63 Total comprehensive income for the year attributable to non-controlling interests 308 92 Dividends paid to non-controlling interests in the year 30 26 1 The summarised financial information includes any amortisation and impairment of goodwill and purchased intangible assets, and the related deferred tax benefit attributable to non-controlling interests. 2022 2021 1 Summarised balance sheet £m £m Non-current assets 8,500 7,653 Current assets 1,245 876 Financial information for subsidiary entities or groups that have material Current liabilities (212) (174) non-controlling interests is provided below: Non-current liabilities (470) (529) | Proportion of economic interest held | Net assets 9,063 7,826 | | --- | --- | | by non-controlling interests 2022 2021 | Attributable to: | | Tradeweb group 48.8% 48.7% | Equity holders of the company 7,250 6,274 | | LCH group 17.4% 17.4% | Non-controlling interests 1,813 1,552 | 1 Turquoise Global Holdings Limited 15.8% 48.6% Total equity 9,063 7,826 1 During the year, the Group acquired an additional 32.8% of Turquoise Global Holdings 1 The summarised balance sheet includes goodwill and purchased intangible assets together Limited for £15 million. The Group recognised a decrease in non-controlling interests of with associated amortisation, impairment and deferred tax. £19 million and an increase in equity attributable to owners of the parent of £4 million. | | | | Summarised total comprehensive | | 2022 | 2021 | | --- | --- | --- | --- | --- | --- | --- | | Profit from continuing operations | 2022 | 2021 | | 1 | | | | | | | income | and cash flows | £m | £m | | allocated to non-controlling interests | £m | £m | | | | | Total income for the year 961 720 Tradeweb group 116 63 Total profit for the year 328 234 LCH group 72 65 Total comprehensive income for the year 805 308 Other 1 3 Net increase in cash and cash equivalents 331 142 189 131 1 The summarised total comprehensive income of the Tradeweb group excludes any amortisation and impairment of goodwill and purchased intangible assets (together with Accumulated balance of 2022 2021 any associated deferred tax) attributable to non-controlling interests. non-controlling interests £m £m LCH group Tradeweb group 1,813 1,552 The Group owns 82.6% of LCH Group Holdings Limited, which is the LCH group 333 302 parent of LCH Limited, based in the UK, and LCH SA, based in France. Other 9 25 There is a further direct non-controlling interest in LCH SA, giving the 2,155 1,879 Group an effective 73.4% economic interest in LCH SA. Summarised financial information for the Tradeweb and LCH groups is | | Summarised financial information | | 2022 | 2021 | | --- | --- | --- | --- | --- | | provided below. | | 1 | | | | | attributable to non-controlling interests | | £m | £m | Profit for the year attributable to Tradeweb group non-controlling interests 72 65 The Group has a 46.7% economic interest in Tradeweb Markets Inc, Total comprehensive income for the year a US company. Tradeweb Markets Inc is the parent company of attributable to non-controlling interests 82 43 Tradeweb Markets LLC in which the Group holds a further direct Dividends paid to non-controlling interest. This gives the Group an effective economic interest of 51.2% interests in the year 50 71 in Tradeweb Markets LLC. 1 The summarised financial information includes any amortisation and impairment of goodwill and purchased intangible assets and the related deferred tax benefit attributable to non-controlling interests . 185 London Stock Exchange Group plc Annual Report 2022 Accounting policy Non-controlling interests The Group recognises non-controlling interests in a business either at fair value or at the non-controlling interest’s proportionate share of the net assets. This treatment is determined on an acquisition-by-acquisition basis. After initial recognition, the carrying value of the non-controlling interest is adjusted for any changes in equity and the total comprehensive income attributable to the non-controlling interest holders, less dividends paid. Change in the ownership interest of a subsidiary company, without loss of control For acquisitions or disposals of non-controlling interests where control of the subsidiary remains with the Group, the difference between any consideration paid or received, and the relevant share of net assets acquired or sold, is recognised in equity. Notes to the financial statements continued ## 11. Group companies and non-controlling interests continued | Summarised balance sheet^{1} | 2022 £m | 2021 £m | | --- | --- | --- | | Non-current assets | 557 | 585 | | Current assets | 794,130 | 749,964 | | Current liabilities | (793,064) | (749,041) | | Non-current liabilities | (52) | (91) | | **Net assets** | **1,571** | **1,417** | | **Attributable to:** | | | | Equity holders of the company | 1,238 | 1,115 | | Non-controlling interests | 333 | 302 | | **Total equity** | **1,571** | **1,417** | 1 The summarised balance sheet includes goodwill and purchased intangible assets together with associated amortisation, impairment and deferred tax. | Summarised total comprehensive income^{1} and cash flows for LCH Group Holdings Limited | 2022 £m | 2021 £m | | --- | --- | --- | | Total income for the year | 952 | 856 | | Total profit for the year | 368 | 317 | | Total comprehensive income for the year | 411 | 214 | | Net increase/(decrease) in cash and cash equivalents | 126 | (211) | 1 The summarised total comprehensive income of the LCH group excludes any amortisation and impairment of goodwill and purchased intangible assets (together with any associated deferred tax) attributable to non-controlling interests. ## 12. Business combinations During the year, the Group acquired the businesses listed below. The results of the businesses have been consolidated since the date of acquisition. - Global Data Consortium, Inc (GDC) - MayStreet Inc. (MayStreet) - Toro Holdings, Inc. (TORA) - Quantile Group Limited (Quantile) ### Accounting policy Business combinations are accounted for using the acquisition method: - Identifiable assets, liabilities and contingent liabilities acquired are measured at fair value at acquisition date. - The cost of an acquisition is measured as the aggregate of the consideration transferred and contingent consideration, which are measured at fair value, and the value of any non-controlling interests in the acquiree. - On an acquisition-by-acquisition basis, the Group elects whether to measure the non-controlling interests in the acquiree, if any, at fair value or at the proportionate share of the acquiree's identifiable net assets (see note 11.2). - Goodwill is initially measured at the amount by which the aggregate of the consideration transferred and the amount recognised for non-controlling interests (plus any previous interest held), exceeds the net identifiable assets acquired and liabilities assumed. The Group considers the nature of any compensation for the selling shareholders' continuing employment to determine if any contingent payments are for post-combination employee services. These are excluded from consideration and together with other acquisition-related costs are classified as a non-underlying transaction costs in the income statement (see note 6). ### Significant accounting estimates and assumptions Intangible assets acquired as part of a business combination The fair value of acquired intangible assets (and therefore the resulting goodwill recognised on acquisition) is significantly affected by a number of factors. These include management's best estimates of future performance (i.e. forecast revenue, expected revenue attrition, forecast operating margin), any contributory assets changes and estimates of the return required to determine an appropriate discount rate (in order to calculate the net present value of the assets). The purchase price allocations (PPAs) (shown in 12.2 below) have been prepared on a provisional basis in accordance with IFRS 3 Business Combinations. If new information obtained within one year of the acquisition date, about facts and circumstances that existed at the acquisition date, identifies adjustments to the amounts below or any additional provisions that existed at the date of acquisition, then the accounting for the acquisition will be revised. 186 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued 187 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS 12. Business combinations continued 12.1 Details of businesses acquired Acquired business Description of business Reason for acquisition Acquisition date Voting equity interest acquired Global Data Consortium, Inc. (GDC) A global provider of high-quality identity verification data to support clients with Know Your Customer (KYC) requirements. GDC’s services are used within LSEG’s Customer & Third-Party Risk Solutions business within the Data & Analytics division, to provide global digital identity verification to customers. Adding GDC to the Group’s suite of digital identity solutions will enable the Group to continue to expand capabilities in this segment. 31 May 2022 89% 1 MayStreet Inc. (MayStreet) A market data solutions provider. MayStreet provides global low latency technology and market data to over 65 industry participants, including banks, asset managers and hedge funds. The acquisition enhances the Group’s Enterprise Data Solutions business, within the Data & Analytics division, expanding our capabilities across the latency spectrum through a global low latency network of over 300 cross asset, exchange and trading venue feeds. This broadens and complements our real-time feeds and historical market data value proposition. 31 May 2022 100% Tora Holdings, Inc. (TORA) A cloud-based technology provider that supports customers trading multiple asset classes across global markets. TORA’s solutions include an order and execution management system (OEMS) and portfolio management system (PMS) for customers trading equities, fixed income, FX, derivatives and digital assets. The transaction will further enhance the global footprint of the Group’s Trading & Banking Solutions business, within the Data & Analytics division, with TORA’s established presence in Asia and North America and operations in Europe. Our customers will benefit from a differentiated trading solution that combines the multi-asset class capabilities of TORA’s software with the Group’s rich data and analytics services. 9 August 2022 100% Quantile Group Limited (Quantile A leading provider of portfolio, margin and capital optimisation and compression services for the global financial services market. Quantile is led by a team of industry experts with significant experience in risk management, quantitative analysis and trading technology. Quantile’s powerful optimisation engine provides advanced trade compression and risk rebalancing services to banks, hedge funds and other financial institutions trading OTC derivatives. Quantile will therefore complement our global OTC Derivatives clearing services, which provide risk management and capital efficiencies to customers. It will also allow the Group to expand its range of Post Trade risk management solutions through trade compression as well as capital and margin optimisation services. 30 November 2022 100% 1 Prior to the acquisition LSEG held an 11% interest in GDC and on 31 May 2022 recognised a £23 million non-underlying remeasurement gain on this investment in associate (see note 6). Notes to the financial statements continued ## 12. Business combinations continued ### 12.2 Consideration transferred, assets acquired and liabilities assumed, and resulting goodwill Goodwill arising from the acquisitions has been recognised as follows: | | Notes | GDC £m | MayStreet £m | TORA £m | Quantile £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | | **Purchase consideration** | | | | | | | | — Cash (including settlement of share options) | | 213 | 153 | 258 | 162 | 786 | | — Fair value of previous interest held | | 28 | — | — | — | 28 | | — Deferred consideration | | — | — | — | 5 | 5 | | — Contingent consideration payable^{1} | 20,23 | — | — | — | 38 | 38 | | **Total purchase consideration** | | **241** | **153** | **258** | **205** | **857** | | **Less: Fair value of identifiable net assets acquired** | | | | | | | | — Intangible assets: Customer and supplier relationships^{2} | 14 | (67) | (28) | (49) | (44) | (188) | | — Intangible assets: Software^{2} | 14 | (28) | (39) | (47) | (35) | (149) | | — Intangible assets: Licences^{2} | 14 | — | — | (3) | — | (3) | | — Other non-current assets | | — | (1) | (3) | — | (4) | | — Cash and cash equivalents | | (5) | (2) | (6) | (5) | (18) | | — Other current assets | | (4) | (3) | (7) | (9) | (23) | | — Total liabilities, excluding deferred tax liabilities | | 4 | 19 | 6 | 5 | 34 | | — Deferred tax liabilities^{3} | | 12 | 9 | 24 | 18 | 63 | | **Fair value of identifiable net assets acquired** | | **(88)** | **(45)** | **(85)** | **(70)** | **(288)** | | **Goodwill** | 14 | **153** | **108** | **173** | **135** | **569** | | Allocated to cash-generating unit | | **Data & Analytics** | **Data & Analytics** | **Data & Analytics** | **Post Trade** | | 1 The contingent consideration payable is linked to performance targets of Quantile. The contingent consideration is calculated with reference to qualifying revenue and relevant valuation multiples which determines the payment, discounted to a present value. The payable is classified as Level 3 (of the fair value hierarchy) due to inputs used in the valuation that are not based on observable data. A 1% change in the discount rate applied would not have a material effect on the valuation of the payable. 2 The fair values of the net assets acquired were determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market and primarily included significant unobservable inputs (Level 3 of the fair value hierarchy). The following valuation methodologies were used to determine fair value: - Customer relationships: multi-period excess earnings method (MEEM) (income approach). - Supplier relationships: replacement cost approach. - Software: relief from royalty method (income approach). - Licences: replacement cost approach. 3 The deferred tax liability mainly comprises the tax effect of the intangible assets. The goodwill is attributable to: - growth in the underlying business; - future data and technology not yet developed; and - expected synergies which will drive growth in the combined business. None of the goodwill recognised is expected to be deductible for income tax purposes. ### 12.3 Revenue and profit contribution From the respective acquisition dates, the acquired businesses contributed revenue and profit before tax as follows: | | 2022 | | | | | --- | --- | --- | --- | --- | | | GDC Seven months £m | MayStreet Seven months £m | TORA Five months £m | Quantile One month £m | | Revenue | 12 | 8 | 12 | 1 | | Adjusted EBITDA | 4 | 2 | — | — | | Profit/(loss) before tax | — | (3) | (8) | — | If the acquisitions had all occurred on 1 January 2022, the acquired businesses would have contributed additional revenue and adjusted EBITDA as follows: | | 2022 | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | LSEG | GDC | MayStreet | TORA | Quantile | Pro-forma Group £m | | | Year ended 31 Dec £m | Five months ended 31 May £m | Five months ended 31 May £m | Seven months ended 31 Jul £m | 11 months ended 30 Nov £m | | | **Continuing** | | | | | | | | Revenue | 7,454 | 8 | 6 | 20 | 11 | 7,499 | | Adjusted EBITDA | 3,550 | 2 | (11) | (3) | — | 3,538 | 188 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 12. Business combinations continued ### 12.4 Acquisition-related costs, including employment-linked management incentive and earn-out arrangements Acquisition-related costs are recognised as non-underlying transaction costs in the income statement (see note 6). The Group incurred acquisition-related costs (on advisor and professional fees and management incentive and retention costs) as follows: | | GDC £m | MayStreet £m | TORA £m | Quantile £m | | --- | --- | --- | --- | --- | | Advisor and professional fees | 3 | 5 | 3 | 8 | | Employment-linked management incentive and earn-out arrangements^{1} | – | 22 | 3 | – | | **Acquisition-related costs** | **3** | **27** | **6** | **8** | $^{1}$ As part of the MayStreet and TORA purchase agreements, employment-linked management retention incentives and earn-out arrangements have been agreed with the former founders and senior management. These arrangements are contingent on continuing employment, and will be: – recognised as post-combination compensation over the arrangement period within salaries and other benefits in the income statement. – classified as non-underlying transaction costs. ## 13. Disposal of businesses and discontinued operations This year we made one material disposal, BETA. It has been treated as a discontinued operation which means that it has been excluded from the results of continuing operations for the year. ### Accounting policy The Group classifies disposal groups as **held for sale** if the carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Disposal groups classified as held for sale are measured at the lower of the carrying amount or fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the sale of a disposal group, excluding finance costs and income tax expense. The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the disposal group will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale is expected to be completed within one year from the date of the classification. Assets and liabilities classified as held for sale are presented separately as current items on the balance sheet and measured at the lower of carrying amount and fair value less cost to sell. Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale. An operation is regarded as a **discontinued operation** if it is held for sale or has already been sold and comprised a major line of business or geographical area of operation. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount of profit or loss after tax from discontinued operations in the income statement. The comparative results are re-presented accordingly to show the continuing operations. ### Disposal of BETA during the year ended 31 December 2022 On 21 March 2022, the disposal of BETA, Maxt and Digital Investor (collectively BETA) was assessed to be highly probable and it has been treated as a disposal group from that date. BETA provides back-office processing to the wealth management industry, including securities processing and tax reporting. BETA has also been treated as a discontinued operation as it represented a separate major line of business. Its results have been excluded from the continuing results of the Group for the year ended 31 December 2022. The results for the prior year have been re-presented to exclude the BETA results from the continuing operations of the Group. On 1 July 2022, BETA was sold for total cash consideration of US$1.1 billion (£0.9 billion) to affiliates of Clearlake Capital Group, L.P. (Clearlake) and Motive Partners (Motive), realising a profit on disposal, after tax, of £0.5 billion. We announced that we have entered into a new long-term strategic partnership for data, content and tools with BETA and portfolio companies owned by Clearlake and Motive. ### Disposal of the Borsa Italiana group during the year ended 31 December 2021 On 29 April 2021, the Group disposed of Borsa Italiana. It was presented as a discontinued operation and its results are excluded from the continuing operations of the Group for the year ended 31 December 2021. As part of the disposal agreement the Group continues to provide services to the Borsa Italiana group on an arm's length basis. 189 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued ## 13. Disposal of businesses and discontinued operations continued ### 13.1 Profit and total comprehensive income from discontinued operations Until the respective disposal dates, the profit and total comprehensive income from discontinued operations are as follows: | | 2022 £m | 2021 (Re- presented) £m | | --- | --- | --- | | **Profit from discontinued operations** | | | | BETA | 512 | 68 | | Borsa Italiana group | – | 2,603 | | **Profit from discontinued operations** | **512** | **2,671** | | **Other comprehensive income from discontinued operations** | | | | Borsa Italiana group | – | (105) | | **Other comprehensive income from discontinued operations** | – | (105) | | **Total comprehensive income from discontinued operations** | **512** | **2,566** | ### Profit and total comprehensive income from BETA | | 2022 £m | 2021 £m | | --- | --- | --- | | Note | | | | Total income | 132 | 205 | | Underlying cost of sales and operating expenses | (57) | (103) | | **Adjusted profit before tax** | **75** | **102** | | Non-underlying expenses | (1) | (9) | | **Profit before tax** | **74** | **93** | | Underlying tax | (16) | (27) | | Non-underlying tax | – | 2 | | **Profit after tax of discontinued operation** | **58** | **68** | | Profit on disposal of discontinued operation, after tax (non-underlying) | 13.2 | 454 | | **Profit (and total comprehensive income) from discontinued operation** | **512** | **68** | ### Profit and total comprehensive income from Borsa Italiana group | | 2021 £m | | --- | --- | | Note | | | Total income | 146 | | Underlying cost of sales and operating expenses | (52) | | **Adjusted profit before tax** | **94** | | Non-underlying expenses | (4) | | **Profit before tax** | **90** | | Underlying tax | (9) | | Non-underlying tax | 3 | | **Profit after tax of discontinued operation** | **84** | | Profit on disposal of discontinued operation (non-underlying) | 13.2 | | **Profit from discontinued operation** | **2,519** | | **Other comprehensive income** | **2,603** | | Recycled from hedging reserve on disposal | 17 | | Net losses from debt instruments held at FVOCI | (10) | | Foreign exchange losses on translation in the period | (53) | | Cumulative foreign exchange adjustments recycled on disposal | (62) | | Tax on items in other comprehensive income | 3 | | **Other comprehensive loss from discontinued operations** | **(105)** | | **Total comprehensive income from discontinued operations** | **2,498** | ### 13.2 Profit on disposal of discontinued operations, after tax | | 2022 BETA £m | 2021 Borsa Italiana group £m | | --- | --- | --- | | Proceeds from disposal | 903 | 3,876 | | Carrying value of cash disposed | – | (284) | | **Proceeds from disposal, net of cash disposed** | **903** | **3,592** | | Carrying value of net assets disposed, excluding cash | (241) | (1,129) | | Non-controlling interests disposed | – | 65 | | Transaction costs | (44) | (46) | | Other expenses | – | (8) | | **Profit on disposal of discontinued operations, before tax and recycling of reserves** | **618** | **2,474** | | Recycling of cumulative foreign exchange translation reserve | – | 62 | | Recycling of amounts held in hedging reserve | – | (17) | | Income tax on gain | (164) | – | | **Profit on disposal of discontinued operations, after tax** | **454** | **2,519** | 190 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued 191 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS 13. Disposal of businesses and discontinued operations continued 13.3 Cash flows from discontinued operations 2022 £m 2021 £m Operating activities BETA 37 87 Borsa Italiana group – 23 Net cash flows from operating activities 37 110 Investing activities BETA (16) (30) Borsa Italiana group – (2) Net cash flows from investing activities (16) (32) Financing activities Borsa Italiana group – (6) Net cash flows from financing activities – (6) Foreign exchange translation (of cash and cash equivalents) – (10) Net increase in cash from discontinued operations 21 62 14. Intangible assets The balance sheet includes significant intangible assets, mainly in relation to goodwill and customer and supplier relationships. Goodwill arises when we acquire a business and pay an amount higher than the fair value of its net assets primarily due to the synergies we expect to create. Goodwill is not amortised but is subject to annual impairment reviews. Customer and supplier relationships are amortised over their useful economic lives. Accounting policy Goodwill Goodwill arising on the acquisition of a business is initially measured at cost, being the amount by which the aggregate of the consideration transferred and the amount recognised for non-controlling interests (plus any previous interest held), exceeds the net identifiable assets acquired and liabilities assumed. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, on the date of acquisition, goodwill acquired in a business combination is allocated to one or more of the Group’s cash-generating units (CGUs) that are expected to benefit from the combination. Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount when determining its gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the CGU retained. Purchased intangible assets Purchased intangible assets are initially recognised at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition which is determined using valuation methodologies such as multi-period excess earnings method (MEEM) or relief from royalty. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. These assets are amortised on a straight-line basis over their useful economic lives which are as follows: — Customer and supplier relationships – 2 to 25 years — Brands – 10 to 25 years — Databases and content – 5 to 12 years — Software, licences and intellectual property – 1 to 25 years (the majority of material assets are amortised over a life not exceeding 5 years) Notes to the financial statements continued 192 London Stock Exchange Group plc Annual Report 2022 14. Intangible assets continued Software and other Internally developed software Expenditure on internal product development is capitalised if: the costs can be reliably measured; the product or process is technically and commercially feasible; future economic benefits are probable; and the Group has sufficient resources to complete the development and to use or sell the asset. The assets are initially recorded at cost, which includes labour, directly attributable costs and any third-party expenses. They are then amortised over their useful economic lives of 3 to 12 years. Internally generated intangibles, excluding capitalised development costs, are expensed as incurred. Third-party software costs for the development and implementation of systems which enhance the services provided by the Group are capitalised and amortised over their estimated useful economic lives of 3 to 5 years. Contract costs Incremental costs of obtaining a customer contract, such as sales commissions paid to employees, are recognised as an intangible asset if the benefit of such costs is expected to be longer than one year. The asset is initially recognised at cost and is amortised over the period from which a customer benefits from the associated software technology supporting the underlying product or service. The Group has determined this to be between 3 and 5 years. The Group recognises the incremental cost of obtaining a contract as an expense when incurred, if the amortisation period is less than one year. Impairment of intangible assets, including goodwill Goodwill is tested for impairment annually. Impairment is determined for goodwill by assessing the recoverable amount of each CGU. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. Intangible assets are assessed for any indicators of impairment at each balance sheet date. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the CGU to which the asset belongs. An impairment loss is recognised when the recoverable amount of the asset, or CGU, is less than its carrying amount. Impairment losses are recognised in the income statement within depreciation, amortisation and impairment. CGU impairment losses are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro-rata basis. Significant accounting estimates and assumptions Intangible assets and goodwill form a significant part of the balance sheet and are key assets for the Group’s businesses. See note 12 for the significant accounting estimates of intangible assets obtained through the purchase of subsidiaries. Recoverable amounts of CGUs and intangible assets The recoverable amounts of CGUs and intangible assets are based on value-in-use calculations. The value-in-use calculations use cash flow projections based on business plans prepared by management for the three-year period ending 31 December 2025. These use management’s best estimate of future performance together with estimates of the return required by investors, which is used to determine an appropriate discount rate to derive the present value. Estimated useful economic lives Intangible assets are amortised over their estimated useful economic lives, being management’s best estimate of the period over which value from the intangible assets is realised. In determining useful economic life, management considers a number of factors including: customer attrition rates; product upgrade cycles for software and technology assets; market participant perspectives of brands; and pace of change of regulation . Notes to the financial statements continued FINANCIAL STATEMENTS ## 14. Intangible assets continued | Group | Notes | Purchased intangible assets | | | | | | Total £m | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Goodwill^{1} relationships | | Databases | | Software, licences and intellectual property £m | Software and other £m | | | | | £m | £m | Brands and content £m | £m | | | | | **Cost** | | | | | | | | | | 1 January 2021 | | 2,402 | 1,847 | 953 | – | 569 | 1,260 | 7,031 | | Intangible assets acquired on acquisition of subsidiaries | | 16,520 | 7,455 | 983 | 2,398 | 199 | 1,608 | 29,163 | | Additions | | – | – | – | – | – | 642 | 642 | | Disposal of business (re-presented)^{1} | | (1,371) | (692) | (1) | – | (66) | (181) | (2,311) | | Disposals and write-off | | – | – | – | – | (1) | (59) | (60) | | Foreign exchange translation | | (42) | 111 | 21 | 36 | 1 | (38) | 89 | | 31 December 2021 (re-presented)^{1} | | 17,509 | 8,721 | 1,956 | 2,434 | 702 | 3,232 | 34,554 | | Intangible assets acquired on acquisition of subsidiaries | 12.2 | 569 | 188 | – | 3 | 149 | – | 909 | | Additions^{2} | | – | – | – | – | – | 868 | 868 | | Disposal of business | 13 | – | – | (51) | – | – | (174) | (225) | | Disposals and write-off | | – | – | – | – | – | (70) | (70) | | Foreign exchange translation | | 1,781 | 1,016 | 208 | 297 | 52 | 273 | 3,627 | | **31 December 2022** | | **19,859** | **9,925** | **2,113** | **2,734** | **903** | **4,129** | **39,663** | | **Accumulated amortisation and impairment** | | | | | | | | | | 1 January 2021 | | 546 | 868 | 265 | – | 345 | 683 | 2,707 | | Amortisation charge for the year | | – | 491 | 130 | 220 | 33 | 425 | 1,299 | | Impairment | | – | – | – | – | – | 13 | 13 | | Disposal of business (re-presented)^{1} | | (498) | (409) | – | – | (58) | (139) | (1,104) | | Disposals and write-off | | – | – | – | – | (1) | (43) | (44) | | Foreign exchange translation | | (25) | 6 | 3 | 4 | (4) | (25) | (41) | | 31 December 2021 (re-presented)^{1} | | 23 | 956 | 398 | 224 | 315 | 914 | 2,830 | | Amortisation charge for the year^{3} | | – | 590 | 150 | 232 | 41 | 587 | 1,600 | | Impairment | | – | – | – | – | – | 11 | 11 | | Disposal of business | 13 | – | – | (4) | – | – | (31) | (35) | | Disposals and write-off | | – | – | – | – | – | (70) | (70) | | Foreign exchange translation | | 7 | 104 | 40 | 34 | 11 | 65 | 261 | | **31 December 2022** | | **30** | **1,650** | **584** | **490** | **367** | **1,476** | **4,597** | | **Net book values^{4}** | | | | | | | | | | **31 December 2022** | | **19,829** | **8,275** | **1,529** | **2,244** | **536** | **2,653** | **35,066** | | 31 December 2021 | | 17,486 | 7,765 | 1,558 | 2,210 | 387 | 2,318 | 31,724 | 1 The prior year comparatives for cost and accumulated impairment of goodwill have both been re-presented by a reduction of £444 million to reflect the correct gross disposal of goodwill cost and accumulated impairment related to Borsa Italiana group. There is no impact on the net book value. 2 During the year, consideration for additions comprised £787 million (2021: £611 million) in cash, nil (2021: £2 million) of leased assets and £81 million (2021: £29 million) in accruals. During the year, the Group: - recognised additions of nil (2021: £2 million) as right-of-use assets, with a right-of-use assets amortisation charge of nil (2021: £6 million). 3 Includes non-underlying amortisation of intangible assets of £1,044 million (2021: £851 million). Includes amortisation of £8 million related to discontinued operations (2021: £25 million). 4 All 31 December 2022, software and other net book value includes contract costs of £75 million (2021: £71 million). 193 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 14. Intangible assets continued ### 14.1 Goodwill #### Carrying value of goodwill allocated to each of the Group's CGUs and annual impairment test Goodwill is allocated to and monitored by management at the level of the Group's four CGUs as set out below: | | Net book value of goodwill | | | --- | --- | --- | | | 2022 £m | 2021 £m | | Data & Analytics^{1} | 14,414 | 12,771 | | Capital Markets, excluding Tradeweb | 2 | 2 | | Tradeweb^{1} | 5,152 | 4,594 | | Post Trade^{1} | 261 | 119 | | | **19,829** | **17,486** | $^{1}$ Goodwill allocated to the Data & Analytics, Tradeweb and Post Trade CGUs include foreign exchange translation during the year of £1,209 million, £558 million and £7 million, respectively. The increase also reflects the acquisitions (see note 12). Goodwill as at 31 December 2022 was tested for impairment. For each CGU, the estimated recoverable amount is higher than its carrying value (being the net book value as at 31 December 2022) and therefore no impairment was identified or recognised. #### Key assumptions used in the impairment assessments and sensitivity to changes Every year, the Group tests whether goodwill has suffered any impairment. For 2022, the recoverable amount of each CGU was determined based on value-in-use calculations. #### Value-in-use calculations The value-in-use calculations are based on, and most sensitive to, the following key assumptions: | Assumption | Determination of assumption | | --- | --- | | Short- and medium-term revenue and cost growth | The short- and medium-term revenue and cost growth assumptions are based on the business plans prepared by management for the three-year period ending 31 December 2025 and extended by a further three years for expected medium-term growth rates. Business plans are based on an assessment of current trends, anticipated market and regulatory developments, discussions with customers and suppliers, and management's experience | | Long-term economic growth rates (used to determine terminal values) | Cash flows beyond an initial six-year period are extrapolated using estimated long-term growth rates, which are based on external estimates of GDP and inflation | | Pre-tax discount rates | Weighted average cost of capital was determined using market risk free rates based on the yields of government bonds most relevant to the operations of the CGU, adjusted for country and operational risk and the cost of borrowing for the Group | #### Value-in-use assumptions | Assumptions | Data & Analytics | | Capital Markets, excluding Tradeweb | | Tradeweb | | Post Trade | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 % | 2021 % | 2022 % | 2021 % | 2022 % | 2021 % | 2022 % | 2021 % | | Long-term growth rates | 4.2 | 3.9 | 3.5 | 3.5 | 3.9 | 4.0 | 3.4 | 3.2 | | Pre-tax discount rates | 11.4 | 9.7 | 12.2 | 10.7 | 10.7 | 10.1 | 14.3 | 12.5 | #### Sensitivity analysis The estimated value-in-use of each CGU exceeds their carrying values. The table below shows the relative changes in the main assumptions, in isolation, that could lead to the value-in-use amounts reducing to the carrying value. Changes beyond those amounts would therefore lead to an impairment loss being recognised for the year ended 31 December 2022. | Assumptions | Change required for value-in-use to equal carrying amount | | | | | --- | --- | --- | --- | --- | | | Data & Analytics | Capital Markets, excluding Tradeweb | Tradeweb | Post Trade | | Reduction in terminal cash flow (%) | (29.9) | N/A^{1} | (32.1) | N/A^{1} | | Reduction in long-term growth rates (percentage points) | (2.0) | N/A^{1} | (2.2) | N/A^{1} | | Increase in pre-tax discount rates (percentage points) | 2.2 | N/A^{1} | 2.3 | N/A^{1} | $^{1}$ N/A indicates that the change required is outside of a reasonably expected change. 194 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued 195 London Stock Exchange Group plc Annual Report 2022 14. Intangible assets continued 14.2 Purchased intangible assets Purchased intangible assets are recognised on acquisition of a business. The material purchased intangible assets are set out below: Carrying value of material purchased intangible assets Remaining amortisation period 2022 £m 2021 £m 2022 2021 Customer and supplier relationships Refinitiv 6,428 6,135 14 years 15 years Tradeweb 954 922 11-18 years 12-19 years Brands Refinitiv 660 717 3-13 years 4-14 years Tradeweb 194 186 13 years 14 years Frank Russell 498 470 17 years 18 years Databases and content Refinitiv 2,219 2,184 9-10 years 10-11 years There are no other individual purchased intangible assets that are considered material to each class of intangible assets. 14.3 Internally developed software and other intangible assets The Group creates technology solutions where software products are developed internally for use within the Group or to sell externally. These assets have a useful economic life of up to 12 years. The £2,653 million (2021: £2,318 million) net book value of software and other intangibles, includes £647 million (2021: £447 million) of assets not yet brought into use. No amortisation has been charged on these assets and instead they are tested for impairment annually. Impairment tests for internally developed software and other intangible assets Following a review of software assets in the year the Group recognised an £11 million impairment charge (2021: £13 million) in relation to assets with a recoverable amount less than the carrying value. During the year the Group recognised disposals and write-offs of assets which are no longer in use of £70 million with nil net book value (2021: £60 million with £16 million net book value). Notes to the financial statements continued 196 London Stock Exchange Group plc Annual Report 2022 15. Property, plant and equipment Most of our tangible assets relate to property (owned and leased) and equipment, furniture and fittings. These assets are depreciated over their useful economic lives. Accounting policy Property, plant and equipment Property, plant and equipment assets are recorded at cost less accumulated depreciation and accumulated impairment losses. Land is not depreciated. Freehold buildings, plant and equipment are depreciated to a residual value on a straight-line basis over their estimated useful economic lives as follows: — Freehold buildings – 30 to 50 years — Plant and equipment – 3 to 20 years Leasehold improvements are recorded at cost and depreciated to a residual value over the shorter of the period of the lease and the useful economic life of the asset. At each reporting date, the Group assesses whether there is an indication that an asset may be impaired. If any indication exists, the Group estimates the asset’s recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the CGU to which the asset belongs. An impairment loss is recognised when the recoverable amount of the asset, or CGU, is less than its carrying amount. Impairment losses are recognised in the income statement within depreciation, amortisation and impairment. CGU impairment losses are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro-rata basis. Right-of-use assets (leases) The Group recognises a right-of-use asset where it has control of an asset for a period of more than 12 months. Assets are recorded initially at cost and depreciated on a straight-line basis over the shorter of the lease term and the estimated useful economic life. Cost is defined as the net present value of the initial lease liability plus any initial costs and dilapidation provisions less any lease incentives received. The lease term is the non-cancellable term plus any periods for which the Group is reasonably certain to exercise any extension options. Where a property is no longer used by the business or there is surplus space, an impairment in the value of the right-of-use asset is recognised and the asset is recognised at its estimated recoverable value. Where a lease is terminated early, this is recognised as a disposal and any difference in value between the asset (being the carrying value of the right-of-use asset) and the liability (being the net present value of future lease obligation) is recognised as a profit or loss on disposal. Any penalty fees payable for early termination are recognised directly in the income statement as an operating expense. Notes to the financial statements continued FINANCIAL STATEMENTS ## 15. Property, plant and equipment continued | Group | Notes | Land & Buildings | | | Plant and equipment | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Freehold property £m | Right-of-use assets £m | Leasehold improvements £m | Right-of-use assets £m | Owned £m | Total £m | | **Cost** | | | | | | | | | 1 January 2021 | | 62 | 197 | 59 | 5 | 292 | 615 | | Property, plant and equipment acquired on acquisition of subsidiaries | | 9 | 379 | 36 | 32 | 222 | 678 | | Additions | | 3 | 25 | 24 | 27 | 101 | 180 | | Lease modifications | | – | 34 | – | (1) | – | 33 | | Disposals and other | | (2) | (1) | (12) | – | (43) | (58) | | Disposal of business | | – | (28) | (4) | (3) | (69) | (104) | | Transfer to held for sale assets | | (17) | – | – | – | – | (17) | | Foreign exchange translation | | – | (1) | – | – | (1) | (2) | | 31 December 2021 | | 55 | 605 | 103 | 60 | 502 | 1,325 | | Property, plant and equipment acquired on acquisition of subsidiaries | 12 | – | 1 | – | – | 2 | 3 | | Additions | | 14 | 44 | 12 | 41 | 130 | 241 | | Lease modifications | | – | 14 | – | – | – | 14 | | Disposals and other | | (14) | (12) | 3 | (1) | (19) | (43) | | Disposal of business | 13 | – | (12) | – | (34) | (15) | (61) | | Foreign exchange translation | | (2) | 32 | 7 | 4 | 24 | 65 | | **31 December 2022** | | **53** | **672** | **125** | **70** | **624** | **1,544** | | **Accumulated depreciation and impairment** | | | | | | | | | 1 January 2021 | | 29 | 50 | 45 | 2 | 192 | 318 | | Depreciation charge for the year | | 3 | 99 | 19 | 18 | 135 | 274 | | Impairment | | – | 22 | – | – | – | 22 | | Disposals and other | | – | (1) | (12) | – | (39) | (52) | | Disposal of business | | – | (11) | (3) | (1) | (50) | (65) | | Transfer to held for sale assets | | (1) | – | – | – | – | (1) | | Foreign exchange translation | | – | (1) | – | – | (2) | (3) | | 31 December 2021 | | 31 | 158 | 49 | 19 | 236 | 493 | | Depreciation charge for the year^{1} | | 1 | 101 | 20 | 18 | 143 | 283 | | Impairment^{1} | | – | 12 | – | – | – | 12 | | Disposals and other | | (3) | (10) | (3) | – | (19) | (35) | | Disposal of business | 13 | – | (4) | – | (16) | (5) | (25) | | Foreign exchange translation | | – | 10 | 1 | 1 | 7 | 19 | | **31 December 2022** | | **29** | **267** | **67** | **22** | **362** | **747** | | **Net book values** | | | | | | | | | **31 December 2022** | | **24** | **405** | **58** | **48** | **262** | **797** | | 31 December 2021 | | 24 | 447 | 54 | 41 | 266 | 832 | $^{1}$ Includes non-underlying accelerated depreciation and impairment of £27 million (2021: £32 million) and depreciation from discontinued operations of £5 million (2021: £15 million). 197 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 16. Investments in financial assets The Group holds equity investments in a number of companies which fall below the level that would result in recognition of an interest in a subsidiary or associate. The Group also holds some debt investments in Government bonds. ### Accounting policy These financial assets are all recognised at fair value through other comprehensive income (FVOCI). See note 23 for the relevant accounting policy, specifically in relation to: - equity instruments Investments in equity instruments and convertible instruments (excluding listed instruments) are classified as Level 3 (of the fair value hierarchy described in the accounting policy of note 23). Listed instruments are classified as Level 1. Investment in financial assets are as follows: | Group | Notes | 2022 £m | 2021 £m | | --- | --- | --- | --- | | **Non-current** | | | | | Equity instruments | 16.1, 23 | 394 | 351 | | **Current** | | | | | Debt instruments | 16.2, 23 | 226 | – | | **Total investments in financial assets** | | **620** | **351** | ### 16.1 Equity instruments Movements in the fair value of the investments in equity instruments (which are almost entirely classified as Level 3) are as follows: | Group | 2022 £m | 2021 £m | | --- | --- | --- | | 1 January | 351 | 261 | | Investments in equity instruments acquired on acquisition of subsidiaries | – | 22 | | Additions | 1 | 28 | | Transfer to investments in associates | (1) | – | | Fair value gain recognised in other comprehensive income | 21 | 59 | | Foreign exchange translation | 22 | (19) | | **31 December** | **394** | **351** | ### Fair value of equity instruments In determining the fair value, recent market transactions are taken into account. If no such transactions can be identified, internal valuations are calculated using discounted cash flow forecasts using a terminal growth rate of 2% to 3% and a risk adjusted discount rate depending on the size and maturity of the investee. These valuations are also benchmarked against other available approaches such as the dividend discount model, regression analysis, and trading multiples. Valuation models generate a range of values by considering reasonable changes in the key unobservable inputs (including terminal growth rates and discount rates). The investments are recognised at the lowest value in the range. The fair values of the material investments are as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | Euroclear | 314 | 297 | | PrimaryBid Limited | 31 | 10 | | Sumscope Inc. | 17 | 15 | ### Income from equity investments Income from equity investments of £12 million represents dividends received from the Group's investment in Euroclear (2021: £22 million). ### 16.2 Debt instruments | Group | 2022 £m | 2021 £m | | --- | --- | --- | | 1 January | – | – | | Additions^{1} | 217 | – | | Foreign exchange translation | 9 | – | | **31 December** | **226** | **–** | $^{1}$ In the last quarter of 2022, we invested £217 million in French Government and European Central Bank bonds. 198 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued ## 17. Pension and other retirement benefit schemes Substantially all of the Group’s employees participate in defined benefit or defined contribution future benefit schemes. Description Defined contribution Defined contribution schemes are savings plans that provide for matching contributions from the Group. schemes Most new employees are eligible to participate in these schemes. The main scheme within the Group is the London Stock Exchange Group Pension Plan. Defined benefit Defined benefit schemes provide pension and other post-retirement benefits for covered employees. schemes The most significant defined benefit schemes (collectively referred to as the ‘Large UK’ schemes) are: — the Reuters Pension Fund (RPF) — the Reuters Supplementary Pension Scheme (SPS) — the London Stock Exchange Group Pension Scheme (LSEGPS) — LSE Section of LSEGPS (previously the London Stock Exchange Retirement Plan) — LCH Section of LSEGPS (previously the LCH Pension Scheme in the UK) Benefits are payable generally based on salary and years of service, although each plan has a unique benefits formula. Employees of the Large UK schemes (and in some smaller schemes) may also make voluntary contributions to augment future benefits. The retirement age is typically in the range of 60 and 65 years and benefits are generally payable as an annuity or lump sum upon retirement. Most schemes include provisions for early retirement or death and include survivor and disability benefits. Under the Large UK schemes, vested benefits of former employees who are not yet of retirement age are held in deferment. Eligible benefits under the Large UK schemes are subject to increases based on inflation. Except when required by law, virtually all defined benefit schemes are closed to new employees. Outside of the UK, some countries operate pension schemes in accordance with the local regulations and practices. All schemes are governed by the local regulatory framework and employment laws in the country in which they operate. Significant accounting judgements The Group judges that, on the winding up of the schemes, it can expect any remaining pension surplus to be refunded in full to the Group. In line with the current accounting standards, it therefore continues to recognise these retirement benefit assets on the balance sheet in full. 199 London Stock Exchange Group plc Annual Report 2022 Accounting policy For defined contribution schemes, the operating charge represents the contributions payable in the year and is recognised in the income statement as incurred. For the defined benefit schemes the income statement expense is allocated between service cost and net finance expense. The service charge represents benefits accruing to employees and is included as an operating expense. Costs of future employee benefits are accrued over the period in which employees earn the benefits. Scheme obligations and costs are determined by an independent qualified actuary, on a regular basis, in line with IAS 19 Employee Benefits, using the projected unit credit method. The obligations are measured by discounting the best estimate of future cash flows to be paid out of the scheme and are reflected in the Group balance sheet. Where a scheme has a net defined benefit liability, interest cost is recognised in finance expense, calculated by applying a discount rate to the net defined benefit liability at the start of each annual reporting period. Where a scheme has a net defined asset, interest is recognised in finance income and calculated in the same way. The discount rate used is based on market interest rates of high-quality, fixed-rate debt securities adjusted to reflect the duration of expected future cash outflows for pension benefit payments. The net asset or liability recognised on the balance sheet comprises the difference between the present value of pension obligations and the fair value of scheme assets. Actuarial gains and losses are recognised at each reporting date, net of tax, in the statement of comprehensive income. These gains and losses arise from experience adjustments, changes in actuarial assumptions or differences between actual and expected returns on assets. Notes to the financial statements continued ## 17. Pension and other retirement benefit schemes continued ### Significant accounting estimates and assumptions **Defined benefit pension or liabilities** are determined based on the present value of future pension obligations using assumptions determined by the Group with advice from an independent qualified actuary. An actuarial valuation involves making various assumptions that may differ from what actually happens in the future. The assumptions that are the most significant to the amounts reported are the discount rate, inflation rate, salary growth and mortality levels. Assumptions about these variables are based on the environment in each country. Due to the complexities involved in a valuation, and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. In particular, changes to the discount rate and inflation rate, could result in material changes to the carrying amounts of the group's pension and other post-retirement benefit obligations within the next financial year. ### 17.1 Pension costs Pensions costs arising from all group retirement benefit arrangements recognised in the income statement are as follows: | Continuing | Notes | 2022 £m | 2021 (Re- presented) £m | | --- | --- | --- | --- | | Defined contribution schemes | | 74 | 65 | | Defined benefit scheme – current/past service cost, curtailment, and expenses | | 7 | 16 | | Pension costs recognised in staff costs | 5 | 81 | 81 | | Net finance income | 7 | (11) | (6) | | | | 70 | 75 | ### 17.2 Actuarial gains and losses on retirement benefit assets and obligations Experience adjustments and the effects of changes in actuarial assumptions during the year are recognised in the statement of comprehensive income. | | 2022 £m | 2021 £m | | --- | --- | --- | | 1 January | 116 | 15 | | Net actuarial (losses)/gains recognised in the year | (329) | 101 | | **31 December** | **(213)** | **116** | ### 17.3 Retirement benefit assets and obligations The amounts recognised in the balance sheet include the assets and liabilities of the Large UK schemes, as well as various smaller schemes. All pension scheme assets are held separately from those of the Group. Retirement benefit assets and obligations recognised on the balance sheet are as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | Retirement benefit assets | 231 | 568 | | Retirement benefit obligations | (64) | (85) | | **Net retirement benefit asset** | **167** | **483** | The net defined benefit assets/(liabilities) in respect of defined benefit schemes are as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | RPF^{1} | 145 | 433 | | SPS^{1} | 11 | 4 | | LSE Section of LSEGPS^{1} | 21 | 33 | | LCH Section of LSEGPS^{1} | 39 | 75 | | Other plans | (49) | (62) | | **Net retirement benefit asset** | **167** | **483** | $^{1}$ As at 31 December 2022, the Group recognised net defined benefit assets on the basis that the Group would have access to the surplus in the event of a winding-up of the scheme. No asset ceiling has therefore been applied to the net surplus recognised. Furthermore, none of these schemes have minimum funding commitments. Changes in the net retirement benefit asset during the year are as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | 1 January | 483 | 63 | | Net defined benefit assets acquired and obligations assumed on acquisition of subsidiaries | – | 282 | | Disposal of business | – | 8 | | Pension income/(expense), including interest | 5 | (10) | | Actuarial (losses)/gains | (329) | 101 | | Employer contributions and benefits paid | 17 | 33 | | Other | (11) | 6 | | Foreign exchange translation | 2 | – | | **31 December** | **167** | **483** | 200 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued ## 17. Pension and other retirement benefit schemes continued ### 17.4 Large UK schemes The detail that follows relates to the Large UK schemes. In this section we show the movement of the scheme assets and defined benefit obligations in the year, alongside the asset classes and expected benefit payments. We also explain the schemes' investment policy, key assumptions and risk management. #### Scheme assets The movements in the fair value of scheme assets during the year are as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | 1 January | 3,811 | 774 | | Scheme assets acquired on acquisition of subsidiaries | – | 3,043 | | Interest income | 79 | 49 | | Movement on plan assets, excluding interest income, recognised in other comprehensive income^{1} | (1,426) | 27 | | Employer contributions^{2} | 21 | 26 | | Plan participants' contributions | 1 | 1 | | Benefits paid | (117) | (109) | | **31 December** | **2,369** | **3,811** | 1 The decrease in plan assets in 2022 is mainly driven by poor asset performance in all countries with funded plans, in particular the UK non-insured plans. 2 The group contributed £21 million (2021: £26 million) to its Large UK schemes. The Group expects to contribute approximately £15 million to its Large UK schemes in 2023. For the Large UK schemes, the Trustees have the right to call for special valuations, which could subsequently result in the Group having to make an unexpected contribution. Market-related factors may also affect the timing and amount of contributions. The fair values of each major class of scheme assets are as follows: | Fair value of assets | 2022 £m | 2021 £m | | --- | --- | --- | | Equities | | | | – Quoted | 29 | 190 | | – Not quoted | 20 | 25 | | Bonds | | | | – Quoted | 250 | 475 | | – Not quoted | 773 | 1,713 | | Buy-in policy | 723 | 1,016 | | Cash and cash equivalents | 366 | 56 | | Multi-assets and other | 208 | 336 | | **Total fair value of assets** | **2,369** | **3,811** | #### Investment policy The Group bears the cost of the Large UK schemes (less employee contributions). However, the responsibility for managing and governing the Large UK schemes lies with an independent trustee board for each scheme (the "Trustees"). Scheme Trustees set investment policies and strategies for each plan and oversee investment allocation. This includes selecting investment managers, commissioning periodic asset-liability studies, and setting long-term targets. The scheme Trustees may consult with the Group in setting investment policy, but the Trustees are ultimately accountable for it. The principal investment objectives are to: - ensure funds are available to pay pension benefits as they become due under a broad range of future economic scenarios - maximise long-term investment return with an acceptable level of risk - diversify across capital markets to insulate asset values against risk in any one market #### Investment allocation Investment allocation takes into account a number of factors, including: the funded status of the scheme; setting the right balance between risk and return; the scheme's liquidity needs; current and expected economic and market conditions; specific asset class risk; as well as the risk profile and maturity pattern of the scheme. Target investment allocation ranges provide guidelines, not limitations. Plans may have diversified portfolios with investments in equities, fixed income, real estate, insurance contracts, derivatives, and other asset classes through direct ownership or through other instruments such as mutual funds, commingled funds, and hedge funds. Derivatives may be used to achieve investment objectives or as a component of risk management (such as for interest rate and currency management strategies). The assets held by the Large UK schemes mainly consist of cash and cash equivalents, government and corporate bonds, and various investment vehicles. Plan assets are invested to adequately secure benefits and to minimise the need for long-term contributions to the schemes. However, specific investment allocation will vary across schemes. The Trustees invest the schemes' assets in a portfolio of physical assets and liability-matching assets: - The physical assets have the objective of outperforming the liabilities by investing in a suitably diversified range of assets, consisting of risk premia strategies, corporate bonds (and other credit alternatives) and property which together are expected to reduce investment volatility. - The liability-matching assets seek to hedge against the interest rate and inflation risks associated with liabilities. The assets are predominantly gilts, both nominal and index-linked. The RPF, SPS and LSE Section of LSEGPS also include bulk annuity transactions (buy-ins) insuring the benefit for a part of the schemes' liabilities. This combination of physical assets and liability-matching assets is expected to provide an appropriate risk and return profile, with suitable interest rate and inflation hedging characteristics, consistent with lower volatility and improved funding levels. #### Funding valuations and arrangements The Trustees are responsible for carrying out triennial valuations (unless circumstances require an earlier review) and securing funding for benefit payments. In order to develop funding valuations and investment policies, the Trustees consult with the scheme's actuary (who is independent of the Group's actuary), the scheme's investment advisors (also independent of the Group's investment advisors) and the Group. Of the Large UK schemes, only the LSEGPS requires the Group to make deficit contributions. For the LSE Section of LSEGPS, the Group contributed £14 million in 2022, with a contingent contribution of £12 million in 2023 and nothing in 2024. No contributions are required for the LCH Section of LSEGPS over these three years. The Group has provided guarantees to the Trustees of the RPF and to the Trustees of the SPS in conjunction with triennial valuation and funding obligations. As at 31 December 2022, the aggregate maximum liability under the guarantees was £700 million for the RPF and £120 million for the SPS. These amounts are unchanged from last year. 201 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued ## 17. Pension and other retirement benefit schemes continued ### Defined benefit obligations The changes in the present value of the defined benefit obligations during the year are as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | 1 January | 3,267 | 693 | | Defined benefit obligations assumed on acquisition of subsidiaries | – | 2,684 | | Pension expense/(income) recognised in the income statement | | | | – Past/current service cost and administrative fees | 7 | 10 | | – Interest cost | 66 | 42 | | – Curtailment | (7) | (1) | | Remeasurements recognised in other comprehensive income | | | | – Actuarial gains – financial assumptions^{1} | (1,213) | (112) | | – Actuarial (gains)/losses – demographic assumptions | (23) | 1 | | – Actuarial losses – experience | 164 | 60 | | Benefits paid | (117) | (109) | | Plan participants' contributions | 1 | 1 | | Other | 7 | (2) | | **31 December** | **2,152** | **3,267** | 1 The gain is mainly driven by the increase in discount rates in 2022. ### Duration of the defined benefit obligations The weighted average duration of the defined benefit obligations at the end of the reporting period are estimated to be: | | 2022 years | 2021 years | | --- | --- | --- | | RPF | | | | – Non-insured | 16 | 17 | | – Insured | 10 | 12 | | SPS | 10 | 12 | | LSE Section of LSEGPS | | | | – Non-insured | 16 | 20 | | – Insured | 9 | 11 | | LCH Section of LSEGPS | 18 | 23 | The following table provides expected benefit payments under the Group's Large UK schemes: | | 2022 £m | 2021 £m | | --- | --- | --- | | Less than 1 year | 98 | 114 | | Between 1 and 2 years | 97 | 93 | | Between 2 and 5 years | 324 | 318 | | Over 5 years | 576 | 607 | | **Total expected benefit payments** | **1,095** | **1,132** | The Group used the following weighted-average assumptions in determining the defined benefit obligation: | | 2022 | 2021 | | --- | --- | --- | | Discount rate | | | | – Non-insured | 4.80% | 1.89% | | – Insured | 4.80% | 1.89% | | Price inflation | 3.33% | 3.38% | | Rate of increase in salaries | 3.30% | 3.83% | Mortality assumptions used for the Large UK Schemes are based on SAPS S3 Tables published by the Institute and Faculty of Actuaries. They are adjusted to take account of projected future improvements in life expectancy based on the Continuous Mortality Investigation (CMI) 2021 Mortality Projections Model, which was published in 2022 by the Institute and Faculty of Actuaries' CMI body. A 1.25% p.a. long-term mortality improvement trend has been applied within the CMI model for men and women to increase life expectancy (2021: 1.25% p.a.). ### Risks for the defined benefit schemes and risk mitigation Some key financial risks for the defined benefit schemes are: - – if there is a reduction in corporate bond yields, this increases the schemes' liabilities which may not be accompanied by a corresponding increase in the schemes' assets - – if investment returns are lower than assumed. The schemes invest a proportion of their assets in growth assets so a fall in the value of these assets will worsen the schemes' funding positions - – if inflation is higher than expected, or average inflation expectations increase, this will increase the liabilities through higher indexing of pension payments - – if members live longer than expected, the length of time for which pensions have to be paid increases An increase in pension liabilities could lead to an increase in the pension deficit or a reduction in any surplus. Defined benefit schemes are normally revalued by actuaries every three years. Where any material funding gap is identified by this process, the Trustees will agree a schedule of contributions with the sponsor company. Such contributions would have a financial impact on the Group. In addition, for the RPF, the SPS and the LSE Section of LSEGPS, the Group is exposed to the creditworthiness of the buy-in insurance provider. A failure of the buy-in insurance provider would reduce the pension assets and could lead to a pension deficit materialising, or an increase in the pension deficit and the need for contributions from the Group. The Large UK schemes hold a range of liquid assets that can be sold for use as collateral for the liability-matching assets if required, and the Trustees consider the liquidity needs of the schemes when setting investment strategy. The schemes' investment strategies have performed as expected during the market volatility that followed the UK government's mini budget on 23 September 2022. The RPF and LSEGPS Trustees make use of liability-driven investments, but there was no interruption to the interest rate and inflation hedges in place. The SPS does not hold any liability-driven investments. The RPF, SPS and LSE Section of LSEGPS also hold bulk annuity policies, which insure the benefit for a part of the schemes' liabilities and hedge both the market and life expectancy risks associated with these liabilities. 202 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued ## 17. Pension and other retirement benefit schemes continued ### Risk management On 1 September 2022, the RPF was closed to future accrual. All 121 remaining active members accepted the new terms and conditions, and their status changed to deferred. They were automatically enrolled into the London Stock Exchange Group Pension Plan, a defined contribution pension plan, unless they opted out. This constitutes an “exit” and triggered curtailment. A curtailment gain of £7 million was recognised. On 30 September 2021, the Trustees of SPS entered into a bulk annuity policy with Legal & General (L&G) covering all of the scheme’s deferred and retiree obligations. The purpose of the arrangement is to reduce pension volatility by transferring longevity risk to L&G and further improve inflation risk and the matching of assets and liabilities. As at 31 December 2022, the SPS buy-in amounted to £182 million (2021: £254 million). The RPF and the LSE Section of LSEGPS have partial buy-in arrangements in place amounting to £404 million (2021: £576 million) and £137 million (2021: £186 million), respectively. ### Sensitivity analysis The sensitivities regarding the principal assumptions used to measure the Large UK schemes obligations are: | Assumption | Change in assumption | (Decrease)/increase in scheme obligations | | | --- | --- | --- | --- | | | | 2022 £m | 2021 £m | | Discount rate | +0.5% | (138) | (268) | | Price inflation | +0.5% | 81 | 146 | | Increase in salaries | +0.5% | – | 5 | | Mortality rate | +1 year | 64 | 110 | The sensitivity analysis above shows how a reasonably possible increase in a particular assumption would, in isolation, result in an increase or decrease in the present value of the defined benefit obligation at the end of the reporting period. The analysis is done in a similar way to calculating the defined benefit obligation recognised in the balance sheet in that it uses the projected unit credit method at the end of the year. ## 18. Trade and other receivables *Trade and other receivables mainly consist of amounts owed to us by customers and amounts that we pay to our suppliers in advance. This note includes finance lease receivables recognised where the Group acts as a lessor. See note 21 for more information on the Group’s leasing activities.* ### Accounting policy **Trade receivables** are initially recognised at the amount of the consideration that is unconditionally due to the Group. They are subsequently measured at amortised cost, less any expected credit loss (ECL). Our approach to calculating ECL provisions is described in note 23. The creation and release of such provisions are recognised in operating expenses in the income statement. **Fees receivable** are recognised when the Group has an unconditional right to consideration in exchange for goods or services transferred, but no fee invoice has been issued. Amounts are transferred to trade receivables when an invoice has been issued. **Other receivables** are initially recognised at fair value and subsequently at amortised cost, less any loss allowance as described in note 23. When a receivable is no longer expected to be recovered, the full amount is written off. We will continue to seek recovery and any subsequent amounts recovered against amounts previously written off are recognised in the income statement. See note 21 for the **net investment in leases** accounting policy, when the Group sub-lets property right-of-use assets. The Group has a **tax indemnity receivable** from Thomson Reuters for any tax liabilities incurred before Refinitiv (previously the Thomson Reuters Financial & Risk Business) separated from Thomson Reuters on 1 October 2018. The tax indemnity receivable is measured on the same basis as the corresponding indemnified tax liabilities. When there is a change in the indemnified tax liabilities, which is recognised within tax in the income statement, there is an offsetting change in the tax indemnity receivable. This change is recognised within operating expenses in the income statement. **Contract assets** are recognised when the Group has a conditional right to consideration from a customer in exchange for goods or services transferred. Contract assets are transferred to trade receivables when the entitlement to payment becomes unconditional and only the passage of time is required before payment is due. 203 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued ## 18. Trade and other receivables continued | | Notes | Group | | Company | | | --- | --- | --- | --- | --- | --- | | | | 2022 £m | 2021 £m | 2022 £m | 2021 £m | | **Non-current** | | | | | | | Net investments in leases | | 71 | 80 | – | – | | Tax indemnity receivable | | 79 | 73 | 56 | 52 | | Convertible loan notes | | 12 | 6 | – | – | | Other receivables | | 47 | 42 | – | – | | Amounts due from Group companies | 28.1 | – | – | 20 | 40 | | Fees receivable | | – | 1 | – | – | | **Total non-current receivables classified as financial assets** | 23.1 | **209** | 202 | **76** | 92 | | **Current** | | | | | | | Trade receivables | | 766 | 497 | – | 2 | | Fees receivable | | 263 | 230 | – | – | | Expected credit loss on trade receivables | | (9) | (7) | – | – | | Net trade receivables | | 1,020 | 720 | – | 2 | | Amounts due from Group companies | 28.1 | – | – | 1,199 | 1,333 | | Group relief receivable | | – | – | 85 | 105 | | Net investments in leases | | 12 | 11 | – | – | | Deposits receivable within one year | | 20 | 18 | – | – | | Other receivables | | 95 | 75 | – | 46 | | Current trade and other receivables classified as financial assets | 23.1 | 1,147 | 824 | 1,284 | 1,486 | | Prepayments | | 214 | 141 | 12 | 10 | | Contract assets | | 3 | 2 | – | – | | **Total current trade and other receivables** | | **1,364** | 967 | **1,296** | 1,496 | | **Total receivables** | | **1,573** | 1,169 | **1,372** | 1,588 | The carrying amounts of the Group's current trade and other receivables are denominated in the following currencies: | | 2022 £m | 2021 £m | | --- | --- | --- | | Sterling | 442 | 310 | | Euro | 100 | 66 | | US dollar | 703 | 503 | | Other currencies | 119 | 88 | | | **1,364** | 967 | ### Provision for expected credit losses Movements in the Group's provision for expected credit losses on trade receivables are as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | 1 January | 7 | 11 | | New provisions for expected credit losses | 6 | 1 | | Amounts written off as uncollectible | (3) | (3) | | Disposal of business | – | (2) | | Foreign exchange translation | (1) | – | | **31 December** | **9** | 7 | ### Net investments in leases: Group as lessor The Group sub-lets a number of its properties where there is surplus space or the office is no longer used by the business. The Group has both finance and operating sub-leases. Net investments in leases are shown within trade and other receivables above. 204 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 18. Trade and other receivables continued The future minimum rentals receivable as at 31 December are as follows: | | 2022 £m | 2021 £m | | --- | --- | --- | | Less than 1 year | 12 | 11 | | Between 1 and 2 years | 10 | 11 | | Between 2 and 5 years | 17 | 21 | | Over 5 years | 52 | 57 | | **Total** | **91** | **100** | The future minimum rentals receivable above reflect the gross rental receivable and are not discounted. The net investment in leases disclosed within trade and other receivables are discounted to reflect the net present value to the Group at the period end. ## 19. Cash and cash equivalents *Cash and cash equivalents comprise cash at bank, short-term deposits, money market funds and other instruments and structures that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value.* | | Note | Group | | Company | | | --- | --- | --- | --- | --- | --- | | | | 2022 £m | 2021 £m | 2022 £m | 2021 £m | | Cash at bank | | 922 | 758 | 18 | 3 | | Cash equivalents | | 2,287 | 1,907 | 59 | 139 | | **Total cash and cash equivalents** | 23 | **3,209** | **2,665** | **77** | **142** | At 31 December 2022, cash and cash equivalents include £1,219 million (2021: £1,261 million) of amounts held by regulated entities for regulatory and operational purposes. Cash held by subsidiaries which operate in countries where exchange controls or other legal restrictions apply, which is therefore not available for general use by the Group, has been fully provided against. Cash and cash equivalents do not include amounts held by the CCPs on behalf of their clearing members. ## 20. Trade and other payables *Trade and other payables mainly consist of amounts owed to suppliers that have been invoiced or are accrued. They also include social security and other amounts due in relation to the Group's role as an employer.* ### Accounting policy **Trade payables** are initially recognised at fair value, which is usually the amount invoiced. They are subsequently measured at amortised cost. **Accrued expenses** are recognised for goods and services received before the end of the year for which no invoice has been received. They are measured at amortised cost. **Contingent consideration**, resulting from business combinations, sometimes arises when additional consideration to the sellers will need to be paid if certain performance targets for the business are achieved. Contingent consideration is valued at fair value at the acquisition date as part of the business combination (see note 12). When the contingent consideration meets the definition of a financial liability, it is subsequently remeasured to fair value through profit or loss at each reporting date. The fair value gain or loss is classified as non-underlying transaction costs in the income statement (see note 6). The determination of the fair value is based on discounted cash flows. The key assumptions take into consideration the probability of meeting each performance target and the discount factor. Trade and other payables include the **Tradeweb tax receivable agreement liability**. In connection with Tradeweb's initial public offering (IPO), Tradeweb entered into a tax receivable agreement with the owners of Tradeweb Markets LLC (the LLC Owners) immediately prior to Tradeweb's IPO. Under the agreement, Tradeweb is required to make cash payments to the LLC Owners equal to 50% of the amount of any tax savings that Tradeweb realises as a result of certain future tax benefits which Tradeweb is entitled to. The Tradeweb tax receivable agreement liability is measured at amortised cost. The Group has a **tax indemnity payable** to Thomson Reuters with a matching tax receivable. The tax indemnity payable is measured on the same basis as the indemnified tax receivable. When there is a change in the indemnified tax receivable, which is recognised within tax in the income statement, there is an offsetting change in the tax indemnity payable. This change is recognised within operating expenses in the income statement. 205 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 20. Trade and other payables continued | | Notes | Group | | Company | | | --- | --- | --- | --- | --- | --- | | | | 2022 £m | 2021 £m | 2022 £m | 2021 £m | | **Non-current** | | | | | | | Contingent consideration payable | 12.2 | 38 | – | – | – | | Lease liabilities | 21 | 533 | 547 | – | – | | Tradeweb tax receivable agreement liability | | 323 | 276 | – | – | | Tax indemnity payable | | 264 | 215 | 188 | 202 | | Other payables | | 24 | 21 | – | – | | **Total non-current payables classified as financial liabilities** | 23.2 | **1,182** | 1,059 | **188** | 202 | | **Current** | | | | | | | Trade payables | | 413 | 259 | 6 | 4 | | Other payables | | 266 | 271 | 16 | 15 | | Lease liabilities | 21 | 139 | 168 | – | – | | Share buyback obligation^{1} | | 200 | – | 200 | – | | Accrued expenses | | 1,049 | 969 | 23 | 28 | | Amounts due to group companies | 28.1 | – | – | 1,249 | 597 | | Amounts owed to associates | 28.2 | – | 1 | – | – | | Current payables classified as financial liabilities | 23.2 | **2,067** | 1,668 | **1,494** | 644 | | Social security and other taxes | | 76 | 114 | – | – | | **Total current trade and other payables** | | **2,143** | 1,782 | **1,494** | 644 | | **Total payables** | | **3,325** | 2,841 | **1,682** | 846 | $^{1}$ In August 2022, the Company launched a £750 million share buyback programme (see note 24). As part of tranche two of the programme, the Company entered into an irrevocable commitment with its corporate brokers to repurchase shares, which in part covers the close period from 1 January 2023 up to the announcement of the Group's full year 2022 results. At 31 December 2022, the remaining obligation was £200 million. ## 21. Lease liabilities and net investments in leases *The Group leases assets from other parties (the Group is a lessee) and also leases assets to other parties (the Group is a lessor). This note describes how the Group accounts for leases and provides details about its lease arrangements.* ### Accounting policy #### Group as lessee ##### Lease liabilities Lease liabilities are recognised at the net present value of the remaining future payments to be made over the lease term. The net present value is determined using a discount rate equivalent to the incremental borrowing rate of the leasing entity unless there is a rate implicit within the lease agreement. Subsequently, the value of the discount is recognised over the life of the lease on a reducing balance basis as lease interest in finance expenses. The Group leases many properties around the world and lease terms vary from monthly up to 15 years. Many of these leases contain option clauses to extend the lease or break clauses to terminate the lease. The lease term recognised is the non-cancellable period of the lease plus any periods for which the Group is reasonably certain of exercising any extension options. The Group values its right-of-use assets and lease liabilities based on its intentions at the balance sheet date. Any change in these intentions is accounted for as a lease modification and the assets and liabilities are amended accordingly. Any effect on the net assets of the Group is not significant. Variable lease payments based on an index are estimated at the commencement date and revalued on an annual basis. Lease payments due within 12 months are classified as current liabilities. Payments due after 12 months are classified as non-current liabilities. ##### Short-term leases and leases of low value assets Rental costs for leased assets that are for less than 12 months or are for assets with an individual value of less than £5,000 are recognised directly in the income statement on a straight-line basis over the life of the lease. 206 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 21. Lease liabilities and net investments in leases continued ### Group as lessor #### Finance leases Where the Group sub-lets a property right-of-use asset for substantially all the useful life of that asset, this is recognised as a finance lease. On commencement of a finance sub-lease, the property right-of-use asset is treated as disposed of and a net investment in lease, equivalent to the net present value of the future rent receipts is recognised (see note 18). The value of the discount is recognised over the life of the sub-lease on a reducing balance basis as interest income in finance income. Where the value of the receipts from the sub-lease is lower than the amount payable on the head-lease, we recognise a loss on disposal of the right-of-use asset in the income statement. #### Operating leases A right-of-use asset that is sub-let for less than its expected useful life is recognised as an operating lease and rental income is recognised as received in other income. We continue to recognise the property right-of-use asset on the balance sheet. Movements in lease liabilities were as follows: | | Notes | 2022 £m | 2021 £m | | --- | --- | --- | --- | | 1 January | | 715 | 189 | | Lease liabilities assumed on acquisition of subsidiaries | 12 | 1 | 588 | | Lease liabilities derecognised on disposal of business | 13 | (22) | (31) | | Leases terminated early | | (2) | (2) | | New lease contracts | | 80 | 54 | | Lease modifications | | 16 | 33 | | Lease interest expense | 7.2 | 15 | 12 | | Lease payments – principal | | (150) | (118) | | Lease payments – interest | | (15) | (12) | | Foreign exchange translation | | 34 | 2 | | **31 December** | | **672** | **715** | | Current | 20 | 139 | 168 | | Non-current | 20 | 533 | 547 | | **Total lease liabilities** | | **672** | **715** | The maturity of the Group's lease commitments is disclosed within the risk management note (see note 23.5). The weighted average discount rate used by the Group for lease liabilities was 2.3% (2021: 1.8%). A limited number of the Group's leases are subject to variable lease payments linked to publicly available indexes. Adjustments to the value of the lease liabilities and associated assets are made annually, but do not have a material impact on the Group's net assets. ## 22. Borrowings and net debt *The Group's sources of borrowing for funding and liquidity purposes come from a range of committed bank facilities and through short-term and long-term bond issuances in the capital markets. Net debt comprises cash and cash equivalents less lease liabilities and interest-bearing loans and borrowings, adjusted for derivative financial instruments.* ### 22.1 Borrowings #### Accounting policy Borrowings are initially recorded at the fair value of amounts received, net of capitalised direct issue costs and arrangement fees (including upfront facility fees). Subsequently, these liabilities are carried at amortised cost. Interest payable on the borrowings is recognised in the income statement over the period of the borrowings using the effective interest rate method. Similarly, direct issue costs and arrangement fees (including upfront facility fees) are recognised in the income statement over the period of the borrowings using the effective interest rate method. Where borrowings are identified as a hedged item in a designated fair value hedge relationship, fair value adjustments are recognised in accordance with our policy (see note 23). 207 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued ## 22. Borrowings and net debt continued | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £m | 2021 £m | 2022 £m | 2021 £m | | **Non-current** | | | | | | Bank borrowings – committed bank facilities and term loans^{1} | (5) | 1,347 | (5) | (6) | | Bonds | 6,860 | 6,306 | 1,820 | 1,746 | | Trade finance loans | 1 | 1 | – | – | | **Total non-current borrowings** | **6,856** | **7,654** | **1,815** | **1,740** | | **Current** | | | | | | Bank borrowings – term loan | 1,295 | – | – | – | | **Total current borrowings** | **1,295** | **–** | **–** | **–** | | **Total borrowings** | **8,151** | **7,654** | **1,815** | **1,740** | 1 Balances are shown net of capitalised arrangement fees. Where there are no amounts borrowed on a particular facility, this gives rise to a negative balance. The Group has the following committed bank facilities, loans and unsecured bonds: | | Maturity date | Facility/ bond £m | Carrying value | | Interest rate % | | --- | --- | --- | --- | --- | --- | | | | | 2022 £m | 2021 £m | | | **Committed bank facilities** | | | | | | | Multi-currency revolving credit facility | Dec 2024 | 1,425 | (2) | (3) | see note^{2} | | Multi-currency revolving credit facility | Dec 2027 | 1,075 | (3) | (3) | see note^{2} | | **Total committed bank facilities^{1}** | | **2,500** | **(5)** | **(6)** | | | **Committed term loans** | | | | | | | €500 million term loan | Dec 2023 | – | – | 126 | EURIBOR + 0.725 | | $2,000 million term loan | Dec 2023 | – | 1,295 | 1,227 | see note^{2} | | **Total committed term loans** | | | **1,295** | **1,353** | | | **Bonds** | | | | | | | $500 million bond, issued April 2021 | Apr 2024 | 416 | 415 | 369 | 0.650 | | €500 million bond, issued September 2017 | Sep 2024 | 444 | 443 | 419 | 0.875 | | €500 million bond, issued April 2021 | Apr 2025 | 444 | 443 | 419 | – | | $1,000 million bond, issued April 2021 | Apr 2026 | 831 | 828 | 738 | 1.375 | | €500 million bond, issued December 2018 | Dec 2027 | 444 | 441 | 417 | 1.750 | | €500 million bond, issued April 2021 | Apr 2028 | 444 | 441 | 417 | 0.250 | | $1,000 million bond, issued April 2021 | Apr 2028 | 831 | 828 | 737 | 2.000 | | €500 million bond, issued September 2017 | Sep 2029 | 444 | 441 | 417 | 1.750 | | €500 million bond, issued April 2021 | Apr 2030 | 500 | 494 | 493 | 1.625 | | $1,250 million bond, issued April 2021 | Apr 2031 | 1,039 | 1,033 | 919 | 2.500 | | €500 million bond, issued April 2021 | Apr 2033 | 444 | 438 | 413 | 0.750 | | $750 million bond, issued April 2021 | Apr 2041 | 623 | 615 | 548 | 3.200 | | **Total bonds** | | **6,904** | **6,860** | **6,306** | | | **Trade finance loans** | Nov 2025 | | **1** | **1** | **7.274** | | **Total committed facilities, loans and unsecured bonds** | | | **8,151** | **7,654** | | 1 Negative balances represent the value of unamortised arrangement fees. 2 As part of the IBOR Reform, a Credit Adjustment Spread (CAS) has been applied where US dollar and sterling LIBOR rates were replaced with SOFR and SONIA rates respectively in the bank facilities. The CAS is variable and depends on the tenor and currency of the borrowings. ### Committed bank facilities: Multi-currency revolving credit facilities In December 2020, the Group arranged a £1,075 million syndicated committed facility maturing in December 2025, which replaced a former £600 million facility. In December 2022, the second of two 1-year extension options was taken up (first option exercised in December 2021), extending the maturity to December 2027. The Group continues to have access to a £1,425 million Revolving Credit Facility, which became effective in January 2021 and matures in December 2024. The revolving credit facilities were drawn down during the year and fully repaid as at 31 December 2022. 208 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 22. Borrowings and net debt continued ### Committed term loans The term loans were fully drawn in January 2021. During the year the Euro term loan was fully repaid and the US Dollar term loan was partly repaid by US$100 million (2021: repayments of €350 million and US$340 million, respectively). The increase in the carrying value amount of the US Dollar term loan compared with last year reflects the impact of foreign exchange movements. ### Commercial paper During the year the Group maintained its Euro Commercial Paper Programme limit of £1 billion and entered into a US Commercial Paper Programme with a limit of $1 billion. There were no outstanding issuances at 31 December 2022 and 31 December 2021. ### Other Group facilities In accordance with the Committee on Payments and Market Infrastructures, the International Organisation of Securities Commissions and Principles for Financial Market Infrastructures, many central banks allow CCPs to apply for access to certain central bank facilities. LCH SA has a French banking licence and is able to access financing at the French Central Bank and at the European Central Bank to support its liquidity position. LCH Ltd is deemed to have sufficient fungible liquid assets to maintain an appropriate liquidity position and has direct access to central bank facilities to support its liquidity risk management in accordance with the requirements under European Market Infrastructure Regulation. In addition, a number of Group entities have access to uncommitted operational, money market and overdraft facilities which support post trade activities and day-to-day liquidity requirements. These facilities were drawn down during the year and fully repaid as at 31 December 2022. ### Fair values All the Group's borrowings are recognised at amortised cost on the balance sheet. In some cases this may differ from their fair value. Bonds are classified as Level 1 of the fair value hierarchy for determining and disclosing the fair value of financial instruments (as described in the accounting policy of note 23). Bond fair values are as quoted in the relevant fixed income markets. Bank borrowings and commercial paper are classified as Level 2 (see definition in note 23). The fair values of these instruments are based on cash flows which are discounted using a rate based on borrowing cost. The fair values of the Group's borrowings are as follows: | Group | 2022 | | 2021 | | | --- | --- | --- | --- | --- | | | Carrying value £m | Fair value £m | Carrying value £m | Fair value £m | | Non-current | 6,856 | 5,903 | 7,654 | 7,765 | | Current | 1,295 | 1,301 | – | – | | **Total borrowings** | **8,151** | **7,204** | **7,654** | **7,765** | The fair values of the Company's borrowings are as follows: | Company | 2022 | | 2021 | | | --- | --- | --- | --- | --- | | | Carrying value £m | Fair value £m | Carrying value £m | Fair value £m | | Non-current | 1,815 | 1,624 | 1,740 | 1,826 | | **Total borrowings** | **1,815** | **1,624** | **1,740** | **1,826** | The carrying amounts of the Group's borrowings are denominated in the following currencies: | Currency | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Drawn £m | Swapped £m | Effective £m | Drawn £m | Swapped £m | Effective £m | | Sterling | 485 | – | 485 | 484 | – | 484 | | Euro | 2,652 | (695) | 1,957 | 2,630 | (619) | 2,011 | | US dollar | 5,014 | 695 | 5,709 | 4,540 | 619 | 5,159 | | **Total** | **8,151** | **–** | **8,151** | **7,654** | **–** | **7,654** | 209 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 22. Borrowings and net debt continued The carrying amounts of the Company's borrowings are denominated in the following currencies: | Currency | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Drawn £m | Swapped £m | Effective £m | Drawn £m | Swapped £m | Effective £m | | Sterling | 484 | – | 484 | 483 | – | 483 | | Euro | 1,331 | (695) | 636 | 1,257 | (619) | 638 | | US dollar | – | 695 | 695 | – | 619 | 619 | | **Total** | **1,815** | **–** | **1,815** | **1,740** | **–** | **1,740** | ### 22.2 Net debt Net debt comprises cash and cash equivalents less lease liabilities and interest-bearing loans and borrowings, adjusted for derivative financial instruments. | | Notes | Group | | Company | | | --- | --- | --- | --- | --- | --- | | | | 2022 £m | 2021 £m | 2022 £m | 2021 £m | | **Current** | | | | | | | Cash and cash equivalents | 19 | 3,209 | 2,665 | 77 | 142 | | Bank borrowings | 22.1 | (1,295) | – | – | – | | Lease liabilities | 21 | (139) | (168) | – | – | | Derivative financial assets | | 36 | 25 | 11 | 10 | | Derivative financial liabilities | | (9) | (7) | – | (5) | | Net amounts owed (to)/from subsidiary companies | 18, 20 | – | – | (50) | 736 | | **Total due within one year** | | **1,802** | **2,515** | **38** | **883** | | **Non-current** | | | | | | | Bank borrowings | 22.1 | 5 | (1,347) | 5 | 6 | | Bonds | 22.1 | (6,860) | (6,306) | (1,820) | (1,746) | | Trade finance loans | 22.1 | (1) | (1) | – | – | | Lease liabilities | 21 | (533) | (547) | – | – | | Derivative financial assets | | 12 | 2 | – | – | | Derivative financial liabilities | | (87) | (45) | (84) | (43) | | Net amounts owed from subsidiary companies | 20 | – | – | 20 | 40 | | **Total due after one year** | | **(7,464)** | **(8,244)** | **(1,879)** | **(1,743)** | | **Net debt** | | **(5,662)** | **(5,729)** | **(1,841)** | **(860)** | ### Reconciliation of net cash flow to movement in net debt | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £m | 2021 £m | 2022 £m | 2021 £m | | **Increase/(decrease) in cash and cash equivalents** | **360** | **940** | **(70)** | **155** | | Bond issue proceeds | – | (5,061) | – | (500) | | Bond repayment | – | 300 | – | 300 | | Net repayments on commercial paper | – | 170 | – | 170 | | Net repayments on short-term bank borrowings | – | 122 | – | 116 | | Additional drawdowns from bank credit facilities | – | (1,883) | – | – | | Repayments made towards bank credit facilities | 209 | 548 | – | – | | Arrangement fees paid | – | 52 | – | 11 | | Principal lease payments | 150 | 118 | – | – | | **Change in net debt resulting from cash flows** | **719** | **(4,694)** | **(70)** | **252** | | Foreign exchange | (547) | 8 | (67) | 108 | | Movement on derivative financial assets and liabilities | (23) | (8) | (35) | (21) | | Movement in bank credit facility arrangement fees | (9) | (19) | (3) | (15) | | Net movements in amounts owed (to)/from subsidiary companies | – | – | (806) | 926 | | Movement on lease liabilities | (73) | (644) | – | – | | Net debt at 1 January | (5,729) | (372) | (860) | (2,110) | | **Net debt at 31 December** | **(5,662)** | **(5,729)** | **(1,841)** | **(860)** | 210 London Stock Exchange Group plc^{}[] Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued 211 London Stock Exchange Group plc Annual Report 2022 22. Borrowings and net debt continued 22.3 Liabilities from financing activities Movement in the Group’s financial liabilities arising from financing activities: 31 December 2021 £m Cash flows from financing activities £m Arrangement fees paid £m Foreign exchange £m Other movements 2 £m 31 December 2022 £m Bank borrowings 1,347 (209) – 148 4 1,290 Bonds 6,306 – – 549 5 6,860 Trade finance loans 1 – – – – 1 Lease liabilities 715 (150) – 34 73 672 8,369 (359) – 731 82 8,823 31 December 2020 £m Cash flows from financing activities £m Arrangement fees paid 1 £m Foreign exchange £m Other movements 2 £m 31 December 2021 £m Bank borrowings 133 1,214 (10) (4) 14 1,347 Bonds 1,647 4,761 (42) (65) 5 6,306 Trade finance loans 1 – – – – 1 Commercial paper 170 (170) – – – – Lease liabilities 189 (118) – 2 642 715 2,140 5,687 (52) (67) 661 8,369 1 Arrangement fees paid on funding arrangements are included in other financing activities within the Group’s cash flows from financing activities. 2 Other movements comprise non-cash movements relating to amortisation of arrangement fees of £9 million (2021: £19 million) and movements in lease liabilities (refer to note 21). Movement in the Company’s financial liabilities arising from financing activities: 31 December 2021 £m Cash flows from financing activities £m Arrangement fees paid £m Foreign exchange £m Other movements 2 £m 31 December 2022 £m Bank borrowings (6) – – (1) 2 (5) Bonds 1,746 – – 73 1 1,820 1,740 – – 72 3 1,815 31 December 2020 £m Cash flows from financing activities £m Arrangement fees paid 1 £m Foreign exchange £m Other movements 2 £m 31 December 2021 £m Bank borrowings 127 (116) (4) (26) 13 (6) Bonds 1,647 200 (7) (96) 2 1,746 Commercial paper 170 (170) – – – – 1,944 (86) (11) (122) 15 1,740 1 Arrangement fees paid on funding arrangements are included in other financing activities within the Company’s cash flows from financing activities. 2 Other movements relate to amortisation of arrangement fees. Notes to the financial statements continued 212 London Stock Exchange Group plc Annual Report 2022 23. Financial assets and financial liabilities The Group has a number of financial assets and financial liabilities. Financial assets mainly consist of clearing member assets, trade and other receivables, cash and cash equivalents, and investments in financial instruments. Financial liabilities are mainly clearing member balances, trade and other payables and borrowings. This note also details our financial risk management such as how we manage our exposure to country, foreign exchange and interest rate risk. Accounting policy Recognition and measurement Financial assets and financial liabilities are initially recognised at fair value. The Group classifies its financial instruments at: amortised cost; fair value through other comprehensive income (FVOCI); or fair value through profit or loss (FVPL). The classification depends on the Group’s business model for managing its financial instruments and whether or not the cash flows generated are ‘solely payments of principal and interest’. Financial assets — Financial assets at amortised cost are financial assets that are held in order to collect the contractual cash flows and the contractual terms give rise to cash flows that are solely payments of principal and interest. These include: cash and cash equivalents; trade and other receivables; clearing member trading balances relating to certain collateralised transactions; and other receivables from clearing members of the CCP businesses. After initial recognition these assets are measured using the effective interest rate method. Interest income from these financial assets is included in finance income. Any gain or loss arising on derecognition is recognised directly in the income statement and presented in other income or operating expenses together with any foreign exchange gains and losses. — Financial assets at FVOCI – debt instruments are assets where the objective is achieved by both collecting the contractual cash flows and selling the asset. The contractual cash flows received are solely payments of principal and interest. They include quoted debt instruments (predominantly government bonds) held by the CCP businesses, which are used under the business model to both collect the contractual cash flows and, on occasion, to profit from their sale. Interest received from these assets is recognised in the income statement as finance income. Where negative interest rates apply, the interest is recognised in finance expense. Any accumulated profit or loss previously recognised in other comprehensive income is recycled to the income statement on derecognition of the asset. — Financial assets at FVOCI – equity instruments are strategic equity investments which are held for the long-term but do not give the Group control or significant influence. The Group has irrevocably elected to classify these investments as FVOCI. Dividends received from these investments are recognised in the income statement within other income when the right of receipt has been established. Accumulated gains or losses on equity instruments remain in equity on derecognition and are not recycled through the income statement. — Financial assets at FVPL include all other financial assets not classified as amortised cost or FVOCI. They include CCP businesses’ clearing member trading balances comprising derivatives, as well as equity and debt instruments that are marked to market on a daily basis . Financial liabilities — Financial liabilities at FVPL include the CCP businesses’ clearing member trading balances, comprising derivatives, as well as equity and debt instruments that are marked to market on a daily basis. — Financial liabilities at amortised cost are all financial liabilities that are not classified as financial liabilities at FVPL. They include trade and other payables, borrowings and other payables to clearing members. Impairment The Group adopts a forward-looking approach to estimating impairment losses on financial assets. An expected credit loss (ECL) arises if the expected cash flows are lower than the contractual cash flows due. The difference is discounted at the asset’s original effective interest rate and recognised as an impairment of the original value of the asset. — Financial assets at amortised cost – the ECL for trade receivables (including fees receivable), contract assets, and lease receivables is derived using the simplified approach in IFRS 9 Financial Instruments to calculate a lifetime ECL. The allowance is based on historical experience of collection rates, adjusted for forward looking factors specific to each counterparty and the economic environment at large, to create an expected loss matrix. The ECL on other financial assets held at amortised cost and those at fair value that are held to collect and sell is measured using the general approach. An allowance is calculated based on the 12-month ECL at each reporting date unless there is a significant increase in the financial instrument’s credit risk, in which case a loss allowance based on the lifetime ECL is calculated. — Financial assets at FVOCI – debt instruments held at FVOCI comprise high-quality government bonds that have a low credit risk. The Group’s policy is to calculate a 12-month ECL on these assets. If there is a significant increase in credit risk, then a lifetime ECL will be recognised. A significant increase in credit risk is considered to have occurred when contractual payments are more than 30 days past due. — Financial assets at FVOCI – equity instruments are revalued to fair value on a regular basis and no further impairment analysis is required. — Financial assets at FVPL – no ECL is calculated for assets held at FVPL as any expected loss is already recognised in the recorded fair value of the asset. FINANCIAL ST ATEMENTS Notes to the financial statements continued ## 23. Financial assets and financial liabilities Fair value hierarchy The Group uses the following valuation hierarchy for determining and disclosing the fair value of financial instruments: — Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities — Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly — Level 3: techniques which use inputs, which have a significant effect on the recorded fair value, that are not based on observable market data For Level 1, the fair value is based on market price quotations at the reporting date. For assets and liabilities classified as Level 2, the fair value is calculated using one or more valuation techniques (e.g. the market approach or the income approach) with market observable inputs. The selection of the appropriate valuation techniques may be affected by the availability and reliability of the relevant inputs. The inputs may include currency rates, interest rates, forward rate curves, and net asset values. When observable market data is not available, the Group uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used in estimating the fair value of Level 3 financial instruments typically include expected timing and amount of future cash flows, timing of settlement, discount rates and the net asset values of certain investments. The Group determines whether a transfer between levels has occurred by reviewing the categorisation of assets and liabilities at the end of each reporting period, based on the lowest level input that is significant to the valuation. 213 London Stock Exchange Group plc Annual Report 2022 Offsetting Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. Derivative financial instruments and hedging activities Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at regular intervals. The method of recognising any resulting measurement gain or loss depends on whether or not the derivative is designated as a hedging instrument and the nature of the item being hedged. The Group has embedded foreign currency derivatives, primarily in revenue contracts where the currency of the contract is different from the functional or local currencies of the parties involved. The Group records these derivative instruments at fair value in the balance sheet as either assets or liabilities. Changes in fair value are recognised in the income statement. The Group hedges a proportion of its net investment in foreign subsidiaries by designating some euro and US dollar borrowings and derivative instruments as net investment hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income and remains in the hedging reserve until the underlying asset or liability is derecognised. In order to qualify for hedge accounting, a transaction must meet strict criteria regarding documentation, effectiveness, probability of occurrence, and reliability of measurement. We document the relationship between hedging instruments and hedged items at the inception of the transaction, as well as documenting the risk management objectives and strategy for undertaking various hedging transactions. The effectiveness of the hedge is tested at each reporting date and at the commencement and conclusion of any hedge in order to verify that it continues to satisfy all the criteria for hedge accounting. Any ineffective portion is recognised in the income statement as finance income or expense. Amounts that have accumulated through other comprehensive income in the hedging reserve are recognised in the income statement in the period when the hedged item affects profit or loss (for example, when the forecast transaction that is hedged takes place). When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss remains in the hedging reserve: it is only recognised in the income statement when the forecast transaction itself is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported through other comprehensive income is immediately recognised in the income statement. The profit or loss on a derivative which is not designated as a hedging instrument is recognised directly in the income statement . Notes to the financial statements continued ## 23. Financial assets and financial liabilities continued ### 23.1 Financial assets | 31 December 2022 | Group | | | | Company | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Amortised cost £m | FVOCI £m | FVPL £m | Total £m | Amortised cost £m | FVPL £m | Total £m | | **Clearing business financial assets^{1}** | | | | | | | | | — Clearing member trading assets | 1,997 | — | 661,370 | 663,367 | — | — | — | | — Other receivables from clearing members | 5,945 | — | — | 5,945 | — | — | — | | — Other financial assets^{2} | — | 18,415 | — | 18,415 | — | — | — | | — Clearing member cash and cash equivalents^{2} | 104,707 | — | — | 104,707 | — | — | — | | **Total clearing member assets** | **112,649** | **18,415** | **661,370** | **792,434** | **—** | **—** | **—** | | Trade and other receivables | 1,344 | — | 12 | 1,356 | 1,360 | — | 1,360 | | Cash and cash equivalents | 3,209 | — | — | 3,209 | 77 | — | 77 | | Investments in financial assets – debt instruments | — | 226 | — | 226 | — | — | — | | Investments in financial assets – equity instruments | — | 394 | — | 394 | — | — | — | | Derivative financial instruments | — | — | 48 | 48 | — | 11 | 11 | | **Total financial assets** | **117,202** | **19,035** | **661,430** | **797,667** | **1,437** | **11** | **1,448** | 1 At 31 December 2022, there are no provisions for expected credit losses in relation to any of the CCP businesses' financial assets held at amortised cost or FVOCI (2021: nil). The Group closely monitors its CCP investment portfolio and invests only in government debt and other collateralised instruments where the risk of loss is minimal. There was no increase in credit risk in the year and none of the assets are past due (2021: nil). 2 Clearing member cash and cash equivalents represents amounts received from the clearing members to cover initial and variation margins, and default fund contributions that are not invested in bonds. These amounts are deposited with banks, including central banks, or invested securely in short-term reverse repurchase contracts (reverse repos). Other financial assets represent the CCP investment in government bonds. | 31 December 2021 | Group | | | | Company | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Amortised cost £m | FVOCI £m | FVPL £m | Total £m | Amortised cost £m | FVPL £m | Total £m | | **Clearing business financial assets** | | | | | | | | | — Clearing member trading assets | 1,476 | — | 645,587 | 647,063 | — | — | — | | — Other receivables from clearing members | 4,184 | — | — | 4,184 | — | — | — | | — Other financial assets | — | 13,784 | — | 13,784 | — | — | — | | — Clearing member cash and cash equivalents | 83,795 | — | — | 83,795 | — | — | — | | **Total clearing member assets** | **89,455** | **13,784** | **645,587** | **748,826** | **—** | **—** | **—** | | Trade and other receivables | 1,020 | — | 6 | 1,026 | 1,578 | — | 1,578 | | Cash and cash equivalents | 2,665 | — | — | 2,665 | 142 | — | 142 | | Investments in financial assets – equity instruments | — | 351 | — | 351 | — | — | — | | Derivative financial instruments | — | — | 27 | 27 | — | 10 | 10 | | **Total financial assets** | **93,140** | **14,135** | **645,620** | **752,895** | **1,720** | **10** | **1,730** | 214 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 23. Financial assets and financial liabilities continued ### 23.2 Financial liabilities | | Group | | | Company | | | | --- | --- | --- | --- | --- | --- | --- | | | Amortised cost £m | FVPL £m | Total £m | Amortised cost £m | FVPL £m | Total £m | | **31 December 2022** | | | | | | | | **Clearing business financial liabilities** | | | | | | | | — Clearing member trading liabilities | 1,997 | 661,370 | 663,367 | — | — | — | | — Other payables to clearing members | 129,227 | — | 129,227 | — | — | — | | **Total clearing member financial liabilities** | **131,224** | **661,370** | **792,594** | **—** | **—** | **—** | | Trade and other payables | 3,211 | 38 | 3,249 | 1,682 | — | 1,682 | | Borrowings | 8,151 | — | 8,151 | 1,815 | — | 1,815 | | Derivative financial instruments | — | 96 | 96 | — | 84 | 84 | | **Total financial liabilities** | **142,586** | **661,504** | **804,090** | **3,497** | **84** | **3,581** | | | Group | | | Company | | | | --- | --- | --- | --- | --- | --- | --- | | | Amortised cost £m | FVPL £m | Total £m | Amortised cost £m | FVPL £m | Total £m | | **31 December 2021** | | | | | | | | **Clearing business financial liabilities** | | | | | | | | — Clearing member trading liabilities | 1,476 | 645,587 | 647,063 | — | — | — | | — Other payables to clearing members | 101,581 | — | 101,581 | — | — | — | | **Total clearing member financial liabilities** | **103,057** | **645,587** | **748,644** | **—** | **—** | **—** | | Trade and other payables | 2,727 | — | 2,727 | 846 | — | 846 | | Borrowings | 7,654 | — | 7,654 | 1,740 | — | 1,740 | | Derivative financial instruments | — | 52 | 52 | — | 48 | 48 | | **Total financial liabilities** | **113,438** | **645,639** | **759,077** | **2,586** | **48** | **2,634** | 215 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 23. Financial assets and financial liabilities continued ### 23.3 Fair values Other than borrowings, we have assessed that the fair values of financial assets and financial liabilities categorised as being at amortised cost approximate to their carrying values. The fair values of the Group's borrowings are disclosed in note 22. #### Fair value measurement hierarchy The Group's financial assets and financial liabilities held at fair value consist largely of securities which are restricted in use for the operations of the Group's CCPs as managers of their respective clearing and guarantee systems. The following tables provide the fair value measurement hierarchy of the Group's financial assets and financial liabilities measured at fair value. #### Financial assets | | Group | | | | | --- | --- | --- | --- | --- | | | Quoted prices in active markets (Level 1) £m | Significant observable inputs (Level 2) £m | Significant unobservable inputs (Level 3) £m | Total £m | | **31 December 2022** | | | | | | Clearing business financial assets | | | | | | — Derivative instruments | 98 | 7,418 | – | 7,516 | | — Non-derivative instruments | – | 653,854 | – | 653,854 | | — Other financial assets | 18,415 | – | – | 18,415 | | | 18,513 | 661,272 | – | 679,785 | | Investments in financial assets – debt | 226 | – | – | 226 | | Investment in financial assets – equity | – | – | 394 | 394 | | Derivatives not designated as hedges: | | | | | | — Foreign exchange forward contracts | – | 48 | – | 48 | | — Trade and other receivables – convertible loan notes | – | – | 12 | 12 | | **Total financial assets measured at fair value^{1}** | **18,739** | **661,320** | **406** | **680,465** | $^{1}$ There were no transfers between levels during the year. **Company:** At 31 December 2022, the Company's derivative assets of £11 million were all classified as Level 2. | | Group | | | | | --- | --- | --- | --- | --- | | | Quoted prices in active markets (Level 1) £m | Significant observable inputs (Level 2) £m | Significant unobservable inputs (Level 3) £m | Total £m | | **31 December 2021** | | | | | | Clearing business financial assets | | | | | | — Derivative instruments | 47 | 2,631 | – | 2,678 | | — Non-derivative instruments | – | 642,909 | – | 642,909 | | — Other financial assets | 13,784 | – | – | 13,784 | | | 13,831 | 645,540 | – | 659,371 | | Investment in financial assets – equity | 1 | – | 350 | 351 | | Derivatives not designated as hedges: | | | | | | — Foreign exchange forward contracts | – | 27 | – | 27 | | — Trade and other receivables – convertible loan notes | – | – | 6 | 6 | | **Total financial assets measured at fair value^{1}** | **13,832** | **645,567** | **356** | **659,755** | $^{1}$ There were no transfers between levels during 2021. **Company:** At 31 December 2021, the Company's derivative assets of £10 million were all classified as Level 2. 216 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 23. Financial assets and financial liabilities continued ### Financial liabilities | | Group | | | | | --- | --- | --- | --- | --- | | | Quoted prices in active markets (Level 1) £m | Significant observable inputs (Level 2) £m | Significant unobservable inputs (Level 3) £m | Total £m | | **31 December 2022** | | | | | | Clearing business financial liabilities | | | | | | — Derivative instruments | 98 | 7,418 | – | 7,516 | | — Non-derivative instruments | – | 653,854 | – | 653,854 | | | 98 | 661,272 | – | 661,370 | | Contingent consideration payable | – | – | 38 | 38 | | Derivatives not designated as hedges: | | | | | | — Foreign exchange forward contracts | – | 12 | – | 12 | | Derivatives designated as hedges: | | | | | | — Cross-currency interest rate swaps | – | 84 | – | 84 | | **Total financial liabilities measured at fair value^{1}** | **98** | **661,368** | **38** | **661,504** | $^{1}$ There were no transfers between levels during the year. **Company:** At 31 December 2022, the Company's derivative liabilities of £84 million were all classified as Level 2. | | Group | | | | | --- | --- | --- | --- | --- | | | Quoted prices in active markets (Level 1) £m | Significant observable inputs (Level 2) £m | Significant unobservable inputs (Level 3) £m | Total £m | | **31 December 2021** | | | | | | Clearing business financial liabilities | | | | | | — Derivative instruments | 47 | 2,631 | – | 2,678 | | — Non-derivative instruments | – | 642,909 | – | 642,909 | | | 47 | 645,540 | – | 645,587 | | Derivatives not designated as hedges: | | | | | | — Foreign exchange forward contracts | – | 8 | – | 8 | | Derivatives designated as hedges: | | | | | | — Cross-currency interest rate swaps | – | 44 | – | 44 | | **Total financial liabilities measured at fair value^{1}** | **47** | **645,592** | **–** | **645,639** | $^{1}$ There were no transfers between levels during 2021. **Company:** At 31 December 2021, the Company's derivative liabilities of £48 million were all classified as Level 2. ### 23.4 Hedging activities and derivatives The Group hedges its exposure to foreign exchange and interest rate movements using derivative instruments. This includes net investment hedges, foreign currency forwards and interest rate swaps, where the Group hedges its currency risk from its investment in foreign operations, cash flows and movements in interest rates, respectively. #### Net investment hedges The Group has designated some of its euro borrowings as net investment hedges. In addition, a proportion of the euro borrowings have been swapped into US dollar debt via cross-currency interest rate swaps that are also designated as a net investment hedge. There is an economic relationship between the hedged items and the hedging instruments (the borrowings) as the euro and US dollar borrowings are matched by the Group's investments in euro and US dollar assets. The Group has established a ratio of 1:1 for the hedging relationships as the underlying foreign exchange risk of the borrowings is identical to the investments. To ensure the hedge is effective, the Group makes sure that the borrowings are always less than the value of the investments. Hedge ineffectiveness only arises if the value of the hedging instrument exceeds the value of the underlying net investment. The hedging instruments are detailed below. 217 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 23. Financial assets and financial liabilities continued ### Cross-currency interest rate swaps In 2017, the Group entered into cross-currency interest rate swaps in order to more closely match the Group's currency of borrowing to the currency of its net assets and earnings. As disclosed in note 22, two €500 million bonds (maturing in 2024 and 2029) were issued in 2017. €700 million of these bonds were swapped into US$836 million through a series of cross-currency interest rate swaps which mature on the same dates as the bonds. These instruments effectively exchange some of the obligations and coupons of the bonds from euros into US dollars. These swaps have been designated as a hedge of the Group's net investments in its US dollar reporting subsidiaries and qualify for hedge accounting. | €700 million cross-currency interest rate swap | 2022 | 2021 | | --- | --- | --- | | Fair value of derivative liability on the balance sheet | (€84m) | (€44m) | | Nominal value of hedging instrument | $836m | $836m | | Hedge ratio | 1:1 | 1:1 | | Hedge effectiveness | 100% | 100% | | Change in fair value of derivative | (€40m) | (€33m) | | Change in value of net investment | €40m | €33m | | Cumulative amount held in hedging reserve | (€84m) | (€44m) | ### Non-derivative hedges Non-derivative hedges relate to euro borrowings which are matched against the Group's investments in euro denominated subsidiaries. The remaining €300 million of the two €500 million bonds issued in 2017 which were not swapped into US dollars, together with the €500 million bond issued in 2018 (see note 22), qualify as hedging instruments against euro denominated subsidiaries and qualify for hedge accounting. The €700 million that has been swapped is included below and is netted against the fair value movement of the US dollar derivative in the hedging reserve. | Euro denominated bonds | 2022 | 2021 | | --- | --- | --- | | Carrying value of debt on the balance sheet | (€1,326m) | (€1,253m) | | Nominal value of hedging instrument | €1,500m | €1,500m | | Hedge ratio | 1:1 | 1:1 | | Hedge effectiveness | 100% | 100% | | Change in carrying value of hedging instrument | (€73m) | €94m | | Change in value of net investment | €73m | (€94m) | | Cumulative amount held in hedging reserve | (€2m) | €71m | During the year the Group drew down on its committed bank facilities in euros and US dollars, but these drawings were not designated as net investment hedges. In 2021, the Group had also drawn down on these facilities, which were designated as hedges of the Group's net investments. At 31 December 2022 and 31 December 2021, there were no amounts drawn down on these facilities. There were no issuances of commercial paper in the year. In 2021, the Group issued euro denominated commercial paper and designated this as a hedge of the Group's net investments. The commercial paper was repaid by 31 December 2021. | Revolving credit facility, bridge facility and commercial paper | 2022 | 2021 | | --- | --- | --- | | Change in carrying value of hedging instruments | – | €26m | | Change in value of net investments | – | (€26m) | | Cumulative amount held in hedging reserve | €8m | €8m | ### Cash flow hedges #### Interest rate swaps In February 2021, the Group entered into a series of US dollar interest rate swaps with tenures of 3, 5 and 10 years, with aggregate principal amounts of US$500 million, US$1,000 million and US$1,250 million respectively. The interest rate swaps were designated as cash flow hedges with the hedged item being planned bond issuances that were deemed highly probable at the time and related to the Refinitiv acquisition. The interest rate swaps were settled in March and April 2021 when the new bonds were issued (refer to note 22 for details). At the date of settlement, a gain of US$31 million (£22 million) was recognised in the hedging reserve, representing the effective portion of the gain on the hedging instrument. This will be recycled to the income statement over the term of the debt. During the year £3 million (2021: £2 million) was recycled to the income statement within continuing operations. ### Hedging reserve | | Note | 2022 £m | 2021 £m | | --- | --- | --- | --- | | 1 January | | 14 | (110) | | Net gains on cash flow hedges taken out in the year | | – | 22 | | Amounts recycled to the income statement – continuing operations | 24 | (3) | (2) | | Amounts recycled to the income statement – discontinued operations | | – | 17 | | Net (losses)/gains on net investment hedges | 24 | (113) | 87 | | **31 December** | | **(102)** | **14** | As at 31 December 2022, £40 million of losses (2021: £40 million of losses) remain in reserves that have not been recycled to the income statement, as the Group continues to hold the underlying investments. 218 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued ## 23. Financial assets and financial liabilities continued 219 London Stock Exchange Group plc Annual Report 2022 Foreign currency forwards The Group uses foreign exchange contracts to manage foreign exchange risk. It has a series of exchange contracts to purchase or sell certain currencies against sterling and US dollars in the future at fixed amounts. The cumulative sterling notional amounts of contracts outstanding as at 31 December 2022 and 2021 were as follows: Sell/(buy) Traded against sterling Traded against US dollars 2022 £m 2021 £m 2022 £m 2021 £m US dollar (40) 408 – – Euro (784) (237) 48 (1) Sterling – – (309) (109) Japanese Yen – – (36) (28) Singapore Dollar – – (32) (19) Australian Dollar – – (22) (17) Canadian Dollar – – (14) (12) Swiss Franc – – (8) – The fair value of these derivatives as at 31 December 2022 was an asset of £14 million (2021: £14 million) and a liability of £6 million (2021: £5 million). Embedded derivatives The fair value of embedded derivatives as at 31 December 2022 was an asset of £34 million (2021: £13 million) and a liability of £6 million (2021: £3 million). The fair value gain has been recognised in the income statement. Hedge accounting is not applied to outstanding foreign currency forwards or embedded derivatives. Notes to the financial statements continued ## 23. Financial assets and financial liabilities continued ### 23.5 Financial risk management The Group seeks to protect its financial performance and the value of its business from various risks including exposure to capital, credit, concentration, country, liquidity, settlement, custodial and market (including foreign exchange, cash flow and fair value interest rate) risks. Details of these risks, which should be read in conjunction with the Principal Risks and Uncertainties on pages 24-84, are provided below. #### Capital risk ##### Risk description Capital risk relates to the Group's ability to meet regulatory capital requirements and minimum internal investment returns. There is a risk that the Group's entities may not maintain, or have continued access to, sufficient high-quality capital to meet their regulatory, or other obligations. This could result in a loss of regulatory approvals and/or the imposition of financial sanctions. Either separately, or in combination, the main capital risks faced by the Group are: - An increased regulatory capital requirement of its regulated companies - Realised, negative yields on its investments - An inability to raise debt or equity financing as a result of its own poor financial performance, or poor financing conditions ##### Risk management approach The Group, which consists of both regulated and unregulated entities, is profitable and strongly cash generative. It can manage its capital structure (which consists of equity and debt capital) and react to changes in economic conditions by varying returns to shareholders, issuing new shares or increasing or reducing borrowings. The Board reviews dividend policy and funding capacity on a regular basis and the Group maintains comfortable levels of debt facility headroom. A high-level summary of the Group's capital structure is presented below: | Book value of capital | 2022 £m | 2021 £m | | --- | --- | --- | | Total shareholders' funds | 25,996 | 23,640 | | Group borrowings | 8,151 | 7,654 | The Group maintains a Capital Management Policy, the execution of which is overseen by the Group's Financial, Investment and Capital Committee. The Group seeks to optimally allocate capital in order to maintain a strong balance sheet, meet regulatory requirements, drive growth and offer suitable returns to shareholders. Regulated entities within the Group monitor compliance with policy and the capital requirements set by their respective regulatory authorities. Regulatory and operational capital represents: - Amounts held as cash and cash equivalents and investments in financial assets by regulated entities to satisfy their local regulatory capital requirements - Letters of credit issued by the Group to customers and suppliers The Group's total regulatory and operational capital is shown below: | Regulatory and operational capital | 2022 £m | 2021 £m | | --- | --- | --- | | Total regulatory and operational capital^{1} | 1,427 | 1,294 | | Amount included in cash and cash equivalents | 1,219 | 1,261 | $^{1}$ Includes investments in financial assets of £191 million (2021: nil) and letters of credit totalling £17 million (2021: £33 million). To ensure ongoing financial strength, access to new capital at a reasonable cost, and to sustain an investment grade credit rating, the Group monitors its leverage ratio against a target range of 1-2 times. Leverage is calculated as operating net debt (i.e. net debt after excluding amounts set aside for regulatory and operational purposes) to adjusted EBITDA before foreign exchange gains or losses. At 31 December 2022, leverage was 1.8 times (2021: 1.9 times). While the Group's bank borrowing facilities no longer include leverage and interest cover ratio covenants, the Group takes into account the potential impact to the key metrics monitored by credit rating agencies when considering whether to increase the size of its borrowings and net debt. The Group seeks to maintain a strong investment grade credit rating and will always seek to return leverage to its target range if it rises temporarily. 220 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 23. Financial assets and financial liabilities continued ### Credit and concentration risk | Risk description | Risk management approach | | --- | --- | | Credit risk relates to the potential for a Group counterparty (including CCP members, and any counterparty where there is exposure through payment, clearing or settlement processes) to be unable to meet its financial obligations to the Group when due. | **Group** Credit risk is governed by policies developed at Group level by the Group Risk function. Limits and thresholds for credit and concentration risk are reviewed regularly. | | Credit concentration risk may arise through Group entities having large individual or connected exposures to groups of counterparties whose likelihood of default is driven by common underlying factors. | Group companies make judgements on the credit quality of their clients. This is based on the client's financial position, the recurring nature of billing and collection arrangements and historical evidence relating to the client's ability to meet its financial liabilities as they fall due. The Group is exposed to a large number of clients and so management deems concentration risk on the Group's receivables to be low. | | | The Group's main credit risk exposure arises on the financial assets shown earlier in note 23.1. There have been no significant increases in credit risk for these assets and no estimated credit losses have been recognised on other financial instruments. | | | **Non-CCP entities** The principal source of non-CCP credit risk is the creditworthiness of the investment counterparties with which the Group deposits cash. The Group manages its credit risk by outlining the maximum financial exposure that may be taken against any one counterparty, based on an assessment of the counterparty's credit quality. | | | Cash and cash equivalents are held with authorised counterparties of a high credit standing. Cash is held in unsecured interest bearing current and call accounts. Cash equivalents comprise short-term deposits and AAA-rated money market funds. | | | Derivative transactions (and other treasury receivable structures) must be in line with the Group's policy framework and may only be undertaken with highly rated counterparties. | | | **CCPs** The principal source of CCP credit risk lies in the potential for one or more clearing members to default. Group CCPs manage this risk through robust financial risk management. Clearing members are selected based on an assessment of their supervisory capital as well as their technical and organisational strength. Each member must pay margins to the relevant Group CCP. This must include a minimum level of cash and can also include highly liquid securities. Clearing members also contribute to default funds managed by the Group CCPs. These aim to protect the integrity of the markets in the event of multiple defaults in extreme market circumstances. Group CCPs use stress tests to determine the appropriate margin and default fund requirements. These are reviewed by CCP risk committees who can take action as appropriate. | | | CCPs are required by regulation to hold a minimum amount of capital (regulatory capital). Each of the Group's CCPs maintains this regulatory capital requirement, together with an additional holding of its own capital. This additional capital is to help manage credit risk during a significant market stress event or member default. | | | The total clearing member contributions of margin and default funds across the Group CCPs is shown below: | | | | | | **2022** 2021 | | | **Ebn** Ebn | | **Total collateral held** | | | Collateral security | Cash received 127 96 | | | Non-cash pledged 147 135 | | | Guarantees pledged 2 2 | | **Total collateral as at 31 December** | **276** 233 | | Maximum collateral held during the year | **310** 246 | | | Group CCPs manage the credit risk associated with margin and default fund contributions by investing the cash element in instruments or structures deemed 'secure' by the relevant regulatory bodies. This includes direct investments in highly rated, 'regulatory qualifying' sovereign bonds and supra-national debt, investments in tri-party and bilateral reverse repos (receiving high-quality government securities as collateral) and, in certain jurisdictions, deposits with the central bank. The small proportion of cash that is invested unsecured is placed for short durations with highly rated counterparties where limits are applied with respect to credit quality, concentration and tenor. | | | | | | **2022** 2021 | | | **Ebn** Ebn | | Total investment portfolio | **123** 98 | | Maximum portfolio size during the year | **157** 108 | | **Additional portfolio information:** | | | Amount invested securely | **99.99%** 99.94% | | Weighted average maturity (days) | **53** 33 | 221 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 23. Financial assets and financial liabilities continued ### Risk description #### Risk management approach Associated liquidity risks are considered in the investment mix and discussed further below in the Liquidity, Settlement and Custodial risk section. To address concentration risk, the Group maintains a diversified portfolio of high-quality, liquid investments and uses a broad range of custodians, payment and settlement banks and agents. The largest concentration of treasury exposures as at 31 December 2022 was with the French Government with an aggregate exposure of 40% of the total investment portfolio (2021: 41% with the French Government). #### Trade receivables (including fees receivable) An impairment analysis of trade and fees receivable is performed monthly using a provision matrix to measure expected credit losses based on factors such as the counterparty's historic payment practices, expected future payments and the economic environment at large. The calculation reflects current conditions together with forecasts of future economic conditions. None of the Group's trade receivables are material by individual counterparty. | 31 December 2022 | Trade receivables | | | | | --- | --- | --- | --- | --- | | | Fees receivable £m | <180 days £m | >180 days £m | Total £m | | Expected credit loss rate | <1% | <1% | 11.2% | | | Total receivables | 263 | 706 | 60 | 1,029 | | Expected credit loss | – | (2) | (7) | (9) | | **Net trade and fees receivables** | **263** | **704** | **53** | **1,020** | | 31 December 2021 | Trade receivables | | | | | --- | --- | --- | --- | --- | | | Fees receivable £m | <180 days £m | >180 days £m | Total £m | | Expected credit loss rate | <1% | <1% | 15.2% | | | Total receivables | 230 | 463 | 34 | 727 | | Expected credit loss | – | (2) | (5) | (7) | | **Net trade and fees receivables** | **230** | **461** | **29** | **720** | ### Country risk #### Risk description Country risk relates to those risks that are inherent when doing business with, or operating in, a country. Some governments may be unable or find it difficult to service their debts. This could have adverse effects, particularly on the Group's CCPs, potentially impacting cleared products, margin collateral, investments, the clearing membership and the financial industry as a whole. In addition, geopolitical events could impact our ability to operate in a country or impact the value of our assets in that country. We may even need to relocate activities or change our operating model in response. #### Risk management approach The Group has a country risk framework which facilitates assessment and monitoring of the risk associated with doing business with, or operating in, a country. Group CCPs have specific risk management frameworks that address country risk for both clearing and margin operations. Contained in these frameworks are a suite of stress scenarios that consider deterioration of sovereign credit quality as well as other risk factors. These scenarios support CCPs in developing and maintaining the appropriate country risk measurement, monitoring and mitigation tools. Risk Committees oversee these risks and the associated policy frameworks to protect the Group against a potentially adverse impact arising from volatility in the sovereign debt markets. The Group CCPs' sovereign exposures at the end of the financial reporting periods were: | Country/organisation | 2022 £bn | 2021 £bn | | --- | --- | --- | | France | 30 | 28 | | European Union (supranational) | 20 | 17 | | USA | 15 | 11 | | UK | 7 | 12 | | Other | 2 | – | | Germany | – | 1 | 222 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 23. Financial assets and financial liabilities continued ### Liquidity, settlement and custodial risk | Risk description | Risk management approach | | --- | --- | | The Group's liquidity risk relates to its ability to meet its short- and long-term payment obligations as they fall due. Additionally, the Group's CCPs, and certain other Group entities, must maintain a level of liquidity (consistent with regulatory requirements) to ensure the smooth operation of their respective services and to be able to continue to operate in the event of a significant stress event. The Group's settlement and custodial risks relate to the potential for a partner firm to default on its obligations in respect of custody, settlement, payment or other administration activities, or that no action is taken by the Group to mitigate these risks. This also includes the risk that client assets are immobilised as a result of a third-party bankruptcy. | **Group** The Group maintains sufficient liquid resources to meet its financial obligations as they fall due, and to invest in capital expenditure, pay dividends, meet its pension commitments and appropriately support or fund acquisitions or repay borrowings. Subject to regulatory constraints impacting certain entities, funds can (generally) be lent across the Group and cash earnings remitted through regular dividend payments by subsidiary companies. This is an important component of the Group Treasury cash management policy and approach. The Group is profitable, has strong free cash flow and generates annuity-like revenue which is not significantly impacted by seasonal variations. Management monitors forecasts of the Group's cash flow and overlays sensitivities to these forecasts to reflect assumptions about more challenging market conditions or stress events. The Group will take the appropriate actions to satisfy working capital requirements when committing to large scale acquisitions, including making sure there is comfortable liquidity headroom projected over a reasonable time frame. **Non-CCP entities** The Group Treasury Policy requires the Group to maintain adequate credit facilities provided by a diversified lending group to cover its expected funding requirements and ensure a minimum level of headroom for at least the next 24 months. The financial strength of the Group's lenders is monitored regularly. For full details of the Group's borrowings and facilities, refer to note 22. **CCPs** In order to meet the cash requirements of the clearing and settlement cycle, the Group's CCPs maintain sufficient cash and cash equivalents and, in certain jurisdictions, have access to central bank refinancing or commercial bank credit lines. Regulations require CCPs to ensure that appropriate levels of back-up liquidity are in place to underpin the dynamics of a largely secured cash investment requirement, ensuring that the maximum potential outflow under extreme market conditions is covered (see credit and concentration risk section above). In the event of a member default, Group CCPs can liquidate the defaulting member's portfolio to cover both losses associated with the default and settlement of any other financial obligations of the defaulting member. In addition, certain Group companies, including the CCPs, maintain commercial bank facilities which support management of intraday and overnight liquidity. Custodians are subject to minimum eligibility requirements, ongoing credit assessments and robust contractual arrangements. They are also required to have appropriate contingency arrangements in place. **Financial liability maturity** The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the table reflect the contractual undiscounted cash flows. The borrowings and lease liabilities include future interest that has not been accrued at the balance sheet date. | | 30 December 2022 | Less than 1 year £m | Between 1 and 2 years £m | Between 2 and 5 years £m | Over 5 years £m | Total £m | | --- | --- | --- | --- | --- | --- | | Borrowings | 1,440 | 967 | 2,008 | 4,754 | 9,169 | | Trade and other payables (excluding lease liabilities) | 2,004 | – | – | – | 2,004 | | Lease liabilities | 158 | 110 | 216 | 283 | 767 | | Clearing member liabilities | 792,594 | – | – | – | 792,594 | | Derivative financial instruments | 9 | 57 | – | 30 | 96 | | Other non-current payables (excluding lease liabilities) | – | 64 | 338 | 247 | 649 | | 31 December 2021 | Less than 1 year £m | Between 1 and 2 years £m | Between 2 and 5 years £m | Over 5 years £m | Total £m | | --- | --- | --- | --- | --- | --- | | Borrowings | 78 | 1,467 | 2,229 | 4,870 | 8,644 | | Trade and other payables (excluding lease liabilities) | 1,614 | – | – | – | 1,614 | | Lease liabilities | 149 | 124 | 204 | 275 | 752 | | Clearing member liabilities | 748,644 | – | – | – | 748,644 | | Derivative financial instruments | 6 | 1 | 30 | 14 | 51 | | Other non-current payables (excluding lease liabilities) | – | 14 | 3 | 495 | 512 | 223 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 23. Financial assets and financial liabilities continued ### Market risk – foreign exchange risk #### Risk description The Group operates globally with primary centres in the UK, Europe and North America. It also has growing and strategically important businesses in Asia. The Group's principal currencies of operation are sterling, US dollars, and the euro. The Group is exposed to transactional foreign exchange risk and translational risk. Transactional risk arises when we buy or sell goods or services in a currency other than our entities' functional currencies. We may be exposed to movements in that currency. Translational risk arises due to the requirement to translate non-reporting currency earnings into an entity's reporting currency for the purpose of statutory reporting. Transactional foreign exchange risk may present itself in payment of intragroup dividends or when interest obligations, which are in a different currency, are due. However, both of these operations play their part in controlling the level of translational foreign exchange exposure the Group faces. Transactional foreign exchange risk may also arise when investing in, or divesting from, operations denominated in currencies other than sterling. In addition, the Group has some contracts/cashflow profiles with a foreign exchange component that could trigger embedded derivative recognition and, as such, fair value accounting treatment. #### Risk management approach ##### Translational risk The Group manages its translational risk, where possible, by matching the currency of its debt to the currency of its earnings, to make sure certain key financial ratios (leverage and interest coverage) are protected from material foreign exchange rate volatility. The Group also seeks to balance the currency of its assets with its liabilities. In order to mitigate the impact of unfavourable currency exchange rate movements on earnings and net assets, non-sterling cash earnings are centralised and applied to debt and interest payments in the same currency. Where required, currency of debt is re-balanced using cross-currency swaps to better match the currency of debt to the overall currency of earnings. A material proportion of the Group's debt is held in or swapped into euros and US dollars as noted below: | Currency of debt | 2022 £m | 2021 £m | | --- | --- | --- | | Euro denominated drawn debt | 2,652 | 2,630 | | Euro denominated cross-currency interest rate swaps | (695) | (619) | | US dollar denominated drawn debt | 5,014 | 4,540 | | US dollar denominated cross-currency interest rate swaps | 695 | 619 | The cross-currency interest rate swaps are directly linked to euro fixed debt. The euro and US dollar denominated debt, including the cross-currency swaps, provide a hedge against the Group's net investment in euro and US dollar denominated entities. At 31 December 2022, the Group's designated hedges of its net investments were effective. ##### Transactional risk While transactional foreign exchange exposure is limited, the Group mitigates this by either hedging material transactions with appropriate derivative instruments or by settling currency payables or receivables within a short timeframe. The Group Treasury Policy requires cash flows of single transactions or a series of linked transactions of more than £10 million or equivalent per annum to be hedged. The risk is also minimised by the periodic exchange of cash into each Group entity's functional currency. Where appropriate, hedge accounting for derivatives is considered in order to mitigate material levels of income statement volatility. ##### Governance and sensitivity The Group's Risk Committee reviewed the approach to foreign exchange risk management during the quarter ended 31 December 2022. In addition to projecting and analysing its earnings and debt profile by currency, the Group reviews sensitivities to movements in exchange rates. The Group has considered movements in the euro and the US dollar over 2022 and 2021 and, based on actual market observations between its principal currency pairs, has concluded that a 10% movement in rates is a reasonable level to illustrate the risk to the Group. The impact on profit after tax and equity is set out in the table below: | | | 2022 | | 2021 | | | --- | --- | --- | --- | --- | --- | | | | Profit after tax £m | Equity £m | Profit after tax £m | Equity £m | | Euro | Sterling weakens | 6 | (71) | (13) | (67) | | | Sterling strengthens | (5) | 64 | 12 | 61 | | US dollar | Sterling weakens | 18 | (68) | 9 | (62) | | | Sterling strengthens | (16) | 61 | (8) | 56 | The sensitivity of profit after tax reflects foreign exchange gains or losses on translation of financial assets and financial liabilities, including cash and borrowings. The sensitivity of equity reflects the foreign exchange gains or losses on translation of euro and US dollar borrowings that have been designated as hedges of a net investment in foreign operations. 224 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued 225 London Stock Exchange Group plc Annual Report 2022 23. Financial assets and financial liabilities continued Market risk – interest rate risk Risk description Risk management approach The Group’s interest rate risk arises from the impact of changes in interest rates on cash held and investments in financial assets, and on borrowings held at floating rates. The Group may also face future interest rate exposure connected to M&A transactions where significant debt financing is involved. The Group’s CCPs have member liabilities, and separately achieve returns which support the payment of these liabilities. A CCP’s interest rate risk can increase if the reference rates used to calculate liabilities increase while the reference rates that underpin investment returns decrease (or do not increase by the same amount). Group companies that offer guaranteed settlement of traded securities can also be exposed to latent interest rate risk (and market risk more generally) in the event of a counterparty default. The Group’s interest rate management policy focuses on protecting the Group’s credit rating and limiting the impact of interest rate increases on Group earnings. To support this objective, the Group targets a minimum coverage of interest expense by adjusted EBITDA of 7 times, and a maximum debt floating rate component of 50%. This approach reflects: — a focus on the Group’s cost of gross debt rather than its net debt given the material cash and cash equivalents set aside for regulatory purposes; — the short duration allowed for investments of cash and cash equivalents held for regulatory purposes which, by their nature, generate low investment yields; and — the broad natural hedge of floating rate borrowings provided by the significant balances of cash and cash equivalents held effectively at floating rates of interest At 31 December 2022, consolidated net interest expense cover by adjusted EBITDA was 19.0 times (2021: 17.9 times) and the floating rate component of total debt was 16% (2021: 18%). Where the Group has committed to M&A transactions and is exposed to prospective interest rate risk on borrowings, the Group Treasury function will assess the exposure and consider hedging solutions that conform with policy and seek to limit future interest costs. In the Group’s CCPs, interest bearing assets are generally invested in secured instruments or structures and for a longer term than interest bearing liabilities, whose interest rate is reset daily. This makes investment returns vulnerable to volatility in overnight rates and shifts in spreads between overnight and term rates. Interest rate exposures (and the risk to CCP capital) are managed within defined risk appetite parameters against which sensitivities are monitored daily. In its review of the sensitivities to potential movements in interest rates, the Group has considered interest rate volatility over the last year and prospects for rates over the next 12 months. It has concluded that a 1 percentage point upward movement (with a limited prospect of material downward movement) reflects a reasonable level of risk to current rates. If interest rates on cash and cash equivalents and borrowings had been 1 percentage point higher, with all other variables held constant, profit after tax for 2022 would have been £8 million higher (2021: £10 million higher) mainly as a result of higher interest income on floating rate cash and cash equivalents, partially offset by higher interest expense on floating rate borrowings. At the CCP level (in aggregate), if interest rates on the common interest bearing member liability benchmarks of EONIA, Fed Funds and SONIA, (for euro, US dollar and sterling liabilities respectively), had been 1 percentage point higher, with all other variables held constant, the Group’s profit after tax would have been £1 million lower (2021: £1 million lower). Notes to the financial statements continued ## 23. Financial assets and financial liabilities continued ### 23.6 Offsetting financial assets and financial liabilities #### Accounting policy The Group reports financial assets and financial liabilities on a net basis on the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liabilities simultaneously. The Group applies the rules of legal right of set off and intent to net settle within clearing member balances. The carrying values of the balances are offset at an appropriate level to arrive at the net balances reported in the balance sheet. The approach adopted is reviewed on a regular basis to ensure it remains the most appropriate. Any change in approach would not materially affect the net assets of the Group. The following tables show the impact of netting arrangements on all financial assets and financial liabilities that are reported net on the balance sheet: | 31 December 2022 | Gross amount £m | Amount offset £m | Net amount as reported £m | | --- | --- | --- | --- | | Other financial assets | 2,404,794 | (2,397,255) | 7,539 | | Repurchase agreements | 798,844 | (145,013) | 653,831 | | **Total assets** | **3,203,638** | **(2,542,268)** | **661,370** | | Other financial liabilities | (2,413,095) | 2,405,556 | (7,539) | | Reverse repurchase agreements | (798,844) | 145,013 | (653,831) | | **Total liabilities** | **(3,211,939)** | **2,550,569** | **(661,370)** | | 31 December 2021 | Gross amount £m | Amount offset £m | Net amount as reported £m | | --- | --- | --- | --- | | Other financial assets | 1,286,359 | (1,283,682) | 2,677 | | Repurchase agreements | 794,543 | (150,157) | 644,386 | | **Total assets** | **2,080,902** | **(1,433,839)** | **647,063** | | Other financial liabilities | (1,302,809) | 1,300,132 | (2,677) | | Reverse repurchase agreements | (794,543) | 150,157 | (644,386) | | **Total liabilities** | **(2,097,352)** | **1,450,289** | **(647,063)** | All offset amounts are clearing member trading assets and trading liabilities within the Group's CCP businesses' financial instruments. The Group's CCP companies sit in the middle of members' transactions and hold default funds and margin amounts as a contingency against the default of a member. As such, further amounts are available to offset in the event of a default reducing the asset and liability of £661,370 million (2021: £647,063 million) to nil. ## 24. Share capital, share premium and other reserves *This note details our share capital, share premium and other capital reserves. During the year, a number of shares were repurchased under the share buyback programme launched in August 2022.* #### Accounting policy The **share capital** of the Company is the number of shares in issue at their par value and includes balances relating to the Company's ordinary equity shares, own shares held by the Employee Benefit Trust (EBT) and any treasury shares held by the Company. Shares acquired by the Company from the open market as part of share buyback programmes are referred to as treasury shares and are held by the Company. The consideration payable is deducted from retained earnings. The par value of purchased treasury shares is recorded as a transfer from the Company's ordinary equity shares to treasury shares within share capital. No gain or loss is recognised by the Company in the income statement on the purchase, sale, issue or cancellation of the Company's treasury shares or of own shares held by the EBT. When the Company issues new shares to the EBT at par, the share capital of the Company is increased by the par value of these own shares, and a corresponding deduction or debit is recorded in the share-based payment reserve. The Company may also issue new shares to the EBT to satisfy vesting of specific employee share schemes. These shares may be issued at a subscription price above par value, reflecting the option cost payable by the participant in the employee share scheme. In such instances, the share capital of the Company is increased by the par value of these own shares and the difference between the subscription price and the par value is recorded in share premium. A corresponding deduction or debit is recognised in the share-based payment reserve. 226 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 24. Share capital, share premium and other reserves continued ### Ordinary share capital issued and fully paid | | Number of shares millions | Ordinary share capital^{1} £m | Share premium^{2} £m | Total £m | | --- | --- | --- | --- | --- | | 1 January 2021 | 351 | 24 | 971 | 995 | | Acquisition of subsidiaries | 204 | 15 | – | 15 | | Issue of shares to the Employee Benefit Trust^{3} | 2 | – | 7 | 7 | | 31 December 2021 | 557 | 39 | 978 | 1,017 | | Issue of shares to the Employee Benefit Trust^{3} | 1 | – | – | – | | Share buyback^{4} | (4) | – | – | – | | **31 December 2022** | **554** | **39** | **978** | **1,017** | 1 Ordinary share capital consists of ordinary shares of 6$^{th}$ per cent. 2 Share premium is the amount subscribed for share capital in excess of par value. 3 The Board approved the allotment and issue of 883,174 ordinary shares at par to the EBT (2021: 1,368,896 ordinary shares at par and 177,894 at a weighted average price of £35.74) to settle employee share plans. A share premium of £m (2021: £7 million) has been recognised in the year in respect of these. 4 At 31 December 2022, the Group held 3,797,344 (2021: nil) treasury shares which were acquired as part of its share buyback programme. ### Share buyback programme In August 2022, the Company launched a £750 million share buyback programme which will be phased over multiple tranches over a 12 month period. During the year, the Company repurchased 3.8 million of its own shares from the market for £300 million, which are being held as treasury shares. Total costs directly attributable to the share buyback programme was £3 million. The consideration paid and costs incurred have been deducted from retained earnings. The Company entered into an irrevocable commitment with its corporate brokers to repurchase shares as part of tranche two of the programme, which in part covers the close period from 1 January 2023 up to the announcement of the Group's full year results. At 31 December 2022, the remaining obligation in relation to the share purchase was £200 million and is presented within trade and other payables. See note 27 for shares repurchased after the reporting date. ### Other reserves | | Note | Merger relief reserve^{1} £m | Capital redemption reserve^{2} £m | Reverse acquisition reserve^{3} £m | Hedging reserve^{4} £m | Foreign exchange translation reserve^{5} £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | --- | | 1 January 2021 | | 1,305 | 514 | (512) | (110) | 608 | 1,805 | | Acquisition of subsidiaries | | 16,981 | – | – | – | – | 16,981 | | Amounts recycled on disposal | | – | – | – | 17 | (62) | (45) | | Foreign exchange differences on translation of foreign operations | | – | – | – | – | (41) | (41) | | Amount recycled to income statement | | – | – | – | (2) | – | (2) | | Changes in fair value recognised | | – | – | – | 109 | – | 109 | | 31 December 2021 | | 18,286 | 514 | (512) | 14 | 505 | 18,807 | | Foreign exchange differences on translation of foreign operations | | – | – | – | – | 2,448 | 2,448 | | Amount recycled to income statement | 23.4 | – | – | – | (3) | – | (3) | | Changes in fair value recognised | 23.4 | – | – | – | (113) | – | (113) | | **31 December 2022** | | **18,286** | **514** | **(512)** | **(102)** | **2,953** | **21,139** | 1 The merger relief reserve is a potentially distributable reserve arising as a result of shares issued to acquire subsidiaries. The Group applied merger relief, as required by section 612 of the Companies Act 2006, to the issue of shares by the Company to acquire Refinitiv. The Group acquired a 100% equity holding in Refinitiv and recognised the excess of the fair value above the nominal share capital issued in the merger relief reserve and retained earnings. 2 The capital redemption reserve was set up as a result of a court approved capital reduction scheme and is non-distributable. 3 The reverse acquisition reserve arose as a result of the acquisition of London Stock Exchange plc in 2007. It is recognised on consolidation as a result of a capital reduction scheme and is non-distributable. 4 The hedging reserve represents the cumulative fair value adjustments recognised in respect of net investment and cash flow hedges entered into in accordance with hedge accounting principles. It is distributable under certain circumstances. Net gains and losses are recognised in other comprehensive income and balances remain in equity until both the hedging instrument and the underlying instrument are derecognised. Gains realised on cash flow hedges during the year are amortised through the income statement over the life of the underlying instrument. During the year £3 million (2021: £2 million) was recycled back through the income statement. 5 The foreign exchange translation reserve records the cumulative impact of foreign exchange rate movements on the translation of non-sterling subsidiary companies into sterling. It is distributable under certain circumstances. Net gains and losses on translation are recognised in other comprehensive income and amounts remain in equity until the subsidiary is derecognised. 227 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 25. Share-based payments We operate various employee share-based compensation plans which allow employees to receive or acquire shares in the Company in different ways. This note describes our main share plans. ### Accounting policy The Group issues equity settled share-based awards to certain employees. The share-based payment expense recognised in the income statement is determined by the fair value (using a stochastic valuation model) of the options granted or shares awarded at the date of grant. The calculated expenses are recognised over the relevant vesting periods. The fair value of the awards granted: - includes any market performance conditions (for example, Total Shareholder Return (TSR)); and - excludes the impact of any service and non-market performance vesting conditions (for example, the need to remain an employee for a specified period of time). In very few countries where the Group cannot issue equity-settled awards due to restrictions, cash settled share-based awards are issued instead. The charges arising from equity-settled share-based payment plans are as follows: | Continuing operations | Note | 2022 £m | 2021 £m | | --- | --- | --- | --- | | Group share plans^{1} | 25.1 | 79 | 64 | | Shares issued to the MIP participants | 25.2 | 16 | 10 | | | | 95 | 74 | | Tradeweb share schemes (recognised in non-controlling interests) | 25.3 | 63 | 67 | | **Total share-based payment expense** | **5.1** | **158** | **141** | 1 Charges of £1 million (2021: nil) relate to plans that are cash-settled as a result of local regulations. The following amounts were recognised in equity: | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £m | 2021 £m | 2022 £m | 2021 £m | | Share-based payments | 94 | 74 | 78 | 64 | | Fair value movement on loans to the Employee Benefit Trust | – | – | (20) | (4) | | Issue of shares to the Employee Benefit Trust | – | (6) | – | (6) | | Cash receipts from employees on vesting | 5 | 8 | 4 | 6 | | | **99** | **76** | **62** | **60** | ### 25.1 Group share plans The Group has the following share plans: #### Save As You Earn and International Sharesave Plan 2018 (SAYE) The SAYE schemes provide for grants of options over the Company's shares to employees who enter into a savings contract. The options are granted at 20% below the market price on the date of grant and vest after three years, subject to continuing employment. #### Long-Term Incentive Plan 2014 (LTIP) Awards are granted at nil cost to employees. Vesting of LTIP awards is dependent on both market and non-market performance conditions. The performance conditions include achievement of relative TSR (40%) and adjusted EPS (60%) targets. #### Restricted Share Award Plan 2018 (RSAP) The Group operates a restricted share plan, the RSAP. It consists of an award of restricted stock units and matching shares. Matching shares are linked to an investment by the employee in the Company's shares. Awards are granted at nil cost to employees and generally vest in tranches after one, two and three years, subject to continuing employment. #### Deferred Bonus Plan (DBP) DBP awards are granted at nil cost to employees. Awards usually vest after two or three years, subject to continuing employment and malus and clawback provisions. #### International Share Incentive Plan (ISIP) The ISIP is a scheme in which employees can buy shares in the Company monthly via salary deduction. For every four shares purchased by the employee, the Group awards them one additional share which vests after completion of a three-year plan cycle. 228 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued FINANCIAL STATEMENTS ## 25. Share-based payments continued Further details on the Group's share plans are provided in the Directors' Remuneration Report on pages 113-141. The Company has an EBT to administer the share plans and to acquire Company shares to meet the commitments to Group employees. At 31 December 2022, 259,129 Company shares were held by the trust (2021: 566,034). The EBT is fully funded by the Company via loans, cash gifts and the issue and transfer of shares. The cost of the Group's shares held by the EBT are recognised directly in equity. Movements in the number of share options and awards outstanding and their weighted average exercise prices are as follows: | | SAYE | | LTIP/RSAP^{1,2} | ISIP^{2} | | --- | --- | --- | --- | --- | | | Number | Weighted average exercise price £ | Number | Number | | 1 January 2021 | 568,246 | 42.42 | 3,053,099 | 470 | | Granted | 307,961 | 64.94 | 1,371,625 | 638 | | Exercised | (227,265) | 35.15 | (1,222,619) | – | | Lapsed/forfeited | (66,768) | 47.65 | (355,671) | (90) | | 31 December 2021 | 582,174 | 56.57 | 2,846,434 | 1,018 | | Granted | **150,359** | **63.71** | **1,527,435** | **14,662** | | Exercised | **(127,662)** | **38.83** | **(1,038,073)** | **–** | | Lapsed/forfeited | **(70,601)** | **58.47** | **(250,125)** | **(828)** | | **31 December 2022** | **534,270** | **62.57** | **3,085,671** | **14,852** | | **Exercisable at** | | | | | | **31 December 2022** | **3,183** | **63.39** | **–** | **–** | | 31 December 2021 | 10,822 | 52.45 | – | – | 1 At 31 December 2022, RSAP awards of 1,078,328 shares were outstanding (2021: 812,746). 2 The LTIP/RSAP and ISIP awards have a nil exercise price. 106,637 matching shares were granted under the RSAP in the year (2021: nil). The weighted average share price of London Stock Exchange Group plc shares during the year was £76.11 (2021: £77.76). The range of exercise prices and weighted average remaining contractual life of awards and options outstanding are as follows: | | 2022 | | 2021 | | | --- | --- | --- | --- | --- | | | Number outstanding | Weighted average remaining contractual life Years | Number outstanding | Weighted average remaining contractual life Years | | **SAYE** | | | | | | – Between £30 and £50 | – | – | 135,130 | 0.4 | | – More than £50 | **534,270** | **1.8** | 447,044 | 2.3 | | **LTIP/RSAP** | **3,085,671** | **1.3** | 2,846,434 | 1.1 | | **ISIP** | **14,852** | **2.1** | 1,018 | 1.8 | | **Total** | **3,634,793** | | 3,429,626 | | A Monte Carlo simulation was used to calculate the fair value of the 40% of the LTIP awards granted during the year that are subject to a relative TSR condition. The model simulates the TSR and compares it against the constituents of the UK FTSE 100. For the remaining 60% of LTIP awards that are subject to adjusted EPS, and all other share awards including the SAYE, the Black-Scholes model was used to determine the related fair value. The inputs into both models include the share price at grant date, expected volatility, dividend yields and the annual risk-free interest rate. The volatility assumption is based on the historical 3-year volatility of the LSEG plc share price as at the date of grant. The risk-free interest rate represents the yield available on a UK zero-coupon government bond on the date of grant for a term commensurate with the vesting period of the award. The expected life refers to the time from the date of grant to the date the awards vest. Holders of share awards and share options are not entitled to receive dividends declared during the vesting period. 229 London Stock Exchange Group plc^{}[] Annual Report 2022 Notes to the financial statements continued ## 25. Share-based payments continued The key assumptions used in the valuations were as follows: | Date of grant | LTIP Performance Shares | | RSAP | | | | | --- | --- | --- | --- | --- | --- | --- | | | 6-Apr | 13-Sep | 6-Apr | 28-Jun | 13-Sep | 15-Dec | | Grant date share price (£) | 83.60 | 80.98 | 83.60 | 76.64 | 80.98 | 76.14 | | Expected life (years) | from 3.0 | 3.0 | 0.40 | 0.72 | 1.00 | 0.25 | | to | — | — | 4.00 | 2.93 | 3.01 | 2.96 | | Exercise price (£) | nil | nil | nil | nil | nil | nil | | Dividend yield (%) | from 0.94 | 0.96 | 0.94 | 0.94 | 0.96 | 1.01 | | to | — | — | 1.05 | 1.16 | 1.16 | 1.32 | | Risk-free interest rate (%) | from 1.59 | 2.90 | 1.28 | 2.10 | 2.75 | 3.37 | | to | — | — | 1.59 | 2.19 | 2.99 | 3.58 | | Volatility (%) | from 32.15 | 31.58 | 27.56 | 28.99 | 28.43 | 25.05 | | to | — | — | 32.86 | 32.55 | 31.57 | 31.18 | | Fair value (£) | from — | — | 80.34 | 74.56 | 78.67 | 73.92 | | to | — | — | 83.22 | 76.00 | 80.05 | 75.89 | | Fair value TSR (£) | 63.50 | 62.43 | — | — | — | — | | Fair value EPS (£) | 81.29 | 78.68 | — | — | — | — | | Date of grant | from to | SAYE | DBP | ISIP | | --- | --- | --- | --- | --- | | | | 29-Sep | 6-Apr | 1-Jan | | Grant date share price (£) | from to | 76.96 | 83.60 | 65.72 | | Expected life (years) | from to | 3.30 | 1.00 | 3.00 | | Exercise price (£) | from to | 63.71 | nil | nil | | Dividend yield (%) | from to | 1.11 | — | 0.92 | | Risk-free interest rate (%) | from to | 4.28 | 1.28 | 1.01 | | Volatility (%) | from to | 32.10 | 28.25 | 28.56 | | Fair value (£) | from to | — | 32.20 | 34.68 | | | | 26.07 | 83.60 | 74.58 | ### 25.2 Management Incentive Plan (MIP) Members of Refinitiv's senior management team participated in the MIP set up by Refinitiv Holding Limited (now York Parent Limited). At the time of the Refinitiv acquisition, 6,041,336 shares relating to MIP participants were transferred to York Parent Limited as a part of the purchase consideration. To improve the retention of the participants, amendments were made to the MIP to include additional service vesting conditions. The Group recognises the MIP as a share-based payment settled by an external shareholder under IFRS 2 and recognises post combination compensation until the end of the vesting period. The MIP share-based payment expense is classified as a non-underlying transaction cost (see note 6). ### 25.3 Tradeweb share schemes Tradeweb grants awards, including performance-based restricted share units (PRSUs), stock options, restricted stock units (RSUs) and dividend equivalent rights. The awards may have performance-based and time-based vesting conditions. Stock options have a maximum contractual term of 10 years. #### — PRSUs (Equity-Settled) PRSUs are promises to issue actual shares at the end of a three-year vesting period. The fair value of the equity-settled PRSUs is calculated as at the grant date using the share price. #### — Options Tradeweb awards options with a four-year graded vesting schedule, one half vesting based solely on the passage of time and one half vesting only if Tradeweb achieves certain performance targets. Costs related to options are recognised as an expense in the income statement over the service period. The fair value of options is calculated as at the grant date using the Black-Scholes model. #### — RSUs RSUs are promises to issue shares at the end of a vesting period. RSUs granted to employees vest over a three-year period. RSUs granted to non-employee directors vest after one year. The fair value of the RSUs is calculated as at the grant date using the share price. 230 London Stock Exchange Group plc^{}[] Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued ## 27. Events after the reporting period Acadia acquisition On 19 December 2022, LSEG announced it has agreed to acquire Acadia Soft, Inc. (Acadia) a leading provider of automated uncleared margin processing and integrated risk and optimisation services for the global derivatives community. Acadia provides risk management, margining and collateral services to global financial institutions for the uncleared derivatives markets. Acadia’s risk and margining products span all OTC derivative asset classes and provide direct connectivity to over 2,000 market participants. LSEG has held a minority stake in Acadia since 2018. Following completion, Acadia will be part of LSEG’s Post Trade division. The purchase price consideration is $700 million (subject to customary adjustments) and the acquisition is expected to close in H1 2023, subject to regulatory approvals. Share buyback programme Since the reporting date, the Company repurchased 2.7 million of its own shares from the market for £196 million which are being held as treasury shares. 231 London Stock Exchange Group plc Annual Report 2022 26. Commitments and contingencies A commitment is a contractual obligation to make a payment in the future. These amounts are not recorded in the balance sheet as we have not yet received the related goods or services. The amounts below are the minimum amounts that we are committed to pay. The Group has the following contracts in place for future expenditure which are not provided for in the consolidated financial statements: Contract Description Minimum commitment Agreement with Reuters News, entered into in 2018, for a 30-year term To receive news and editorial content Minimum CPI adjusted payment, which was US$360 million for 2022 10-year strategic partnership with Microsoft To architect LSEG’s data infrastructure using the Microsoft Cloud, and to jointly develop new products and services for data and analytics Minimum cloud-related spend of US$2.8 billion over the term of the partnership In the normal course of business, the Group can receive legal claims including, for example, in relation to commercial matters, service and product quality or liability, employee matters and tax audits. The Group is also involved in legal proceedings and actions, engagement with regulatory authorities and in dispute resolution processes. These are reviewed on a regular basis and, where possible, an estimate is made of the potential financial impact on the Group. In some cases a provision is recognised based on advice, best estimates and management judgement. Where it is too early to determine the likely outcome of these matters, no provision is made. Whilst the Group cannot predict the outcome of any such current or future matters with any certainty, it currently believes the likelihood of any material liabilities to be low, and that these will not have a material adverse effect on its consolidated income, financial position or cash flows. Notes to the financial statements continued ## 28. Transactions with related parties The Group has a number of related parties including associates, Directors and Executive Committee members. In addition, the Company transacts with some of its subsidiaries. A full list of subsidiaries is included in note 29.2. All significant transactions with related parties are carried out on an arm's length basis. ### 28.1 Transactions with subsidiaries For the year, the Company recognised the following recharges and charges, dividend receipts and balances with its subsidiaries: | | Note | 2022 £m | 2021 £m | | --- | --- | --- | --- | | Other income (recharges) – services provided to subsidiaries | | 8 | 27 | | Operating expenses (charges) – services provided by subsidiaries | | (166) | (119) | | Charges for share-based payment expense charged to subsidiaries | 25 | 79 | 67 | | Dividends received from subsidiaries | | 250 | 3,303 | | Amounts due from group companies, split as: | | | | | — Loans receivable | | 1,101 | 1,235 | | — Other receivables | | 118 | 138 | | | 18 | 1,219 | 1,373 | | Amounts due to group companies, split as: | | | | | — Loans payable | | (1,071) | (423) | | — Other payables | | (178) | (174) | | | 20 | (1,249) | (597) | ### 28.2 Transactions with associates During the year, the Group recognised the following transactions with its associates: | | 2022 £m | 2021 £m | | --- | --- | --- | | Sales to associates | 1 | 1 | | Amounts due from associates | 1 | – | | Amounts owed to associates | – | 1 | ### 28.3 Transactions with other related parties Stephen O'Connor, a director of London Stock Exchange plc, is a director and former shareholder of Quantile, a company registered in England & Wales. The Group acquired Quantile during the year (see note 12). ## 29. Other information ### 29.1 Audit, audit-related and other non-audit services The following fees were paid or are payable to the company's auditors, Ernst and Young LLP and its associates: | | 2022 £m | 2021 £m | | --- | --- | --- | | Audit of parent and consolidated financial statements | 6 | 7 | | Audit of subsidiary companies | 7 | 6 | | Non-audit services^{1} | 1 | 1 | | **Total auditors' remuneration** | **14** | **14** | 1 Ernst and Young LLP provided non-audit services of £0.9 million; 7% of total fees (2021: £1.2 million; 8% of total fees). This comprised 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). Further details of the services provided by Ernst and Young LLP are given in the Report of the Audit Committee on pages 105-110. ### 29.2 Group subsidiary companies A company is considered to be a subsidiary company of the Group when the Parent Company is able to direct and control the activity of that company and to benefit from its variable returns. #### Accounting policy Interests in subsidiaries, as well as loans and other contributions to subsidiaries, are recognised by the Parent Company at cost less accumulated impairment. Interests in subsidiaries are reviewed for impairment when events indicate the carrying amount may not be recoverable. When an indication of impairment is identified, the interest's recoverable amount is estimated based on value-in-use calculations. An impairment loss is recognised when the recoverable amount of an interest is less than its carrying amount. #### Investment in subsidiaries The Company recognises the following amounts as investment in subsidiaries: | Company | Shares £m | Other^{1} £m | Total £m | | --- | --- | --- | --- | | 1 January 2021 | 5,789 | 1,017 | 6,806 | | Acquisition of subsidiaries | 18,549 | – | 18,549 | | Impairment | (563) | – | (563) | | 31 December 2021 | 23,775 | 1,017 | 24,792 | | Additional investments in subsidiaries^{2} | 130 | – | 130 | | **31 December 2022** | **23,905** | **1,017** | **24,922** | 1 Other includes amounts invested in subsidiaries by way of capital contributions and awards granted under the Group's share schemes. 2 During the year, the Company invested £15 million in London Stock Exchange Group Holdings (R) Limited to fund the acquisition of an additional 32.8% of the issued shares of Turquoise Global Holdings Limited (see note 11.2) and £115 million in London Stock Exchange Reg Holdings Limited to fund acquisitions and investments. 232 London Stock Exchange Group plc Annual Report 2022 Notes to the financial statements continued ## 29. Other information continued A list of the Group's subsidiaries as at 31 December 2022 is given below including the percentage of each class of share held and the Group's ownership percentages. The share ownership percentage records the percentage of each subsidiary's share capital owned by its immediate parent company. Shares owned directly by LSEG plc are listed as being a 'direct' shareholding; shares owned by other Group companies are listed as an 'indirect' shareholding. Where more than one LSEG Group company owns shares in a subsidiary these interests have been combined. The ultimate economic interest percentage is the Group's effective overall interest in a subsidiary, reflecting situations where subsidiaries are owned indirectly by intermediate subsidiaries who may themselves have non-controlling interests. | Name of subsidiary undertaking | Location of incorporation | Registered office address | Class of share held | Direct or indirect holding | Share ownership % | LSEG plc ultimate economic interest % | | --- | --- | --- | --- | --- | --- | --- | | Alta Limited | Cook Islands | c/o Cook Islands Trust Corporation Limited, First Floor, BCI House, PO Box 141, Avaura, Rarotonga, Cook Islands | Ordinary | Indirect | 100.00 | 100.00 | | Avox Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Banque Centrale de Compensation SA (LCH SA) | France | 18 Rue du Quatre-Septembre, 75002 Paris, France | Ordinary | Indirect | 88.91 | 73.45 | | Beyond Ratings | France | 18 Rue du Quatre-Septembre, 75002 Paris, France | Ordinary | Indirect | 100.00 | 100.00 | | Blaxmill (Eleven) Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Blaxmill (Nine) Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Blaxmill (Six) | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Blaxmill (Ten) Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Blaxmill (Thirteen) Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Blaxmill (Thirty-Three) Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Blaxmill (Twelve) Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Blaxmill (Twenty-Eight) Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | BondClear Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Indirect | 100.00 | 82.61 | | BondDesk Group LLC | USA | c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States | Membership Interest | Indirect | 100.00 | 51.24 | | Caspian Holdings, Ltd. | Cayman Islands | One Nexus Way, Camana Bay, Grand Cayman, KY1-9005, Cayman Islands | Ordinary | Indirect | 100.00 | 100.00 | | Caspian, Ltd. | Cayman Islands | One Nexus Way, Camana Bay, Grand Cayman, KY1-9005, Cayman Islands | Ordinary | Indirect | 100.00 | 100.00 | | CommodityClear Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Indirect | 100.00 | 82.61 | | Criminal Law Week Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Data Development Services Limited | Cook Islands | c/o Cook Islands Trust Corporation Limited, First Floor, BCI House, PO Box 141, Avaura, Rarotonga, Cook Islands | Ordinary | Indirect | 100.00 | 100.00 | | Dealerweb Inc. | USA | c/o Corporation Service Company, 80 State Street, Albany, NY 12207, United States | Common A Common B | Indirect Indirect | 100.00 100.00 | 51.24 | | DW SEF LLC | USA | c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States | Membership Interest | Indirect | 100.00 | 51.24 | | EPIC Acquisition Sub LLC | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Membership Interest | Indirect | 100.00 | 100.00 | | EnergybankLink Pty Ltd | Australia | c/o TMF Corporate Services (Aust) Pty Limited, Suite 1, Level 11, 66 Goulburn Street, Sydney, NSW 2000, Australia | Ordinary | Indirect | 100.00 | 100.00 | 233 London Stock Exchange Group plc^{}[] Annual Report 2022 FINANCIAL STATEMENTS London Stock Exchange Group plc Annual Report 2022 234 Name of subsidiary undertaking Location of incorporation Registered office address Class of share held Direct or indirect holding Share ownership % LSEG plc ultimate economic interest % Enterprise Risk Management Technology Limited England & Wales 5 Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 EquityClear Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 82.61 Financial & Risk Organisation Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 Financial & Risk Transaction Services Ireland Limited Ireland 12/13 Exchange Place, IFSC, Dublin, Ireland, D01P8H1 Ordinary Indirect 100.00 100.00 ForexClear Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 82.61 Frank Russell Company USA c/o United Agent Group Inc. 707 W. Main Avenue #B1, Spokane, WA 99201, United States Common Indirect 100.00 100.00 FTSE (Australia) Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 FTSE (Beijing) Consulting Limited China Room 02D-H, 6/F Dongwai Diplomatic Building, 23 Dongzhimenwai Dajie, Beijing, China Ordinary Indirect 100.00 100.00 FTSE (Japan) Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 FTSE Americas, Inc. USA c/o United Agent Group Inc. 600 Mamaroneck Avenue #400, Harrison, NY 10528, United States Ordinary Indirect 100.00 100.00 FTSE China Index Ltd. Hong Kong c/o Primasia Corporate Services Limited, Suite 1106-8, Tai Yau Building, 181 Johnston Road, Wanchai, Hong Kong Ordinary Indirect 100.00 100.00 FTSE Fixed Income LLC USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Membership Interest Indirect 100.00 100.00 FTSE Fixed Income Europe Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 FTSE Global Debt Capital Markets Inc. Canada c/o Miller Thompson LLP, Suite 5800, 40 King Street West, Toronto, ON, Canada, M5H 3S1 Ordinary Indirect 100.00 100.00 FTSE Global Debt Capital Markets Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 FTSE International (Hong Kong) Limited Hong Kong c/o Primasia Corporate Services Limited, Suite 1106-8, Tai Yau Building, 181 Johnston Road, Wanchai, Hong Kong Ordinary Indirect 100.00 100.00 FTSE International (MEA) Ltd United Arab Emirates Office 50, Level 15, The Gate, PO Box 121208, Dubai, United Arab Emirates Ordinary Indirect 100.00 100.00 FTSE International Brasil Representações Limitada Brazil Edificio Argentina, Praia de Botafogo 228, 16 andar, Sala1617, Rio de Janeiro Ordinary Indirect 100.00 100.00 FTSE International LimitedEngland & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 FTSE Mexico Sociedad de Responsabilidad Limitada de Capital Variable Mexico Torre 3, Privada Paseo de los Tamarindos 120, Bosques de las Lomas, Mexico City Ordinary Indirect 100.00 100.00 FTSE International Taiwan Limited Taiwan 26/F, No. 100, Song Ren Road, Xinyi District, Taipei City 11073, Taiwan Ordinary Indirect 100.00 100.00 FTSE Italy S.P.A. Italy Piazza Generale Armando Diaz 2, Milan, 20123 Ordinary Indirect 100.00 100.00 FX Alliance International, LLC USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Common Indirect 100.00 100.00 FX Alliance, LLC USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Common Indirect 100.00 100.00 Giact Systems, LLC USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Membership Interest Indirect 100.00 100.00 Global Data Consortium Australia Pty Limited Australia 7C, BDO Services Pty Limited, Level 11, 1 Margaret St, Sydney, NSW 2000, Australia Ordinary Indirect 100.00 100.00 Notes to the financial statements continued 29. Other information continued 235 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued 29. Other information continued Name of subsidiary undertaking Location of incorporation Registered office address Class of share held Direct or indirect holding Share ownership % LSEG plc ultimate economic interest % Global Data Consortium Netherlands B.V. Netherlands Barbara Strozzilan 201, Zuidas 2, 1083HN, Amsterdam, Netherlands Ordinary Indirect 100.00 100.00 Global Data Consortium Singapore Pte. Ltd. Singapore 11, Collyer Quay, 17-00 The Arcade, Singapore 04931 Ordinary Indirect 100.00 100.00 Global Data Consortium, Inc. USA c/o United Agent Group Inc,15720, Brixham Hill Avenue #300, Charlotte, NC 28277, United States Common Indirect 100.00 100.00 Global World-Check England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 Global World-Check Holdings (Nominee) Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 Global World-Check Holdings Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 globeSettle S.à r.l. Luxembourg c/o Crestbridge Luxembourg, 1 Boulevard de la Foire, L-1528, Luxembourg Ordinary Indirect 100.00 100.00 Guangzhou Data Development Services Limited China Part 1-8 self compiled 21-016, 21 / F 15 Zhujiang West Road, Guangzhou, Guangzhou, TianHe District Contribution Unit Indirect 100.00 100.00 IAG US LLC USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Member Shares Indirect 100.00 100.00 Infosight Singapore Pte. Ltd. Singapore One Raffles Quay, #28-01, Singapore 048583 Ordinary Indirect 100.00 100.00 IntegraScreen (Malaysia) Sdn. Bhd. Malaysia 13.03 Menara Tan & Tan, 207 Jalan Tun Razak, Kuala Lumpur 50400, Malaysia Ordinary Indirect 100.00 100.00 IntegraScreen (Panama), Inc. Panama The Century Tower, Via Ricardo J. Alfaro y Calle 65, Oeste Piso 10, Local 1005, Panama Ordinary Indirect 100.00 100.00 IntegraScreen Limited Hong Kong c/o Primasia Corporate Services Limited, Suite 1106-8, Tai Yau Building, 181 Johnston Road, Wanchai, Hong Kong Ordinary Indirect 100.00 100.00 IntegraScreen Spolka Z o.o. Poland 40-084 Katowice, Ul. Opolska 22, Poland Ordinary Indirect 100.00 100.00 International Commodities Clearing House Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 Intrinsic Research Systems, Inc. USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Common-A Indirect 100.00 100.00 Common-B Indirect 100.00 LCH Group Holdings Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary (Voting) Indirect 82.61 82.61 LCH Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 82.61 LCH.Clearnet Group Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 82.61 LCH.Clearnet LLC USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Ordinary Indirect 100.00 82.61 Lipper Asia Limited Cook Islands c/o Cook Islands Trust Corporation Limited, First Floor, BCI House, PO Box 141, Avaura, Rarotonga, Cook Islands Ordinary Indirect 100.00 100.00 Lipper Australia Pty Ltd Australia Level 10, 60 Margaret Street, Sydney, NSW, Australia 2000 Ordinary Indirect 100.00 100.00 Lipper Inc. USA c/o United Agent Group Inc, 155 E. Boardwalk #490, Fort Collins, CO 80525, United States Ordinary Indirect 100.00 100.00 Lipper Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 London Produce Clearing House Limited (The) England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 82.61 London Stock Exchange (C) Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS £ Ordinary Direct 100.00 100.00 € Ordinary Direct 100.00 London Stock Exchange Connectivity Solutions LP England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Partnership interest Indirect 100.00 100.00 London Stock Exchange Group plc Annual Report 2022 236 Name of subsidiary undertaking Location of incorporation Registered office address Class of share held Direct or indirect holding Share ownership % LSEG plc ultimate economic interest % London Stock Exchange Group (Services) Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Direct 100.00 100.00 London Stock Exchange Group Holdings Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Direct 100.00 100.00 London Stock Exchange Group Holdings (Italy) Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Direct 100.00 100.00 London Stock Exchange Group Holdings (R) Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Direct 100.00 100.00 London Stock Exchange LEI Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 London Stock Exchange plc England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Direct 100.00 100.00 London Stock Exchange Reg Holdings Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Direct 100.00 100.00 LSEG (ELT) Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 LSEG (F) Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 LSEG (G) Inc. USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Ordinary Indirect 100.00 100.00 LSEG (M) Financing Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 LSEG Business Services Colombo (Private) Limited Sri Lanka Trace Expert City, Maradana, Colombo 10, Colombo, Sri Lanka Ordinary Indirect 100.00 100.00 LSEG Business Services Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 LSEG Business Services RM S.R.L Romania Campus 6.1, Bulevardul Iuliu Maniu 6G, Bucuresti 061344, Romania Ordinary Indirect 100.00 100.00 LSEG Employment Services Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 LSEG Foundation (formerly Refinitiv Charities) England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Charitable incorporated organisation – – – LSEG F1 Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Direct 0.53 100.00 Ordinary Indirect 99.47 LSEG F2 Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 LSEG F3 Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 LSEG HK Financing Limited Hong Kong c/o Primasia Corporate Services Limited, Suite 1106-8, Tai Yau Building, 181 Johnston Road, Wanchai, Hong Kong Ordinary Indirect 100.00 100.00 LSEG Information Services (US) Inc. USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Ordinary Indirect 100.00 100.00 LSEG Financing Corporation USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Ordinary Indirect 100.00 100.00 LSEG Financing LLC USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Membership Units Indirect 100.00 100.00 LSEG Ireland Limited Ireland 10 Earlsfort Terrace, Dublin, Ireland, DO2 T380 Ordinary Indirect 100.00 100.00 LSEG Ireland 2 Limited Ireland 1 Stokes Place, St Stephen’s Green, Dublin, Ireland DO2 DE03 Ordinary Indirect 100.00 100.00 LSEG Ireland 3 Limited Ireland 1 Stokes Place, St Stephen’s Green, Dublin, Ireland DO2 DE03 Ordinary Indirect 100.00 100.00 Notes to the financial statements continued 29. Other information continued Notes to the financial statements continued FINANCIAL STATEMENTS ## 29. Other information continued | Name of subsidiary undertaking | Location of incorporation | Registered office address | Class of share held | Direct or indirect holding | Share ownership % | LSEG plc ultimate economic interest % | | --- | --- | --- | --- | --- | --- | --- | | LSEG LuxCo 1 S.à r.l. | Luxembourg | c/o Crestbridge Luxembourg, 1 Boulevard de la Foire, L-1528, Luxembourg | Ordinary | Indirect | 100.00 | 100.00 | | LSEG LuxCo 2 S.à r.l. | Luxembourg | c/o Crestbridge Luxembourg, 1 Boulevard de la Foire, L-1528, Luxembourg | Ordinary | Indirect | 100.00 | 100.00 | | LSEG Malaysia Sdn. Bhd. | Malaysia | 13,03 Menara Tan & Tan, 207 Jalan Tun Razak, Kuala Lumpur 50400, Malaysia | Ordinary | Indirect | 100.00 | 100.00 | | LSEG Netherlands B.V. | Netherlands | Suite 108, Nieuwezijds Voorburgwal 162, Amsterdam, 1012 SJ, Netherlands | Ordinary | Direct | 100.00 | 100.00 | | LSEG Pension Trustees Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Indirect | 100.00 | 100.00 | | LSEG Post Trade Services Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Indirect | 100.00 | 100.00 | | LSEG Technology Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Indirect | 100.00 | 100.00 | | LSEG US Fin Corp (formerly Refinitiv US Fin Corp) | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Ordinary | Indirect | 100.00 | 100.00 | | LSEG US Holdco, Inc. | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Common | Direct | 100.00 | 100.00 | | LSEGA Financing plc | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Direct | 100.00 | 100.00 | | LSEGA Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Direct | 100.00 | 100.00 | | LSEGA, Inc. | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Common Stock | Indirect | 100.00 | 100.00 | | LSEGA Jersey Limited | Jersey | c/o Crestbridge Jersey, 47 Esplanade, St Helier, JE1 0BD, Jersey | Ordinary | Indirect | 100.00 | 100.00 | | LSEGA2 Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Direct | 100.00 | 100.00 | | LSEGH (I) LLC | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Ordinary | Indirect | 100.00 | 100.00 | | LSEGH (Luxembourg) Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Direct | 100.00 | 100.00 | | LSEGH Inc. | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Common | Indirect | 100.00 | 100.00 | | LSEGH US PT, Inc. | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Common Stock | Direct | 100.00 | 100.00 | | LUH Financing Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Limited by Guarantee | Indirect | 100.00 | 100.00 | | Maystreet Inc. | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Common Stock | Indirect | 100.00 | 100.00 | | Mergent Japan K.K. | Japan | 1-2-1, Otemachi First Square East Tower 11F, Otemachi, Chiyodaoku, Tokyo, 100-0004 | Ordinary | Indirect | 100.00 | 100.00 | | Mergent, Inc. | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Ordinary | Indirect | 100.00 | 100.00 | | Millennium Information Technologies (India) Private Limited | India | One World Center, 12th Floor, Tower 1, 841 Senapati Bapat Marg, Mumbai, 400013 India | Ordinary | Indirect | 100.00 | 100.00 | | Millennium IT (USA) Inc. | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Common | Indirect | 100.00 | 100.00 | | Millennium I.T. Services (Private) Limited | Sri Lanka | 65/2, Sir Chittampalam A Gardiner Mawatha, Colombo, 02 | Ordinary | Indirect | 100.00 | 100.00 | | Millennium IT Software (Canada) Inc. | Canada | Suite 2400, 333 Bay Street, Toronto, Ontario, Canada, M5H 2T6 | Common | Indirect | 100.00 | 100.00 | | Millennium IT Software (Private) Limited | Sri Lanka | 1 Millennium Drive, Malabe, Colombo 10115, Sri Lanka | Ordinary | Indirect | 100.00 | 100.00 | 237 London Stock Exchange Group plc^{}[] Annual Report 2022 London Stock Exchange Group plc Annual Report 2022 238 Name of subsidiary undertaking Location of incorporation Registered office address Class of share held Direct or indirect holding Share ownership % LSEG plc ultimate economic interest % Monitor Services Hong Kong Limited Cook Islands c/o Cook Islands Trust Corporation Limited, First Floor, BCI House, PO Box 141, Avaura, Rarotonga, Cook Islands Ordinary Indirect 100.00 100.00 Monitor Trading Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 PT Refinitiv Services Indonesia Indonesia Menara Astra, #37-118, Jl. Jendral Sudirman Kav 5-6, Jakarta Pusat, Jakarta 10220, Indonesia Ordinary Indirect 100.00 100.00 PT LSEG Transaction Services Indonesia Indonesia Menara Astra, #37-118, Jl. Jendral Sudirman Kav 5-6, Jakarta Pusat, Jakarta 10220, Indonesia Class A Indirect 100.00 100.00 1 Class B – – Quantile B.V. Netherlands Stadhouderskade 5H, 1054 ES Amsterdam, Netherlands Ordinary Indirect 100.00 100.00 Preference Indirect 100.00 Quantile Group Limited England & Wales Cannon Green Building, 27 Bush Lane, London, United Kingdom, EC4R 0AN Ordinary Indirect 100.00 100.00 Quantile Inc. USA c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Common Indirect 100.00 100.00 Quantile Technologies Limited England & Wales Cannon Green Building, 27 Bush Lane, London, United Kingdom, EC4R 0AN Ordinary Indirect 100.00 100.00 Quorate Technology Limited Scotland 8th Floor, Appleton Tower, 11 Crichton Street, Edinburgh, Scotland, United Kingdom, EH8 9LE Ordinary Indirect 100.00 100.00 R.M.E. Bahrain Limited W.L.L. Bahrain Flat 1002, Building 1459, Road 4626, Block 346, Manama Ordinary Indirect 100.00 100.00 REDI Technologies Ltd England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 REDI Global Technologies LLC USA c/o United Agent Group Inc, 600 Mamaroneck Avenue, #400, Harrison, NY 10528, United States Member Interest Indirect 100.00 100.00 Refinitiv (Canvas) Holdings 1 Limited Bermuda c/o Conyers Corporate Service (Bermuda) Limited, Clarendon House, 2 Church Street, Hamilton, Bermuda, HM 11 Common Indirect 100.00 100.00 Refinitiv (Canvas) Holdings 2 Limited Bermuda c/o Conyers Corporate Service (Bermuda) Limited, Clarendon House, 2 Church Street, Hamilton, Bermuda, HM 11 Common Indirect 100.00 100.00 Refinitiv (Canvas) Holdings 3 Limited Bermuda c/o Conyers Corporate Service (Bermuda) Limited, Clarendon House, 2 Church Street, Hamilton, Bermuda, HM 11 Common Indirect 100.00 100.00 Refinitiv (Thailand) Limited Thailand 968 U Chu Liang Building, 34th Floor, Rama IV Road, Silom, Bangrak, Bangkok, Thailand, 10500 Ordinary Indirect 100.00 100.00 1 Preference Indirect 49.00 Refinitiv Asia Pte. Ltd. Singapore 1 Raffles Quay, #28-01, Singapore 048583 Ordinary Indirect 100.00 100.00 Refinitiv Australia Pty Limited Australia c/o TMF Corporate Services (Aust) Pty Limited, Suite 1, Level 11, 66 Goulburn Street, Sydney, NSW 2000, Australia Ordinary Indirect 100.00 100.00 Refinitiv Austria GmbH Austria The ICON Vienna, Wiedner Gürtel 13, A/12.OG/1123, 1100 Vienna, Austria Ordinary Indirect 100.00 100.00 Refinitiv Benchmark Services (UK) Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 Refinitiv Brasil Servicos Economicos Limitada Brazil Avenida Doutour Cardoso de Melo, 1855 – 4 e 12 andares, Conj 41 e 122, Vila Olimpia, Sao Paulo – SP, Brazil CEP 04548-005 Ordinary Indirect 100.00 100.00 Refinitiv Canada Holdings Limited Canada Suite 400, 333 Bay Street, Suite 400, Toronto, Canada, M5H 2R2 Common Indirect 100.00 100.00 Refinitiv Costa Rica Sociedad De Responsabilidad Limitada Costa Rica San Jose, Santa Ana radial a San Antionio de Belen, Doscientos metros norte de la Cruz Roja de Santa Ana, Edificio Murano, Piso Uno, Oficina 13, Costa Rica Ordinary Indirect 100.00 100.00 Refinitiv Cyprus Limited Cyprus Neas Egkomis 33, 1st floor, Flat/Office 208, Egkomi, Nicosia, Cyprus, 2409 Ordinary Indirect 100.00 100.00 Refinitiv Czech Republic s.r.o. Czechia Na Perstyne 342/1, Staré Mesto, 110 00 Praha 1, Czechia Ordinary Indirect 100.00 100.00 Notes to the financial statements continued 29. Other information continued 239 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued 29. Other information continued Name of subsidiary undertaking Location of incorporation Registered office address Class of share held Direct or indirect holding Share ownership % LSEG plc ultimate economic interest % Refinitiv de Mexico, S.A. de C.V. Mexico Torre Esmeralda II. Blvd. Manuel Avila Camacho #36, Floor 19th, Lomas de Chapultepec, Mexico City, Mexico 11000 Common Indirect 100.00 100.00 Refinitiv Denmark A/S Denmark Vesterbrogade 1 E, 4, DK-1620, Copenhagen V, Denmark Ordinary Indirect 100.00 100.00 Refinitiv Enformasyon Limited Sirketi Turkey Is Kuleleri, Kule 2, Kat 1-2, 4. Levent, Istanbul, Turkey, 34330 Ordinary Indirect 100.00 100.00 Refinitiv Europe Middle East and Africa (Central Region) Limited Guernsey c/o Alternative Risk Management Limited, Level 5, Mill Court, La Charroterie, St Peter Port, Guernsey, GY1 1EJ Ordinary Indirect 100.00 100.00 Refinitiv Financial Technology Information Service (China) Group Co. Ltd. China Room 1811, The Towers Offices at Oriental Plaza, No.1 East Chang’an Avenue, WangFuJing, Dongcheng Qu, Beijing 100006, China Contribution Unit Indirect 100.00 100.00 Refinitiv Finland OY AB Finland Spaces Postitalo, Mannerheiminaukio 1A, Helsinki, Finland 00100 Ordinary Indirect 100.00 100.00 Refinitiv France Holdings S.à r.l. France 18 Rue du Quatre-Septembre, 75002 Paris, France Ordinary Indirect 100.00 100.00 Refinitiv France SAS France 18 Rue du Quatre-Septembre, 75002 Paris, France Ordinary Indirect 100.00 100.00 Refinitiv Germany GmbH Germany Friedrich-Ebert-Anlage 49, 60327 Frankfurt am Main, Germany Ordinary Indirect 100.00 100.00 Refinitiv Germany Holdings GmbH Germany Friedrich-Ebert-Anlage 49, 60327 Frankfurt am Main, Germany Ordinary Indirect 100.00 100.00 Refinitiv Global Markets Inc. USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Common Indirect 100.00 100.00 Refinitiv Global Private Limited India One World Center, 12th Floor, Tower 1, 841 Senapati Bapat Marg, Maharashtra, Mumbai, 400013 Ordinary Indirect 100.00 100.00 Refinitiv Group Nominees Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Limited by Guarantee Indirect 100.00 100.00 Refinitiv Hellas Single-member Societe Anonyme Greece 53 Solonos Street, Athens, Greece, 10672 Ordinary Indirect 100.00 100.00 Refinitiv Holdings (Thailand) Limited Thailand 30th floor, U Chu Liang Building, 968 Rama IV, Bangkok, Silom Bangrak, Thailand, 10500 Ordinary Indirect 100.00 100.00 1 Preference – – Refinitiv Hong Kong Limited Jersey c/o Crestbridge Jersey, 47 Esplanade, St Helier, JE1 0BD, Jersey Ordinary Indirect 100.00 100.00 Refinitiv Hungary Kft. Hungary Alkotás utca 53, A torony, 6. emelet, Budapest, 1123 Hungary Ordinary Indirect 100.00 100.00 Refinitiv India Private Limited India One World Center, 12th Floor, Tower 1, 841 Senapati Bapat Marg, Maharashtra, Mumbai, 400013 Ordinary Indirect 100.00 100.00 Refinitiv India Shared Services Private Limited India One World Center, 12th Floor, Tower 1, 841 Senapati Bapat Marg, Maharashtra, Mumbai, 400013 Ordinary Indirect 100.00 100.00 Refinitiv India Transaction Services Private Limited India One World Center, 12th Floor, Tower 1, 841 Senapati Bapat Marg, Maharashtra, Mumbai, 400013 Ordinary Indirect 100.00 100.00 Refinitiv Information Services (China) Co Limited China Unit 3006, No 1223, Azia Centre, Lujiqzui Huang Road, Shanghai, China Contribution Unit Indirect 100.00 100.00 Refinitiv International Holdings SARL Switzerland 153 Route de Thonon, 1245 Collonge-Bellerive, Switzerland Ordinary Indirect 100.00 100.00 Refinitiv Ireland Limited Ireland 12/13 Exchange Place, IFSC, Dublin, Ireland, D01P8H1 Ordinary Indirect 100.00 100.00 Refinitiv Israel Ltd. Israel 121-123 Derech Menachem Begin, Azrieli Sarona Building – 30 Fl, Tel Aviv, Israel, 6701203 Ordinary Indirect 100.00 100.00 Refinitiv Italy Holding S.P.A. Italy Piazza Armando Diaz, 2, Milano, Italy, 20123 Ordinary Indirect 100.00 100.00 Refinitiv Italy S.P.A Italy Piazza Armando Diaz, 2, Milano, Italy, 20123 Ordinary Indirect 100.00 100.00 Refinitiv Japan K.K. Japan 30/F Akasaka Biz Tower, 5-3-1 Akasaka, Minato-Ku, Tokyo 107-6330, Japan Ordinary Indirect 100.00 100.00 London Stock Exchange Group plc Annual Report 2022 240 Name of subsidiary undertaking Location of incorporation Registered office address Class of share held Direct or indirect holding Share ownership % LSEG plc ultimate economic interest % Refinitiv Korea Limited Korea 9F S Tower, 82 Saemunanro, Jongnogu, Korea, 03185 Common – Voting Indirect 100.00 100.00 Refinitiv Latam Trading Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 Refinitiv Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 Refinitiv Malaysia Sdn. Bhd. Malaysia Suite 13.03, 13th floor, Menara Tan & Tan, 207 Jalan Tun Razak, Kuala Lumpur 50400, Malaysia Ordinary Indirect 100.00 100.00 Refinitiv Middle East FZ-LLC United Arab Emirates Premises 501, 5th Floor, Building 01, Dubai, United Arab Emirates Ordinary Indirect 100.00 100.00 Refinitiv Netherlands B.V. Netherlands Antonio Vivaldistraat 50, 1083 HP Amsterdam, Netherlands Ordinary Indirect 100.00 100.00 Refinitiv Netherlands Finance B.V. Netherlands Antonio Vivaldistraat 50, 1083 HP Amsterdam, Netherlands Ordinary Indirect 100.00 100.00 Refinitiv Netherlands Holdings B.V. Netherlands Antonio Vivaldistraat 50, 1083 HP Amsterdam, Netherlands Ordinary Indirect 100.00 100.00 Refinitiv Netherlands Overseas Holdings B.V. Netherlands Antonio Vivaldistraat 50, 1083 HP Amsterdam, Netherlands Ordinary Indirect 100.00 100.00 Refinitiv New Zealand Limited New Zealand c/o The Business Advisory Group Limited, Level 9, 55 Shortland Street, Auckland, New Zealand, 1010 Ordinary Indirect 100.00 100.00 Refinitiv Norge AS Norway Dronning Eufemias gate 16, Oslo, Norway, 0191 Ordinary Indirect 100.00 100.00 Refinitiv Parent Limited Cayman Islands c/o Intertrust Corporate Services (Cayman) Limited, 1 Nexus Way, Camana Bay, Grand Cayman, KY1-9005, Cayman Islands Ordinary Direct 67.51 100.00 Indirect 32.49 Refinitiv Peru Srl Peru 102, WeWork Real 2, Avenida Victor Andrés Belaúnde 147, Via Principal 133, Lima, Peru, 15073 Ordinary Indirect 100.00 100.00 Refinitiv Poland Spolka Z o.o. Poland 126/134 Marszalkowska St, 00-008, Warsaw, Poland Ordinary Indirect 100.00 100.00 Refinitiv Portugal Unipessoal Limitada Portugal 10, Rua Mouzinho da Silveira, Lisboa, Portugal, 1250-167 Ordinary Indirect 100.00 100.00 Refinitiv Romania S.R.L. Romania 6L, Iuliu Maniu Boulevard, Campus 6.1, 4th Floor, District 6, Bucharest, Romania, 061344 Ordinary Indirect 100.00 100.00 Refinitiv RUS LLC Russian Federation 5 Petrovka Street, Berlin Haus, Business Centre, Moscow, Russian Federation, 107031 Ordinary Indirect 100.00 100.00 Refinitiv SA Switzerland 153 Route de Thonon, 1245 Collonge-Bellerive, Switzerland Ordinary Indirect 100.00 100.00 Refinitiv Saudi for Information and Communication Technology Saudi Arabia Al Thalatten Commercial Centre, 2nd Floor, Olaya Thalateen, Corner Dhabab Street, PO Box 62422, Riyadh, Saudi Arabia, 11585 Ordinary Indirect 75.00 100.00 2 Refinitiv Software (Thailand) Limited Thailand U Chu Liang Building, 968 Rama IV Road, Silom, Bangrak, Bangkok, Thailand, 10500 Ordinary Indirect 100.00 100.00 Refinitiv Sweden AB Sweden PO Box 1732, Stockholm, Sweden, SE 111 87 Ordinary Indirect 100.00 100.00 Refinitiv Technology (China) Co., Limited China A2 Tower, ZhongGuanCun #1, 81 BeiQing Road, Haidian District, Beijing, China, 100193 Contribution Unit Indirect 100.00 100.00 Refinitiv Tecnologia em Sistemas Brasil Limitada Brazil Av. Doutor Cardoso de Melo 1855, Andar 4, Conj. 42, Vila Olimpia, Sao Paulo, Brazil, 04548-005 Ordinary Indirect 100.00 100.00 Refinitiv Transaction Services Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 Refinitiv Transaction Services Malaysia Sdn. Bhd. Malaysia Suite 13.03, 13th floor, Menara Tan & Tan, 207 Jalan Tun Razak, Kuala Lumpur 50400, Malaysia Ordinary Indirect 100.00 100.00 Refinitiv Transaction Services Pte. Ltd. Singapore One Raffles Quay, #28-01, Singapore 048583 Ordinary Indirect 100.00 100.00 Refinitiv TW Holdings Ltd. Cayman Islands c/o Intertrust Corporate Services (Cayman) Limited, 1 Nexus Way, Camana Bay, Grand Cayman, KY1-9005, Cayman Islands Ordinary Indirect 100.00 100.00 Notes to the financial statements continued 29. Other information continued Notes to the financial statements continued FINANCIAL STATEMENTS ## 29. Other information continued | Name of subsidiary undertaking | Location of incorporation | Registered office address | Class of share held | Direct or indirect holding | Share ownership % | LSEG plc ultimate economic interest % | | --- | --- | --- | --- | --- | --- | --- | | Refinitiv UK (Rest Of World) Holdings Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Refinitiv UK Eastern Europe Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Refinitiv UK Financial Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Refinitiv UK Holding Company Limited | Bermuda | c/o Conyers Corporate Services (Bermuda) Limited, Clarendon House, 2 Church Street, Hamilton, Bermuda, HM 11 | Ordinary | Indirect | 100.00 | 100.00 | | Refinitiv UK Holdings Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Refinitiv UK Overseas Holdings Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Refinitiv UK Parent Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Ordinary | Indirect | 100.00 | 100.00 | | Refinitiv US IP Corp | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Ordinary | Indirect | 100.00 | 100.00 | | Refinitiv US LLC | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Member Interest | Indirect | 100.00 | 100.00 | | Refinitiv US Organization LLC | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Member Interest | Indirect | 100.00 | 100.00 | | Refinitiv US Personal Focus Inc. | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Ordinary | Indirect | 100.00 | 100.00 | | Refinitiv US PME LLC | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Class A | Indirect | 100.00 | 100.00 | | | | | Class B | Indirect | 100.00 | 100.00 | | Refinitiv US SEF LLC | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Ordinary | Indirect | 100.00 | 100.00 | | Refinitiv US Services Corp | USA | c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States | Ordinary | Indirect | 100.00 | 100.00 | | Refinitiv US Tradeweb LLC | USA | c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States | Ordinary | Indirect | 100.00 | 46.67^{1} | | Refinitiv, S.L. | Spain | Paseo de la Castellana 95, 7a, Edificio Torre Europa, Madrid, Spain, 28046 | Ordinary | Indirect | 100.00 | 100.00 | | RepoClear Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Indirect | 100.00 | 82.61 | | Reuters Asia Pacific Limited | Mauritius | c/o Ocorian Corporate Administrators Limited, 6th Floor Tower A, Ebene, Cyber City, Mauritius, 72201 | Ordinary | Indirect | 100.00 | 100.00 | | Reuters Pension Fund Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Limited by Guarantee | Indirect | 100.00 | – | | Reuters SPS Trustee Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Limited by Guarantee | Indirect | 100.00 | – | | RRP Pension Trustee Limited | England & Wales | Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ | Limited by Guarantee | Indirect | 100.00 | – | | SSC Global Business Services Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Indirect | 100.00 | 100.00 | | SwapAgent Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Indirect | 100.00 | 82.61 | | SwapClear Limited | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Indirect | 100.00 | 82.61 | | Stock Exchange (Holdings) Limited (The) | England & Wales | 10 Paternoster Square, London, United Kingdom, EC4M 7LS | Ordinary | Indirect | 100.00 | 100.00 | | Tech Hackers LLC | USA | c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States | Membership Interest | Indirect | 100.00 | 51.24 | | Telfer Investments Australia Pty Limited | Australia | c/o TMF Corporate Services (Aust) Pty Limited, Suite 1, Level 11, 66 Goulburn Street, Sydney, NSW 2000, Australia | Ordinary | Indirect | 100.00 | 100.00 | | | | | Special | Indirect | 100.00 | 100.00 | 241 London Stock Exchange Group plc^{}[] Annual Report 2022 London Stock Exchange Group plc Annual Report 2022 242 Name of subsidiary undertaking Location of incorporation Registered office address Class of share held Direct or indirect holding Share ownership % LSEG plc ultimate economic interest % Telfer Pty. Limited Australia c/o TMF Corporate Services (Aust) Pty Limited, Suite 1, Level 11, 66 Goulburn Street, Sydney, NSW 2000, Australia Ordinary Indirect 100.00 100.00 Special Indirect 100.00 The London Clearing House Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 82.61 The Red Flag Group (Australia) Pty Limited Australia c/o Pilot Partners, Waterfront Place, Level 10, 1 Eagle Street, Brisbane, QLD 4000, Australia Ordinary Indirect 100.00 100.00 The Red Flag Group (BVI) Limited British Virgin Islands Jayla Place, 2nd Floor, Road Town, Tortola, British Virgin Islands Ordinary Indirect 100.00 100.00 The Red Flag Group (France) SAS France 20 Avenue Andre Malraux – 92300, Levallois Perret, France Ordinary Indirect 100.00 100.00 The Red Flag Group (HK) Limited Hong Kong 18/F ICBC Tower, 3 Garden Road, Hong Kong Ordinary Indirect 100.00 100.00 The Red Flag Group (Malaysia) Sdn. Bhd. Malaysia 12th Floor, Menara Symphony, No. 5 Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor, Malaysia Ordinary Indirect 100.00 100.00 The Red Flag Group (Netherlands) B.V. Netherlands Antonio Vivaldistraat 50, 1083 HP Amsterdam, Netherlands Ordinary Indirect 100.00 100.00 The Red Flag Group (Philippines) Inc. Philippines Unit 7-2, 7/F Net Square, 3rd Avenue Corner 28th Street E-Square, Crescent Park West Bonifacio Global City, Taguig Metro Manila, Philippines Ordinary Indirect 100.00 100.00 The Red Flag Group (Poland) Spolka Z o.o. Poland UI. Kotlarska 11, 31-539, Krakow, Poland Ordinary Indirect 100.00 100.00 The Red Flag Group (Shanghai) Limited China 3F. Agile International Plaza, No. 525 Middle Xizang Road, Huangpu District, Shanghai, China Ordinary Indirect 100.00 100.00 The Red Flag Group (Spain) SL Spain Paseo de la Castellana, No 161, 2 Planta, Madrid 28046, Spain Ordinary Indirect 100.00 100.00 The Red Flag Group (Switzerland) AG Switzerland Baarerstrasse 112, 6300 Zug, Switzerland Ordinary Indirect 100.00 100.00 The Red Flag Group (UK) Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 The Red Flag Group FZ-LLC United Arab Emirates Office 104, Building 3, PO Box 500 630, Dubai Internet City, Dubai, United Arab Emirates Ordinary Indirect 100.00 100.00 The Red Flag Group Inc. USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Ordinary Indirect 100.00 100.00 The Red Flag Group International (Panama) SA Panama Obarrio, 55th East, “Santa Rita O” St., SFC Tower, 15th Floor, Office 15-ABC, Panama City Ordinary Indirect 100.00 100.00 The Red Flag Group Limited Hong Kong 18/F Champion Tower and ICBC Tower, 3 Garden Road, Hong Kong Ordinary Indirect 100.00 100.00 The Red Flag Group Products (HK) Limited Hong Kong 18/F Champion Tower and ICBC Tower, 3 Garden Road, Hong Kong Ordinary Indirect 100.00 100.00 The Red Flag Group Pte Limited Singapore 1 Raffles Quay, #28-01, Singapore 048583 Ordinary Indirect 100.00 100.00 The Yield Book, Inc. USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Common Indirect 100.00 100.00 TicketAid Limited England & Wales Five Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 – TIPS LLC USA c/o Corporation Service Company, 1821 Logan Avenue, Cheyenne, WY 82001, United States Membership Interest Indirect 100.00 51.24 Tora Holdings, Inc. USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Common Indirect 100.00 100.00 Tora Trading Investments, LLC USA c/o CT Corporation, 1209 Orange Street, Wilmington, DE 19801, United States Common Indirect 100.00 100.00 Tora Trading Services (Asia) Limited Hong Kong 20th Floor, The Wellington, 198 Wellington St, Central, Hong Kong Ordinary Indirect 100.00 100.00 Tora Trading Services (Jersey) Limited Jersey De Carteret House, 7, Castle St, St. Helier, Jersey, JE2 3BT Ordinary Indirect 100.00 100.00 Notes to the financial statements continued 29. Other information continued 243 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Notes to the financial statements continued 29. Other information continued Name of subsidiary undertaking Location of incorporation Registered office address Class of share held Direct or indirect holding Share ownership % LSEG plc ultimate economic interest % Tora Trading Services K.K. Japan KDX Kojimachi Bldg, 2nd Floor, 3-3-4 Kojimachi, Chiyoda-ku, Tokyo, 102-0083, Japan Ordinary Indirect 100.00 100.00 Tora Trading Services, LLC USA c/o CT Corporation, 1209 Orange Street, Wilmington, DE 19801, United States Common Indirect 100.00 100.00 Tora Trading Services Limited Cayman Islands 1 Nexus Way, Camana Bay, Grand Cayman, KY1-9005, Cayman Islands Ordinary Indirect 100.00 100.00 Tora Trading Services Limited Hong Kong 20th Floor, The Wellington, 198 Wellington St, Central, Hong Kong Ordinary Indirect 100.00 100.00 Tora Trading Services Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 Tora Trading Services Pte Ltd. Singapore Level 58, Republic Plaza, 9, Raffles Place, Singapore 048619 Ordinary Indirect 100.00 100.00 Tora Trading Services Pty Limited Australia Level 5, Deutsche Bank Place, 126 Phillip St, Sydney, NSW 2000, Australia Ordinary Indirect 100.00 100.00 Tora Trading Services S.R.L. Romania Strada Nicolae Iorga 1, Cluj-Napoca 400063, Romania Ordinary Indirect 100.00 100.00 TradeWeb Commercial Information Consulting (Shanghai) Company Limited China Floors 3 & 4, No. 1 Lane, 65 Huanlong Road, Shanghai Free Trade Zone Contribution Unit Indirect 100.00 51.24 Tradeweb Direct LLC USA c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Contribution Unit Indirect 100.00 51.24 Tradeweb EU B.V. Netherlands Antonio Vivaldistraat 50, Amsterdam, 1083 HP, Netherlands Membership Interest Indirect 100.00 51.24 Tradeweb Europe Limited England & Wales 1 Fore Street Avenue, London, United Kingdom, EC2Y 9DT Ordinary Indirect 100.00 51.24 Tradeweb Execution Services Limited England & Wales 1 Fore Street Avenue, London, United Kingdom, EC2Y 9DT Ordinary Indirect 100.00 51.24 Tradeweb Execution Services B.V. Netherlands Strawinskylaan 4117, Amsterdam, 10777ZX Ordinary Indirect 100.00 51.24 Tradeweb Global Holding LLC USA c/o Corporation Service Company, 2711 Centerville Road, Suite 400, DE 19808, United States Ordinary Indirect 100.00 51.24 Tradeweb Global LLC USA c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Ordinary Indirect 100.00 51.24 Tradeweb IDB Markets, Inc. USA c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Ordinary Indirect 100.00 51.24 Tradeweb Japan K.K. Japan 30/F Akasaka Biz Tower, 5-3-1 Akasaka, Minato-Ku, Tokyo 107-0052, Japan Ordinary Indirect 100.00 51.24 Tradeweb LLC USA c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Common Indirect 100.00 51.24 Tradeweb Markets Inc. USA c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Common A – – 46.67 3 Common B Indirect 100.00 Common C – – Common D Indirect 99.50 Tradeweb Markets LLC USA c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Membership interest Indirect 100.00 51.24 Turquoise Global Holdings Europe B.V. Netherlands Suite 108, Nieuwezijds Voorburgwal 162, Amsterdam, 1012 SJ, Netherlands Ordinary Indirect 100.00 84.17 Turquoise Global Holdings Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary A Indirect 100.00 84.17 Ordinary B Indirect 67.46 Turquoise Global Holdings US, Inc. USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Common Indirect 100.00 84.17 TW SEF LLC USA c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Limited Liability Company Interest Indirect 100.00 51.24 London Stock Exchange Group plc Annual Report 2022 244 Name of subsidiary undertaking Location of incorporation Registered office address Class of share held Direct or indirect holding Share ownership % LSEG plc ultimate economic interest % TWC Limited Cayman Islands 1 Nexus Way, Camana Bay, Grand Cayman, KY1-9005, Cayman Islands Ordinary Indirect 100.00 51.24 TWEL Holding LLC USA c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Limited Liability Company Interest Indirect 100.00 51.24 UK LSEG Financing 1 Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 UK LSEG Financing Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 Unavista Limited England & Wales 10 Paternoster Square, London, United Kingdom, EC4M 7LS Ordinary Indirect 100.00 100.00 UnaVista TRADEcho B.V. Netherlands Suite 108, Nieuwezijds Voorburgwal 162, Amsterdam, 1012 SJ, Netherlands Ordinary Indirect 100.00 100.00 World Bureau of Metal Statistics Limited England & Wales 5 Canada Square, Canary Wharf, London, United Kingdom, E14 5AQ Ordinary Indirect 100.00 100.00 Yield Book Tangible Property BRE LLC USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Member Interest Indirect 100.00 100.00 Yield Book Software BRE LLC USA c/o United Agent Group Inc, 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810, United States Member Interest Indirect 100.00 100.00 Zawya Internet Content Provider LLC United Arab Emirates P.O. Box 41640, Green Tower, District-Deira, Dubai, PO Box 1426 Ordinary Indirect 49.00 100.00 1 Zawya Limited Cayman Islands 1 Nexus Way, Camana Bay, Grand Cayman, KY1-9005, Cayman Islands Common Indirect 100.00 100.00 Zhi Cheng Worldwide Management Consulting (Shenzhen) Co., Ltd. China Room 312-04, New Times Square, No 1 Taizi Road, Shuiwan Community, Zhao Shang Street, Nanshan District, Shenzhen, China Ordinary Indirect 100.00 100.00 1 The Group’s equity interest is 49.00%, but the economic interest is 100.00%. 2 The Group’s equity interest is 75.00%, but the economic interest is 100.00%. 3 The Group’s voting interest is 91.2%. Notes to the financial statements continued 29. Other information continued FINANCIAL STATEMENTS ## 29. Other information continued ### 29.3 Associates An associate is where the Group is able to significantly influence the activity of an entity, but not control it. The Group's associate undertakings are: | Associate name | Location of incorporation | Registered office address | Identity of each class of share held in the associate undertaking | Direct or indirect holding | Share ownership % held by the investing company | Group ultimate economic interest % | | --- | --- | --- | --- | --- | --- | --- | | AcadiaSoft, Inc. | United States | c/o The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle, 19801 United States | Convertible Preferred | Indirect | 15.67 | 15.67^{1} | | ASX Refinitiv Charity Foundation Ltd | Australia | Level 10,60 Margaret Street, Sydney, NSW2000, Australia | Charitable incorporated organisation | Indirect | 50.00 | – | | Citywire Holdings Limited | England and Wales | 3 Spring Mews, London, England, SE11 5AN | Ordinary | Indirect | 16.40 | 16.40^{2} | | Curve Global Limited^{3} | England and Wales | 156 Great Charles Street, Queensway, Birmingham, England, B3 3HN | Ordinary A | Direct | 43.99 | 40.90 | | | | | Ordinary B | Direct | 46.01 | | | | | | Ordinary C | – | – | | | Fomtech Limited | England and Wales | 107 Cheapside, London, England, EC2V 6DN | Ordinary | Indirect | 19.50 | 19.50^{3} | | LabCi Holding Inc. | British Virgin Island | OMC Chambers, Wickhams Cay1, Road Town, Tortola | Ordinary | Direct | 47.62 | 47.62 | | Nivaura Ltd | England and Wales | 107 Cheapside, London, England, EC2V 6DN | Ordinary | Indirect | 23.70 | 23.70 | | Seabridge Holdings Pte. Limited | Singapore | 80 Raffles Place, 32-01 UOB Plaza 1, Singapore, 048624 | Ordinary | Indirect | 10.00 | 10.00^{3} | 1 The Group has significant influence over AcadiaSoft, Inc. due to its right to appoint three of the company's directors. 2 The Group has significant influence over Citywire Holdings Limited, Fomtech Limited and Seabridge Holdings Pte. Limited due to its right to appoint one of the company's directors. 3 Curve Global Limited is in liquidation. All associates have the same year end as the Group, except Fomtech Limited which has a 31 August year end. 245 London Stock Exchange Group plc^{}[] Annual Report 2022 # 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. ## **Depository Receipts/Global Depository Receipts (GDR)** Tradable certificates representing ownership of a number of underlying shares, mainly for companies in developing or emerging markets. 246 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Glossary continued Derivatives FX Matching Tradable financial instruments whose value is determined by the value The Group’s dealer-to-dealer FX trading venue. of underlying instruments; this could be equity, an index, a commodity or any other tradable instrument. GIACT — Exchange traded derivatives (ETD) The Group’s digital identity and payments verification platform. Listed derivatives traded on an electronic trading venue such as an Refinitiv acquired GIACT in December 2020 and it was included exchange and cleared through a clearing house. in the acquisition of Refinitiv in January 2021. — Over the counter (OTC) Green Economy Mark Derivatives are negotiated privately between two parties and may Mark recognising equity issuers on London Stock Exchange with 50% be cleared through a clearing house. or more green revenues. EBITDA Group Earnings before interest, tax, depreciation and amortisation. The Company and its Group undertakings. ESMA Group undertakings The European Securities and Markets Authority (ESMA), the EU Group undertakings shall be construed in accordance with section 1161 securities markets regulator. of the Companies Act 2006 and, in relation to the Company. Exchange Traded Fund (ETF) Hampton-Alexander Review Low-cost and flexible investments that track indices and sectors. An independent, business-led initiative established in 2016 to increase FCA the representation of women in senior leadership positions and on Financial Conduct Authority, the current regulator of conduct of boards of FTSE 350 Companies. providers of financial services in the UK and of UK trading venues IPO such as Recognised Investment Exchanges (RIEs) and MTFs. Initial Public Offering – the process whereby companies join our Fintech markets and raise capital for the first time. Financial technology. KYC ForexClear ‘Know your customer’ screening. LCH’s over-the-counter foreign exchange clearing service. LCH or LCH Group FRTB LCH Group Limited and its subsidiaries, the Group’s 82.6% owned Fundamental Review of the Trading Book, an international standard global clearing and risk management business. that sets out the rules governing the capital that banks must hold Lipper against market risk exposures. Lipper provides global, independent fund performance data in a FTSE Russell precise, granular fund classification system, and includes mutual funds, FTSE International Limited and its subsidiaries, the Group subsidiary closed-end funds (CEFs), exchange-traded funds (ETFs), hedge funds, that is a leading global provider of index and analytics solutions. domestic retirement funds, pension funds, and insurance products. FXall LSE The Group’s dealer-to-client electronic FX trading and London Stock Exchange plc. workflow platform. 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. 247 London Stock Exchange Group plc Annual Report 2022 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.p.A. 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. 248 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Glossary continued Science Based Targets Initiative (SBTi) UnaVista A coalition established in 2015 between the CDP, the United Nations The Group’s web-based matching, reconciliation and data integration Global Compact, World Resources Institute and WWF which aims engine that provides matching of post trade data in a simple, to enable companies to set emission reduction targets in line with automated process and the Trade Repository approved by ESMA. leading climate science. Voluntary Carbon Market (VCM) Secondary Market The Voluntary Carbon Market enables private investors, governments, The public market on which securities once issued are traded. non-governmental organisations, and businesses to voluntarily purchase carbon offsets to offset their emissions. SEDOL The Group’s securities identification service. Workspace LSEG’s data & analytics workflow solution designed to provide access SETS to company financial data and economic indicators as well as news, The electronic order book operated by the London Stock Exchange analytics and productivity tools. for the trading of the most liquid securities. World-Check SSE The Group’s risk intelligence database designed to assist organisations Sustainable Stock Exchanges. UN-led initiative to oversee the in meeting their KYC and third-party due diligence screening obligations. 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. 249 London Stock Exchange Group plc Annual Report 2022 # Investor Relations 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% - 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. 1 Represents total voting rights held by BCP York Holdings (Delaware) LP, York Holdings II Limited and York Holdings III Limited. 250 London Stock Exchange Group plc Annual Report 2022 FINANCIAL STATEMENTS Investor Relations continued | Investor Relations | Corporate brokers | | --- | --- | | London Stock Exchange Group plc | Citi | | 10 Paternoster Square | 33 Canada Square | | London | Canary Wharf | | EC4M 7LS | London | E14 5LB For enquiries relating to shareholdings in London Stock Exchange Group plc: T +44 (0)20 7500 5000 www.citigroup.com Shareholder helpline: +44 (0)20 7797 3322. Email: ir@lseg.com Morgan Stanley | Visit the Investor Relations section of our website for up-to-date | 25 Cabot Square | | --- | --- | | information including the latest share price, announcements, | Canary Wharf | | financial reports and details of analysts and consensus forecasts: | London | | www.lseg.com/investor-relations | E14 4QA | | Registered office | T +44 (0)20 7425 8000 | | London Stock Exchange Group plc | www.morganstanley.com | 10 Paternoster Square London Goldman Sachs EC4M 7LS Plumtree Court 25 Shoe Lane | Registered company number | London | | --- | --- | | London Stock Exchange Group plc: 5369106 | EC4A 4AU | | Registrar information | T +44 (0)20 7774 1000 | | Equiniti | www.goldmansachs.com | 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 251 London Stock Exchange Group plc Annual Report 2022 ## Disclaimers AIM, London Stock Exchange, MillenniumIT is a registered trade London Stock Exchange Group, mark of Millennium Information LSE, the London Stock Exchange Technologies Limited. Refinitiv, Coat of Arms Device, FTSE the Refinitiv logo, Refinitiv Russell, SEDOL, SETS and Workspace, Lipper, World-Check, UnaVista, are registered trade REDI, FXall, Eikon, Red Flag marks of London Stock Exchange Group, Scivantage and plc. Main Market and the Datastream are registered Green Economy Mark are trademarks of Financial & Risk un-registered trade mark of Organisation Limited and London Stock Exchange plc. Refinitiv US Organization LLC, as applicable. Beyond Ratings is a registered trade mark of Beyond Ratings. Tradeweb is a registered trade mark of TRADEWEB CDSClear is a registered trade MARKETS LLC. mark of LCH S.A. Turquoise is a registered FTSE, FTSE Russell is a registered trade mark of Turquoise trade mark of the London Stock Global Holdings Limited. Exchange Group companies and is used by FTSE International The Yield Book and WGBI are Limited under licence. registered trade marks of The Yield Book, Inc. 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 252 London Stock Exchange Group plc Annual Report 2022 Other logos, organisations and Designed and produced company names referred to by Friend may be the trade marks of www.friendstudio.com their respective owners. 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 Other logos, organisations and company names referred to may be the trade marks of their Exchange Coat of Arms Device, FTSE Russell, SEDOL, SETS and UnaVista, are registered respective owners. trade marks of London Stock Exchange plc. Main Market and the Green Economy Mark are un-registered trade mark of London Stock Exchange plc. Designed by Superunion, London. www.superunion.com. Beyond Ratings is a registered trade mark of Beyond Ratings. Board and Executive Committee photography by Henrik Andersen (LSEG) and Nabor Godoy (www.godoyshots.com). CDSClear is a registered trade mark of LCH S.A.. This report is printed on Vision Superior which is made of FSC® certified and other FTSE, FTSE Russell is a registered trade mark of the London Stock Exchange Group controlled material. companies and is used by FTSE International Limited under licence. Printed sustainably in the UK by Pureprint, a Carbon Neutral company with FSC® Chain of GIACT is a registered trade mark of Giact Systems, LLC. custody and an ISO 14001-certified environmental management system recycling over 100% of all dry waste. 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. ## www.lseg.com London Stock Exchange Group plc 10 Paternoster Square London EC4M 7LS Telephone +44 (0)20 7797 1000 Registered in England and Wales No. 5369106