1 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
London Stock Exchange Group plc
Annual Report 2023
Partnering to transform
our industry
OPEN MAKES MORE POSSIBLE
OPEN MAKES MORE POSSIBLE
Partnering to transform
our industry
We build partnerships across our industry that facilitate
innovation, build trust and improve efficiency. See the case
studies on the following pages to learn more about our
partnerships in action…
18
42
24
32
Partnering to transform
our industry: Microsoft
Partnering to transform
our industry: Post Trade Solutions
Partnering to transform
our industry: BlackRock
Partnering to transform
our industry: HSBC
CASE STUDY
CASE STUDY
CASE STUDY
CASE STUDY
01 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Contents
Strategic Report
Approval of the Strategic Report is provided in the
Directors’ Report on page 154.
LSEG at a glance 02
Our business model 04
Market trends and our response 08
Chair’s statement 10
Chief Executive Officer’s statement 12
Executive management team 14
A compelling investment story 16
Partnering to transform our industry: Microsoft 18
Key performance indicators 20
Partnering to transform our industry: BlackRock 24
Our purpose and strategy 26
Partnering to transform our industry: HSBC 32
Divisional review: Data & Analytics 34
Divisional review: Capital Markets 38
Divisional review: Post Trade 40
Partnering to transform our industry: Post Trade Solutions 42
Chief Financial Officer review 44
Financial review 48
Sustainability 58
Board engagement with stakeholders 69
Section 172(1) Statement 75
Principal risks and uncertainties 79
Financial viability statement 89
Who we are
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
Further information on London Stock Exchange Group
can be found at: www.lseg.com.
Governance
Corporate governance introduction 92
Board of Directors 94
Corporate governance report 98
Complying with the provisions of the Code 105
Report of the Nomination Committee 106
Report of the Audit Committee 109
Report of the Risk Committee 115
Directors’ Remuneration Report 117
Directors’ Report 154
Statement of Directors’ responsibilities 159
Financial Statements
Independent Auditor’s Report 162
Consolidated income statement 171
Consolidated statement of comprehensive income 172
Consolidated balance sheet 173
Consolidated statement of changes in equity 174
Consolidated cash flow statement 175
Notes to the consolidated financial statements 176
Company balance sheet 241
Company statement of changes in equity 242
Notes to the Company financial statements 243
Shareholder Information
Glossary 255
Investor Relations 259
London Stock Exchange Group plc
Annual Report 2023
02
LSEG at a glance
Our divisions
What we do
Our purpose
Our strategy
We are an integral partner for our customers across every stage of
the trade lifecycle, in multiple asset classes.
Data & Analytics
High-value data, analytics and indices, with solutions to manage risk,
workflow and data.
Capital Markets
Venues/platforms to raise or transfer capital through issuance and
secondary market trading for equities, fixed income and foreign
exchange (FX).
Post Trade
Clearing, risk management, capital optimisation and regulatory
reporting solutions.
We drive financial stability
by operating businesses that are of systemic importance, fundamental
to the financial ecosystem and critical to our customers.
We empower economies
by helping our customers to raise capital, support employment, innovate
and access global financial networks, across multiple asset classes.
We enable customers to create sustainable growth
by providing the tools and data that enable financial markets to manage
risk and make informed investment decisions.
Our long-term strategy builds on our strengths, as we invest in solutions
and services that can adapt and scale in evolving global financial
markets. We are:
Globally essential
Critical infrastructure and insight to customers required for the efficient
running of financial markets.
Multi-asset class
Across traditional and emerging asset classes, in both public and
private markets.
Seamlessly connected
Partnering with customers, enabling connectivity across the financial
markets value chain through open platforms and venues.
For more detail on our divisions –
refer to pages 34-41.
For more detail on our strategy –
refer to pages 27-30.
For more detail on our purpose –
refer to page 26.
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 reviews on pages 34-41.
03 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
LSEG at a glance continued
Total income growth excluding recoveries
2
(constant currency basis)
+8.3%
2022: +5.7%
Female representation at senior leadership
42%
2022: 40%
Adjusted EBITDA margin
47.2%
4
2022: 47.8%
Sustainable issuers
236
2022: 217
Adjusted operating profit
£2,862m
2022: £2,728m
Adjusted earnings per share
323.9p
2022: 317.8p
Reduction in carbon emissions
5
-29%
2022: -57%
Adjusted financial highlights
1,3
Sustainability highlights
Total income growth excluding recoveries
2
+7.8%
2022: +19.6%
Operating profit
£1,371m
2022: £1,417m
Basic earnings per share
138.9p
2022: 141.8p
Dividends per share
115.0p
2022: 107.0p
Financial highlights
1
How we performed
1 Continuing operations
2 Recoveries relate to fees for third-party content, such as exchange data, that is distributed directly to customers.
3 Adjusted figures exclude the impact of any non-underlying items. For more information on the criteria that constitute non-underlying items, see page 181.
4 On the basis of our c.48% EBITDA margin guidance for 2023 (excluding the impact of FX movements and the acquisition of Acadia), adjusted EBITDA margin was 48.0%.
5 Reduction of Scope 1, Scope 2 (market), Scope 3 (selected – business travel, home working, commuting, FERA) emissions vs a 2019 baseline.
For a full list of our key performance indicators –
refer to pages 20 to 23.
Our financial performance in the year, including
the below metrics, are discussed in more detail
in our financial review on pages 44 to 57.
London Stock Exchange Group plc
Annual Report 2023
We are a leading provider of financial
markets data and infrastructure
Across our business divisions we provide products and services that are
essential to financial markets. These include:
Data and distribution
Workspace provides end users with access to critical financial data, news,
our workflow platform and content from over 150k data sources. Our
real-time feeds drive trading and investment decisions across multiple
latencies, delivering data covering more than 80 million instruments
through proprietary distribution channels as well as partner applications.
Our Customer & Third-Party Risk business provides risk screening,
identity and account verification and customer onboarding services.
Our real-time data covers
>80m
instruments
Our World Check One
offering processed
176bn
screens in 2023
World-class indices
FTSE Russell provides indices supporting trillions in global assets
under management (AUM), enabling investment flow for the buy-side.
2023 FTSE Russell
ETF AUM
>$1.2tn
2023 FTSE Russell
ESG passive AUM
$262bn
Leading venues
We operate leading equities venues including London Stock Exchange
Main Market and LSE Alternative Investment Market (AIM). In FX and
in Fixed Income (through Tradeweb), we operate leading global
dealer-to-dealer and dealer-to-client venues.
2023 FX total ADV
1
$442bn
2023 Tradeweb rates – cash ADV
1
$367bn
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 2023
3.2m
CDS notional cleared in 2023
€4.8tn
Uniquely positioned
We are trusted by customers, partners and regulators as a provider of
critical infrastructure. This stems from decades of experience operating
trading venues, clearing systems and data and analytics infrastructure.
Bringing together this differentiated combination of capabilities is enabling
scale and new value creation as we serve financial markets. As the
boundaries between data and infrastructure blur, we will generate
new areas of opportunity and collaborative customer partnerships:
— Innovative trading and risk analytics.
— Improved workflow connectivity.
— More connected and intelligent data sets.
— New cloud-based models – Data-as-a-Service, Platform-as-a-Service,
Analytics-as-a-Service.
Our business model
1
04
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
markets 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
05 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Our business model continued
2
We bring deep expertise and a trusted reputation
across the financial markets value chain
Growth
2
+7.3%
Highlights
— #1 real-time data business.
— A leading global index and benchmark
provider (FTSE Russell).
— Leading provider of Know Your Customer
screening though World-Check.
Other market participants include:
Bloomberg
S&P Global
Income
£5.3bn
Growth
2
+6.1%
Highlights
— A leading dealer-to-client FX platform (FXall)
and leading global interbank FX venue.
— A leading fixed income, derivatives and
ETF electronic trading platform (Tradeweb).
— #1 European exchange by capital raised.
Other market participants include:
CBOE Global Markets
Euronext
Income
£1.5bn
Growth
(including NTI)
2
+17.4%
Highlights
— Leading global clearing house with
>90% global share of cleared interest
rate swap notional outstanding.
Other market participants include:
CME Group
Deutsche Boerse AG
Income
£1.2bn
Share of Group income
2
66% Share of Group income
2
19% Share of Group income
2
15%
Data & Analytics
A leading provider of high-value financial
markets data, indices and analytics.
Capital Markets
A global operator of leading capital raising
and trading venues in multiple asset classes.
Post Trade
A leading provider of clearing,
risk management and capital
optimisation solutions.
1 Average daily volume.
2 Proportion of total Group income, excluding recoveries.
3 Growth is on a constant currency basis.
For more information on each of our
divisions – refer to our divisional
reviews on pages 34 to 41.
London Stock Exchange Group plc
Annual Report 2023
06
Our business model continued
3
We are exposed to structurally
high growth markets
We have built a global footprint that enables us to serve a broad range
of customers around the world.
Growing markets
We serve multiple asset classes and growing liquidity pools, including
equities, FX and fixed income markets. Through our Data & Analytics
business we are also able to capitalise on the growing demand for
data, insight and automation. We expect this demand to accelerate
further as the adoption of cloud, AI and automation continues to
increase in the coming years.
For more information on relevant
market trends and our responses
– refer to pages 08 and 09.
Diverse geographies
We have a balanced global exposure, generating 43% of income in
EMEA, 42% 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 dedicated partners to our customers across the entire trade
lifecycle, with an open model and commitment to excellence.
We are a leading partner for the financial services sector, with customers
including the world’s largest banks, buy-side and sell-side trading desks,
asset managers and 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 47 of the 50 largest corporates
globally, with offerings including FX hedging solutions, risk management
tools and capital raising.
Customers we serve
45,000+
Customers out of the
top 100 global banks
by total assets
1
100
Customers out of the
50 largest corporates by
market capitalisation
1
47
1 As of February 2024.
Revenue by geography
1
Americas 42%
EMEA 43%
APAC 15%
1 Total income including recoveries.
Employees by geography
Americas 12%
EMEA 32%
APAC 56%
07 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Our business model continued
4
We consistently invest
for growth
5
We are highly cash generative, allowing us to invest organically in new
products and services, continually modernise our infrastructure and
acquire businesses that are complementary to our business model and
distribution footprint. In 2023 we continued to invest in our business,
through a combination of building new products to drive organic growth,
transforming our technology and continuing to ensure our systems
are resilient and secure. We also completed the acquisition of Acadia,
supporting our development of innovative post trade solutions and
unlocking the growth potential of the business within the Group.
For more information on this acquisition, see our Post Trade 2023
highlights on page 41 and a case study on our Post Trade Solutions
offering on page 43.
Our 10-year strategic partnership with Microsoft will also help build
next-generation services that empower customers to generate business
insights, automate complex and time-consuming processes and
ultimately, do more with less. For more information on our partnership
and how we are investing in joint product development alongside
Microsoft, see page 19.
More detail on capital allocation can
be found in our Chief Financial Officer’s
review on page 46 and on our website:
www.lseg.com/investor-relations/.
We generate high-quality revenue
that is mostly recurring in nature
We generate more than 70% of our income through recurring revenue
associated with data subscriptions and licences. This business model
benefits from a consistently high level of retention, contracts that are
typically 12-24 months in duration and improving performance in our
Annual Subscription Value (ASV).
We are well positioned to capitalise on growing pools of transactional
income through our venues. This includes Tradeweb, which continues
to benefit from the electronification of rates and credit markets, and
other businesses positioned to attract liquidity flow such as FXall
(FX dealer-to-client), Matching (FX dealer-to-dealer) and LCH which
benefits from volume growth in swaps and other OTC derivative markets.
Recurring revenue
Visible revenue
Mostly subscription and licence revenue, typically 12-24 month
contract duration.
Highly diversified
Revenues are broadly based across activity, product, geography
and >45,000 customers.
Strong customer relationships
Consistently high retention.
Transactional revenue
Diversified pool of revenue, growing across Post Trade and
Capital Markets, driven by strong Tradeweb performance.
Recurring revenue 72%
Transactional revenue 24%
Net treasury income 4%
Total income excluding recoveries
London Stock Exchange Group plc
Annual Report 2023
08
Market trends
and our response
Demand for data and its integration
into workflows
Rise of new technologies
including AI
Growth in global demand for high-quality, precision time stamped and
differentiated datasets from flexible, reliable and traceable data, which
offer choice of on-premise and cloud service delivery.
What is LSEG’s response?
We continue to invest in our real-time and pricing offerings to add more
latency options and we are embracing automation to improve the quality
and breadth of our data across asset classes. We are focused on maintaining
our position as the #1 real-time data provider by offering more choice in
public and private cloud, and managed on-premise solutions.
Example of this in action
Our Real-Time Optimised service, hosted on the public cloud, provides fast
and simple access to our unparalleled content from hundreds of exchanges
and OTC markets around the world allowing our customers depth of content,
choice of service and delivering speed to market.
With increasing automation and liquidity fragmentation and evolving
regulation, there is a growing need for smarter, faster, safer trading platforms,
enabling end-to-end trading workflows, with access to liquidity, data and
execution. We can also be affected by evolving regulation ourselves.
What is LSEG’s response?
We are joining up all our workflows across multiple areas of our businesses
to create seamless and interoperable offerings for our customers. We also
continue to work closely with regulators on an ongoing basis. For example,
we have been in ongoing dialogue with the Financial Conduct Authority
(FCA) as they conduct their study into the wholesale data market. We await
their findings as they look to assess the competitive landscape of this space.
Example of this in action
We are integrating our recently acquired Order and Execution Management
System (OEMS) platform, TORA, into Workspace. This will create an
end-to-end buy-side workflow solution for traders and fund managers, with
seamless access to, and interoperability with, our datasets and analytics.
The continued global focus on growth that is sustainable in all senses
is driving increasing demand for sustainably-linked investments and products.
Investors are increasingly allocating capital to sustainable portfolios and
strategies, while market participants are integrating sustainability into
workflows and business models, in many cases driven by emerging
regulatory requirements that differ by market.
What is LSEG’s response?
We are developing new products to deliver on our commitment to
enable sustainable growth for our customers and their communities.
Example of this in action
Our new climate data package includes an expanded set of reported
data measures, sophisticated analytics, new climate emission estimate
models and third-party data from the Carbon Disclosure Project (CDP).
This solution consolidates our capabilities on climate to help our clients
manage climate risk, build investment strategies and products, and report
on climate transition.
Buy-side market participants who believe market data spending
will rise over the next 12 months
80%
Cloud-enabled business models such as Data-as-a-Service (DaaS),
Data-Management-as-a-Service (DMaaS) and Analytics-as-a-Service
(AaaS) are emerging as firms look to build new solutions and do more
with data and analytics.
What is LSEG’s response?
We are developing new and innovative data and analytics solutions
for our clients in the cloud, enabled by our multi-cloud approach.
Example of this in action
Our next-gen content offering is reinventing the data experience for our
customers and addressing the growing number of challenges they face
around handling data. This is being done in partnership with Microsoft –
for more information on this partnership, see page 19.
Process automation, machine learning and AI continue to create
opportunities for operational efficiencies, alongside the development
of new innovative products.
What is LSEG’s response?
We have been using AI and machine learning across our business for
many years and we continue to build AI functionality into our platforms
and workflows. Our peers are also investing and innovating in this evolving
space, leading to increased competition and quality of AI-powered products
and services.
Example of this in action
Two examples of AI in our offering include: 1) Content ingestion in our
Data & Analytics business, which uses natural language processing (NLP)
to automate transcripts of company webcasts, reducing average processing
time of transcript summaries into Workspace; and 2) Advanced Dealing,
our fully integrated, cloud-based FX trading environment with AI-powered,
chat-driven trading functionality.
The rise of Large Language Models (LLMs) and generative AI drives both
a need for ever more expansive data sets and the opportunity for businesses
to access more data, in faster, more efficient and trusted ways.
What is LSEG’s response?
We are using generative AI to further modernise our business, enhance
customer productivity and unlock operational efficiencies. We aim to be the
trusted provider of financial services data for usage by AI models across
financial services, leveraging our data breadth, quality and auditability.
Example of this in action
We have a bespoke AI framework, tailored using our data and IP, to generate
insights and create intelligent workflows. Furthermore, in partnership with
Microsoft we are developing AI-powered copilots and solutions to be
delivered through Microsoft platforms, which will ease discoverability
and usage of our data.
Proportion of financial service firms actively adopting
AI technology
62%
09 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Electronification and digitisation
of trading
Regulation, risk management and
the need for capital optimisation
Electronification of financial markets continues to drive trading volume
growth, improve efficiency and enable access to liquidity. This trend is
expected to continue as many asset classes are far from reaching maturity
in adoption of electronic and automated trading.
What is LSEG’s response?
Tradeweb is continuously innovating to remain the platform of choice as
fixed income trading becomes increasingly electronic.
Example of this in action
Tradeweb launched improvements to its Automated Intelligent Execution
(AiEX) tool, where clients can link their order management systems directly
to the Tradeweb platform, fully automating the execution of the trade.
Tradeweb has continued to evolve the technology, adding asset classes
and new trading protocols, such as click-to-trade, Request-for-Market (RFM)
and portfolio trading.
The rise in the use of – and demand for – digital assets across both
retail and institutional investors as well as with central authorities and
asset managers and custodians is driving increased customer demand
for associated financial markets infrastructure, data and analytics.
What is LSEG’s response?
Expanding the coverage of our asset classes whilst adhering to our high
risk standards is key to ensuring we fully support customers navigating
emerging drivers of market volatility, such as the failure of FTX Trading.
Example of this in action
We announced our intention to partner with GFO-X to provide a regulated
crypto future trading and clearing infrastructure.
Digital platforms are unlocking growth across multiple segments
including digital exchanges, digital payments, online banking and retail
wealth, driving greater demand for efficiency across the trade lifecycle.
What is LSEG’s response?
Our vision is to create the first global digital market infrastructure that
provides an open access, all-to-all solution for transferring securities:
any asset class, anywhere in the world, at any time and end-to-end,
from issuance to post trade processing.
Example of this in action
We announced plans for a new digital market infrastructure, which will
facilitate capital market transactions using distributed ledger technology.
Share of US investment grade corporate bonds traded electronically
(doubled since 2020)
40%
Market volatility highlights the importance of trusted venues and secure
clearing houses that are capable of meeting demand spikes. Cases of
extreme volatility can ultimately lead to the consolidation of some of
our customers, as we saw in 2023 with Credit Suisse.
What is LSEG’s response?
Our market infrastructure businesses play a key role in helping participants
to navigate major events, such as the collapse of Silicon Valley Bank in March
2023. Heightened market volatility is a positive driver of revenue for parts
of our business, e.g. our OTC Derivatives clearing business in 2023.
Example of this in action
LCH is a global business; our FX, IRS, CDS, equities and repo markets are all
cross-border markets, enabling us to provide clearing services to customers
in over 60 countries.
A combination of regulatory and capital requirements and pressure
to improve operational efficiency is driving heightened need for our
customers to manage capital and cost. Many are seeking ways to automate
and streamline post trade workflows for cleared and uncleared OTC
derivatives and optimise how their balance sheets are utilised.
What is LSEG’s response?
We are bringing the benefits of our clearing house and OTC derivatives
know-how to the uncleared space, working alongside our partners to
support their regulatory compliance and capital optimisation needs.
Example of this in action
We are consolidating three assets to create Post Trade Solutions:
1) SwapAgent, our clearing house for bilateral derivatives; 2) Quantile,
which provides financial resource optimisation solutions; and 3) Acadia,
providing standardised collateral and multi-asset class workflow capabilities
for uncleared OTC derivatives. For more information on Post Trade Solutions,
refer to page 43.
The impacts of accelerated digitisation, including open banking, emerging
regulations, the growth in digital payments and increased cross-border
business operations, have created new risks for our clients and their
customers. Firms are seeking ways to manage these risks by better
understanding their customer base/supply network (Know Your Customer
– KYC and Know Your Third Party – KY3P) and minimising incidences of
fraud and illicit activity through anti-money laundering solutions and digital
customer identification.
What is LSEG’s response?
We help our clients comply with mandatory KYC, anti-bribery and corruption,
and associated legislation, and support them in detecting money laundering,
and account and payment fraud. We also help them counter the financing
of terrorism, human trafficking, modern day slavery and green crime.
Example of this in action
Our globally recognised World Check database helps clients to meet their
due diligence obligations and identify potential financial criminal activity.
The importance of this service has been heightened in a year of significant
geopolitical tension.
Additional capital required by European banks to adhere to the
regulatory requirements of Basel IV
€120bn
Market trends and our response continued
Growth in adjusted operating profit
1
+7.9%
2022: +4.6%
Total dividend per share for 2023
115p
2022: 107p
Returned to shareholders via buybacks since August 2022
£1.5bn
Chair’s statement
1 Growth is on a constant currency basis.
LSEG delivered a strong
performance as we continue
to transform our business and
deliver on our strategy to be the
leading global financial markets
infrastructure and data provider.
Don Robert
Chair
London Stock Exchange Group plc
Annual Report 2023
10
11 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Overview
In 2023, LSEG delivered a strong performance as we continue to
transform our business and deliver on our strategy to be the leading
global financial markets infrastructure and data provider. Total income
excluding recoveries was £8.0 billion, up 8.3% on a constant currency
basis, while adjusted operating profit was £2.9 billion, up 7.9% on
a constant currency basis and adjusted EPS grew 1.9%.
With over 70% of revenues recurring, we remain highly cash generative
and continue to carefully manage our capital allocation. We completed
a £750 million directed share buyback in Q3 and have now returned
a total of £1.5 billion to shareholders via buybacks since August 2022.
We have also announced plans to return £1 billion to shareholders
via further share buybacks during 2024.
We have seen significant evolution in our shareholder base, with the
Blackstone-led consortium making excellent progress in selling their
shares to existing and new institutional investors. The Blackstone
holding has reduced from over 34% to around 11% over the year.
At our Capital Markets event in November 2023, we outlined our
new medium-term guidance. We expect mid to high single-digit organic
revenue growth, accelerating after 2024, as customers begin to benefit
from investment in our platforms and our partnership with Microsoft.
We also expect our EBITDA margin to increase over time, while capital
expenditure will decline to a high single-digit percentage of income. We
also expect cumulative free cash flow to exceed adjusted profit after tax.
The Board is proposing a final dividend of 79.3 pence per share,
representing a total dividend of 115.0 pence per share, a 7.5% increase.
Governance
The Board seeks to operate to and maintain the highest governance
and ethical standards. Further detail is available in the Board’s
governance report from page 92.
In February 2023, Scott Guthrie joined the Board as a Non-Executive
Director in connection with LSEG’s strategic partnership with Microsoft.
Scott’s long-standing career at Microsoft, including running the Microsoft
Cloud and AI Group business, and deep technology expertise provides
a unique and valuable perspective to the Group as we continue to
deliver on our ambition.
Erin Brown and Doug Steenland stepped down as Non-Executive
Directors of the Board, following the sales of shares by the Blackstone-
led consortium. I’d like to thank them both for their contributions to the
Group since the acquisition of Refinitiv in 2021 and wish them all the
best in their future endeavours.
In November 2023, we announced that Michel-Alain Proch had
been appointed Chief Financial Officer and a member of the Board of
LSEG plc. This followed Anna Manz’s decision to step down in order
to assume another CFO role. Anna has been a valued member of the
LSEG Board and I would like to thank her for the key role she has played
in the successful delivery of the Group’s strategy over the last three
years. I would also like to welcome Michel-Alain to the Board and look
forward to working with him.
I am pleased to confirm that we meet the Parker Review
recommendations, and that we meet all recommendations set out by
the FTSE Women Leaders Review. Two of the four senior positions in the
Company outlined in the Listing Rules are currently held by women and
two of the Board’s Directors are from a minority ethnic background.
At the end of 2023, the Board was over 40% female, however, following
Anna’s departure and Michel-Alain’s arrival, this will drop to below 40%.
As part of our commitment to visit one international office per year to
engage with colleagues, the Board visited the Paris office to hear more
from them and learn about our customers in the region.
Sustainability
As described in the Sustainability section of the Strategic Report
(pages 58 to 68), 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 other stakeholders
in this regard.
We remain committed to our ambition to reach net zero by 2040 and
to our Climate Transition Plan which we published in 2022, the first
global exchange group to do so. Our primary near-term target is to
reduce all of our operational emissions
1
by 50% by 2030, from a 2019
baseline. By the end of 2023, we had achieved a 29% reduction in
these emissions (2022: 57%). Like many companies, we saw a steep
reduction in our carbon emissions during the Covid-19 pandemic and
emissions have naturally increased over the past two years as physical
activity levels normalise. We remain well on track to achieve all of our
Science-Based Target initiative (SBTi)-approved targets.
Remuneration policy
The Board and Committee believe it is essential to reset our Executive
Director pay, adjusting the three core elements — salary, annual bonus,
and long-term incentive provisions — to closely align the overall pay
quantum with the median of our global sector peer pay. The proposed
revisions to the Policy address our desire to reinforce a pay-for
performance philosophy as the majority of the quantum reset is
performance-based. We will continue to set stretching targets to ensure
bonus and LTIP vesting is warranted only when underlying performance
and shareholder value creation is strong. We are considering CEO
compensation in the very specific circumstances of David Schwimmer,
taking into account his outstanding past performance and strategic
direction. The revised remuneration policy, as outlined from page 118,
will be subject to shareholder approval at the 2024 AGM.
Summary
It has been another year of strong progress in 2023. We will continue
to invest in our global talent and growing our global businesses,
in partnership with our customers, to drive revenue growth and
increased profitability.
On behalf of the Board, I’d like to thank our colleagues across the world
for their continued commitment throughout the year. I look forward to
working with the Board and LSEG’s Executive Committee to achieve
our strategic objectives as we transform the financial services industry.
Don Robert
Chair
28 February 2024
Chair’s statement continued
1 We aim to reduce operational emissions (Scope 1, Scope 2 (market based) and selected
Scope 3 for FERA, business travel, home working, commuting) by 50% vs a 2019 baseline.
For more information on our Climate Transition Plan and all of our climate-based targets,
refer to page 63 of this report and to our 2023 Sustainability Report.
London Stock Exchange Group plc
Annual Report 2023
12
Growth in total income excluding recoveries
1
+8.3%
2022: +5.7%
Growth in adjusted earnings per share
+1.9%
2022: +16.7%
Chief Executive
Officer’s statement
The breadth and depth of
our offering is a true strategic
differentiator. Customers recognise
that because we serve them across
so many different parts of their
business, our relationship is
not that of a typical supplier.
Through investment, innovation
and partnership, we will shape
the future of our industry.
David Schwimmer
Chief Executive Officer
London Stock Exchange Group plc
Annual Report 2023
12
1 Growth is on a constant currency basis.
13 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Introduction
In 2023, we continued to deliver for our customers and shareholders
despite an uncertain macroeconomic environment, with ongoing interest
rate rises and recession risks impacting markets around the world.
The actions that LSEG has taken to transform and diversify our business
over the past three years have positioned us well to capitalise on
powerful industry trends and meet the evolving needs of our customers.
How did LSEG perform in 2023?
We delivered another year of strong revenue growth, with good
contributions from all of our business divisions. In Data & Analytics,
we’re innovating to improve our customer offering on many fronts
and this helped to drive revenue growth of 7.3%
1
in 2023. Revenue
benefits from higher customer satisfaction were also reflected in Annual
Subscription Value growth, which reached 6.7% by the end of the year.
Businesses that historically had been underperforming and losing
market share, such as Trading & Banking, are now achieving consistent
healthy growth, building on our deep and broad customer relationships.
Our Enterprise Data business is growing well. We are seeing strong
demand for our data sets, including from investors deploying capital
through AI- and quant-driven strategies. A great example of this is Tick
History, our comprehensive database of historical pricing information
and one of our many proprietary datasets. It gives customers access
to over 87 trillion ticks of data, spanning 100 million instruments, across
over 500 trading venues dating back more than 25 years of Tick History
Data. By combining this with our PCAP – or Packet Capture data –
we offer a very powerful subset of historical pricing information
with precise, nanosecond timestamps.
We’re also accelerating innovation in our Investment Solutions business,
where we’re going to market much faster with new index products
thanks to our investment in the systems that drive the business. In Post
Trade, volumes in interest rate swaps clearing and other products, as
well as the expansion of our business into the uncleared space, drove
total income up by 17.4%
1
. Capital Markets achieved revenue growth
of 6.1%
1
, largely driven by Tradeweb as the team continues to innovate
while benefiting from the ongoing electronification of fixed income
markets. In equities, 2023 was a poor year globally for IPOs, but looking
ahead, the pipeline in 2024 is encouraging.
Our adjusted EBITDA margin was slightly lower than in 2022,
reflecting investment in the Microsoft partnership, the in-year impact
of acquisitions and some FX-related items. We’re continuing to improve
our underlying profitability and excluding these impacts, we delivered
adjusted EBITDA margin expansion of 110bps in 2023.
The strong income growth we delivered, coupled with ongoing cost
discipline and strong delivery of Refinitiv-related synergies, helped
drive growth in our adjusted operating profit of 7.9%
1
.
We’re continuing to strengthen and unify the LSEG business. Our brand
campaign clarifies how we show up to the market, bringing cohesion
and simplicity to what was once a confusing image of over 20 branded
products. At the same time, we’ve created a new culture focused on
driving collaboration across our Group.
In December 2022, we announced an exciting strategic partnership
with Microsoft and we’ve made excellent progress over the past year.
We are beginning the rollout of new products in the first half of 2024
with a steady drumbeat of pilots, launches and ongoing enhancements
developed in partnership with some of our biggest customers.
What differentiates LSEG’s business?
LSEG is a truly global business with operations in over 60 countries and
providing services into more than 170 countries. We span multiple asset
classes and we provide services throughout the entire trade lifecycle.
None of our competitors has the breadth of offering or the global reach
of LSEG. This in turn, supports genuine long-term partnerships built
on trust. From a financial perspective, the nature of our services, the
markets we are aligned to and relationships we have, mean that the
quality and visibility of our earnings are very high and not correlated
to a single driver.
The breadth and depth of our offering is a true strategic differentiator.
Customers recognise that because we serve them across so many
different parts of their business, our relationship is not that of a typical
supplier. We are a strategic partner. We are increasingly working in
partnership with our customers’ leadership teams to solve problems
and create opportunities. We help them simplify their business, reduce
their reliance on multiple other vendors and drive growth, innovation
and efficiency. We have competitors in each segment, but our
customers really value our breadth and the benefits that it brings them.
What are the drivers for future growth?
LSEG is operating in growing markets and the range of our products
and services brings diverse revenue streams. In addition, our
partnership with Microsoft means we will be able to address new
markets, which will offer us additional opportunities for growth.
Other opportunities for long-term growth include expansion into new
industry verticals. As well as the investment we’re making with Microsoft,
products in areas like Risk Intelligence have broad applications. Our
expertise in data management is second to none and as companies
across industries become increasingly data driven, they will look to
experts to help them manage their data. We are well-positioned to play
that role. In private markets, we are investing in developing a trading
venue for private companies to create a funding continuum between
private and public markets. We are also looking in more detail at digital
markets infrastructure in partnership with Microsoft and others.
Chief Executive Officer’s statement continued
1 Growth rates are on a constant currency basis.
London Stock Exchange Group plc
Annual Report 2023
14
Executive management team
Day-to-day management of the Group is led by the CEO David
Schwimmer, supported by the Executive Committee. The team meets
regularly to review a wide range of business matters, including financial
performance, investment and projects, corporate culture, development
and implementation of strategy, and setting and monitoring of
performance targets.
Profiles of the Executive team are provided as at January 2024.
For further information on David Schwimmer, as well as our outgoing
CFO, Anna Manz and our incoming CFO, Michel-Alain Proch, who are
also members of the Board of Directors, see our Board of Directors
overview on pages 94 to 97.
Changes to the Executive Committee
Tim Jones left LSEG in January 2023 and was replaced on the
Executive Committee by our new Chief People Officer, Erica Bourne.
Ron Lefferts joined the Executive Committee in April 2023.
Satvinder Singh joined LSEG as Head of Data & Analytics in July 2023,
at which time he also joined the Executive Committee.
Brigitte Trafford left LSEG in December 2023.
Upon his retirement, Anthony McCarthy was replaced on the
Executive Committee by our new Chief Information Officer, Irfan Hussain,
in January 2024.
Anna Manz will leave LSEG on 29 February 2024 and will be replaced
on the Executive Committee by our new CFO, Michel-Alain Proch.
In January 2024, David Shalders announced that he would be leaving
LSEG during 2024.
Appointment of a new Chief Financial Officer
In May 2023, Anna Manz announced she would be leaving LSEG to
take the CFO role at Nestlé.
Michel-Alain Proch joined LSEG as CFO on 26 February 2024 and
becomes CFO and Executive Director on 1 March 2024. Previously,
Michel-Alain was Group CFO of Publicis Groupe SA where he led
the global finance team across 100 countries.
Michel-Alain Proch
Group Chief Financial Officer-designate
Chief Executive Officer’s statement continued
What are LSEG’s priorities for 2024 and beyond?
In less than three years we have transformed LSEG into a leading
financial markets infrastructure and data business, trebling the growth
rate of the Refinitiv Data & Analytics businesses we acquired and
beating the growth targets we had set, line by line. However, the real
opportunity still lies in front of us. As we enter the next phase of growth,
we will develop our leading businesses across the financial markets
lifecycle to create seamless workflows within and across asset classes.
We will provide our customers with new AI-driven insights based on our
trusted and validated data, combined with straight-through execution,
risk management and capital efficiency across their businesses.
Through investment, innovation and partnership we will shape the future
of our industry. We expect growth to accelerate over the medium term.
Margins will expand and our strong cash generation will further improve,
creating opportunities for reinvestment in growth and continued
shareholder returns. We will build on our differentiated customer
proposition to affirm our position as the partner of choice across the
financial markets value chain.
Throughout this process, our people will be central to our success.
Our corporate values of integrity, partnership, excellence and change
form the basis for how we approach everything we do and encourage
an inclusive culture that values a range of perspectives and embraces
diversity of every kind. On behalf of the Executive Committee, I would
like to thank all our people for their hard work and commitment in
delivering another year of transformation for LSEG.
David Schwimmer
Chief Executive Officer
28 February 2024
For more information on our CEO and CFO, refer to
our of Board of Directors’ profiles on pages 94 to 97.
Chief Executive Officer’s statement continued
David Schwimmer
Group Chief Executive Officer
Joined LSEG in 2018
Irfan Hussain
Chief Information Officer
Joined LSEG in January 2024
Irfan leads LSEG’s technology
team, driving innovation in global
financial markets. In a 28-year
career at Goldman Sachs, Irfan
held many senior positions
including, most recently, Chief
Operating & Strategy Officer
in the Engineering division.
David Shalders
Chief Operating Officer
and Head of Integration
Joined LSEG in 2019. Due to
leave LSEG at the end of 2024.
David oversees operational
activities at LSEG and was
responsible for the integration
of Refinitiv. Previously Group
Operations and Technology
Director at Willis Towers Watson,
David also spent 19 years at RBS
in a number of senior operations
and technology roles.
Anna Manz
Group Chief Financial Officer
(outgoing)
Joined LSEG in 2020, and will
leave on 29 February 2024.
Satvinder Singh
Head of Data & Analytics
Joined LSEG on 3 July 2023
Satvinder leads LSEG’s Data &
Analytics division, serving over
45,000 customers globally. He
has over 28 years of experience
leading global businesses in data
and analytics, capital markets,
post trade services, payments
and technology.
Daniel Maguire
Head of Post Trade,
CEO, LCH Group
& Chief Strategy Officer
Joined LCH in 2008
Daniel has 24 years of experience
in risk and default management,
product management and
regulatory strategy, with over
20 years spent at LSEG. As well
as heading up Post Trade,
Daniel assumed the role of
Chief Strategy Officer in 2023.
Murray Roos
Head of Capital Markets
Joined LSEG in 2020
Murray oversees LSEG’s Equities,
FX and Fixed Income divisions
and has 26 years’ experience in
developed and emerging markets,
including Executive roles at
Citigroup and Deutsche Bank.
Balbir Bakhshi
Chief Risk Officer
Joined LSEG in 2021
With 29 years of experience at
global financial institutions, Balbir
oversees risk management at
LSEG, including risk identification
and mitigation. Previously Head of
Non-Financial Risk Management
at Deutsche Bank.
Ron Lefferts
Head of Sales & Account
Management
Joined LSEG in January 2021
Ron leads LSEG’s global sales
team to drive the growth of our
products and solutions. Ron’s 25
years of experience include senior
leadership roles with IBM and,
most recently, Global Leader of
Technology Consulting at Protiviti.
Erica Bourne
Chief People Officer
Joined LSEG in January 2023
As CPO, Erica leads LSEG’s HR
policies and programmes. With
15 years of experience, Erica has
held a number of leadership and
executive roles across technology,
consulting and financial services
and previously led the People
function at Burberry Group.
Catherine Johnson
General Counsel
Joined LSEG in 1996
Catherine manages a global
team of lawyers and compliance
professionals, advising the Board
and senior executives on key
legal and compliance issues and
strategic initiatives. Catherine
qualified as a lawyer in 1993 and
has held a number of senior roles
in her career at LSEG.
Executive management team left to right
15 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
A compelling
investment story
With market-leading positions built
on trusted partnerships and orientated
to attractive long-term trends,
and a highly cash-generative and
visible financial model, LSEG offers
a compelling investment story.
London Stock Exchange Group plc
Annual Report 2023
16
We are globally essential
— We provide services in more than 170 countries, with operations
in over 60.
— Many of our competitors are heavily focused on single markets
or regions.
We are multi-asset class, with leading market positions
— We have leading data, trading and clearing franchises in equities,
foreign exchange and fixed income.
— We also have a growing presence in commodities and derivatives,
and are investing to grow in private markets and digital assets.
We are seamlessly connected, operating across the trade lifecycle
— We are leaders in pre-trade research, counterparty risk management,
execution, benchmarking and clearing.
— We are increasingly building connections between our businesses,
developing innovative new services and improving workflow
for our customers.
We are a trusted, long-term partner
— The depth, breadth and quality of our data is deeply trusted to
power the processes of major institutions globally.
— We operate and grow a number of key platforms that were
once owned and developed by our customers – for example
The London Stock Exchange, London Clearing House and Tradeweb.
— We are open – customers can easily combine our data with theirs,
or access third-party platforms through us.
What differentiates our business
for our customers…
Countries we serve
170+
Countries where we operate
60+
For more information on our business
model – refer to pages 04 to 07.
Find out more about our products
and services in our divisional
reviews on pages 34 to 41.
STRATEGIC REPORT
London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
A compelling investment story continued
17
We operate in growing markets and have diverse revenue streams
— All of our addressable markets have a healthy growth profile –
at least mid-single digit % growth or better.
— Through the Microsoft partnership we can address new markets
offering significant additional growth opportunities.
— Our revenue is diversified by product, market and customer –
with our top 250 customers only accounting for c.55% of revenue.
Our revenue is high quality and high visibility
— 72% of our revenue is subscription-based and benefits from
long-term customer relationships. Our services are vital to our
customers’ businesses.
— Our transactional revenue, which comes mainly from Tradeweb
and Post Trade, is very high quality – with strong existing positions
and long-term growth drivers.
— Post Trade total income CAGR was 10% 2019-2023 and Tradeweb’s
revenue CAGR was 15%.
We generate uncorrelated growth
— We are not over-exposed to any single macroeconomic or industry
measure – be it GDP growth, debt issuance, volatility or equity
markets performance.
— We have achieved consistent mid to high single digit organic
revenue growth since 2018 despite significant and unforeseen
factors – including the Covid-19 pandemic, the Russia/Ukraine War
and the rapid increase in inflation and interest rates.
Our cash generation is strong and we have reinvested
for growth successfully
— We generated £1.8 billion of free cash flow in 2023, and expect
our cumulative free cash flow to exceed net income over the
medium term.
— This allows us to invest in organic growth, grow the dividend,
fund M&A and return excess capital to shareholders.
— Our AEPS and dividend CAGRs over the last 20 years have been
15% and 18% respectively.
…is also good for our shareholders
Subscription-based revenue
72%
Equity free cash flow generated in 2023
£1.8bn
Satvinder Singh (left) and Nick Parker (President,
Industry and Partnerships, Microsoft) taking
questions at a recent event between LSEG and
Microsoft that took place at our offices in London.
The event brought together over
500 employees from across
the two firms for a series
of workshops, presentations
and product development
discussions.
1818
CASE STUDY
London Stock Exchange Group plc
Annual Report 2023
Partnering to transform
our industry: Microsoft
19 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Partnering with Microsoft continued
Partnering to transform the financial services industry
In December 2022, we launched a 10-year partnership with Microsoft
to deliver next-generation data, analytics and cloud infrastructure
solutions that will change the way financial markets participants interact,
collaborate and derive insight. By integrating Workspace with Microsoft’s
productivity suite, we will deliver an enhanced workflow experience
that offers seamless Microsoft Teams communication and Microsoft 365
interoperability with built-in compliance. Plus, with Microsoft’s cutting-
edge generative AI technology and by migrating our data platform
and other key technology infrastructure to the Microsoft Azure
environment, we will make it easier for our customers to discover,
manage, share and analyse petabytes of unstructured data.
A meaningful growth opportunity
Today, we estimate that our Data & Analytics total addressable market
(TAM) stands at around £35 billion. However, this only represents spend
on third-party providers and is under half of the market’s total outlay
on data and analytics. There is a further c.£50 billion of spend that is
currently taken in-house to perform manual activities such as cleaning,
validating and storing data, and we hear a clear message from our
customers that they want to outsource these activities. By combining
our data management expertise with Microsoft’s cloud infrastructure
and suite of AI applications, we’re positioning ourselves to address this
incremental TAM. Over time, we expect the partnership will meaningfully
increase revenue growth for LSEG.
Delivering ahead of schedule
We have hundreds of people working across the partnership to build
these products and through our Design Partner Programme, we are
working alongside some of our largest customers to understand their
desires and pain points, ensuring these are factored into key product
development decisions. We are making excellent progress and we now
expect that the first solutions will become available in the first half of
2024 – ahead of our original expectations. Solutions will initially be
made available through pilot programmes – starting with some
productivity tools and O365 interoperability – before a steady
drumbeat of updates begins to hit the market.
Potential data management TAM, currently taken in-house
c.£50bn
First products due to launch ahead of schedule in
H1 2024
Partnering with Microsoft to revolutionise
workflows for financial markets participants
LSEG’s datasets and analytics
products, as well as the deep
partnerships and trust they have
established across the financial
services industry, is unique.
The combination of LSEG’s data
platform and Microsoft’s AI
capabilities will unlock tremendous
new potential for our customers.
Scott Guthrie
Executive Vice President, Cloud and AI Group, Microsoft
LSEG Board Member
Our partnership with Microsoft
is one of the many reasons
I’m excited about the future
for Data & Analytics.
We are co-innovating solutions that
will transform the financial services
industry. Using our collective
strengths, we will change how our
customers discover and experience
our trusted breadth and depth
of data. We will deliver clear value
to customers by helping them
do more: quickly and simply,
and across a much broader
addressable market.
Satvinder Singh
Head of Data & Analytics, LSEG
London Stock Exchange Group plc
Annual Report 2023
20
2023 Financial KPIs
We are focused on delivering consistently
strong financial performance and achieving
the targets we have set.
These core financial KPIs demonstrate
the value we are delivering for both our
customers and shareholders and they
show that our strategy is working.
These KPIs align to our Group
Strategic Objectives (GSOs) which
help determine Executive Director
remuneration and performance-
related pay for all employees.
Further detail on the GSO performance
assessment can be found in our
Directors’ Remuneration Report
on pages 139 to 141.
Key performance
indicators
1 Constant currency income growth, excluding recoveries.
2 2022 growth excludes the impact of the Russia/Ukraine War.
3 For more information on the criteria that constitute non-underlying items, see page 181.
4 Our 2023 EBITDA margin guidance of “around 48%” was set on the basis of a £1 = $1.21
exchange rate and excluded any impact of the Acadia acquisition. For more information,
refer to page 49 of our Financial Review.
Definition
Income growth, independent
of FX movements.
Why this is important for LSEG
Income growth is a key measure
of our success since we operate
in growing markets and aim to
hold or grow market share. For
2023, we guided to total income
growth (excluding recoveries)
of 6-8%, excluding new M&A.
Going forward, we expect to
deliver mid to high single-digit
organic income growth,
accelerating after 2024.
Analysis
We delivered total income growth
1
of 8.3% in 2023. Excluding the
impact of the Acadia acquisition,
we delivered growth of 7.7%,
towards the upper end of our
6-8% guidance range.
All divisions contributed to this
growth. We continued improving
product retention in Data &
Analytics by investing in and
expanding our content and
capabilities, also realising a higher
price review in 2023. In Post
Trade, uncertainty around global
interest rates drove robust client
clearing activity at SwapClear
and we translated this into
strong growth. In Capital
Markets, Tradeweb continued to
innovate and drive expansion in
international markets, as structural
electronification tailwinds persist.
Total income growth
1
+8.3%
2022: +6.6%
2
2023
2022
2021
8.3%
6.6%
6.1%
Link to strategic objectives
This KPI aligns to our Growth
objective, to drive sustainable
value creation and accelerate
growth; and support delivery
of transformational growth.
Definition
A point in time measure of
our book of recurring contracts
vs 12 months ago.
Why this is important for LSEG
>70% of our revenues are
subscription-based with a high
degree of visibility. ASV growth
measures the year-on-year growth
of that recurring book of business
at a point in time. ASV growth
should act as a leading indicator
for subscription revenue growth
and has three key drivers:
retention, new sales and
price increases.
Analysis
Our year-end ASV growth of
6.7% represents an acceleration
of 370bps since the acquisition
of Refinitiv. This reflects the
significant progress we have
made strengthening our offering
through a combination of: better
execution, a greater focus on
our customers and targeted
investment in our products
and services.
In 2023, we delivered
approximately 100bps of
incremental ASV growth through
higher price reviews. On the
whole, we had positive price
review conversations with our
customers as the incremental
value we have added to our
offering is recognised.
ASV growth
+6.7%
2022: +6.2%
2
2023
2022
2021
6.7%
6.2%
4.6%
Link to strategic objectives
ASV growth aligns to our
Growth objective, indicating
the rate of expansion of our
subscriptions book.
Total income
growth
1
Annualised Subscription
Value (ASV) growth
21 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORTSTRATEGIC REPORT
Key performance indicators continued
Definition
EBITDA – excluding non-
underlying items
3
– over total
income (excluding recoveries).
Why this is important for LSEG
We are building a more efficient,
scalable business and expanding
underlying profitability over time.
Excluding FX impacts related
items we had guided to an
EBITDA margin of around 48%
in 2023. Longer term, we expect
to increase our EBITDA margin
over time.
Analysis
We delivered a 2023 adjusted
EBITDA margin of 47.2%, with the
year-on-year decline of 60bps
primarily reflecting the full-year
impact of recent acquisitions,
costs relating to development
of products with Microsoft and
FX-related items.
Excluding FX-related items, we
delivered an adjusted EBITDA
margin of 47.7% (2022: 46.9%). We
drove this underlying expansion
through continued improvements
in efficiency and scalability, in
particular through modernisation
of the infrastructure that supports
our Data & Analytics offering.
Excluding Acadia and movements
in FX rates, our EBITDA margin
was in line with guidance
4
.
Adjusted EBITDA margin
47.2%
2022: 47.8%
2023
2022
2021
47.2%
47.8%
47.8%
Link to strategic objectives
Expansion of our EBITDA margin
is driven by income growth
(Growth objective) and cost
efficiencies (Efficiency objective).
Definition
Earnings per share,
adjusted to remove any
non-underlying items.
3
Why this is important for LSEG
A key financial metric that is
both central to our valuation
and a significant element of
employees’ performance-related
remuneration. Growth in our
AEPS reflects our degree of
success in driving strong top-line
performance, as well as managing
costs including tax and interest,
and capital allocation.
Analysis
Adjusted earnings per share
(AEPS) from continuing operations
was 323.9 pence. The 1.9%
increase in AEPS year-on-year
reflected growth in underlying
profitability, partly offset by higher
net finance expense due to
additional interest expenses on
floating rate borrowing and growth
in depreciation which reflected
our ongoing investment in the
business and delivery of our
synergy programmes.
Our adjusted effective tax rate
was a little higher year-on-year,
principally driven by the impact
of a higher UK corporate tax rate
from 1 April 2023. Share buybacks
also reduced the average share
count in 2023, which acted as
a tailwind for AEPS.
Adjusted earnings per share
323.9p
2022: 317.8p
2023
2022
2021
323.9p
317.8p
272.4p
Link to strategic objectives
Earnings per share growth is
driven by income growth (Growth
objective) and cost efficiencies
(Efficiency objective).
Definition
Annual incremental revenue
delivered through synergies
from the Refinitiv integration.
Why this is important for LSEG
By harnessing Refinitiv data to
build new products and through
cross-sell and distribution
opportunities, we are
demonstrating the value generated
by the Refinitiv acquisition.
In March 2023, we raised our
target for runrate revenue
synergies from £225 million to
£350-400 million by the end of
2025, incurring £550-600 million
in costs to achieve.
Analysis
By the end of 2023, we had
delivered £158 million of runrate
revenue synergies, exceeding
our target to double the 2022
year-end figure of £68 million.
We have continued delivering
synergies against three key
categories. We’re cross-selling
data products to new customers,
such as the underlying pricing
data behind FTSE Russell indices;
enhancing existing products, for
example by delivering enhanced
analytics through Workspace;
and utilising our data to build
new products. We launched 72
synergy-related products in 2023.
We have also launched our
ecommerce platform, which
we expect to deliver synergies
through new sales.
Annual runrate revenue synergies
£158m
2022: £68m
2023
2022
2021
£158m
£68m
£15m
Link to strategic objectives
Revenue synergies contribute to
income growth, so this KPI aligns
to our Growth objective.
Definition
Annual incremental cost savings
delivered as a result of synergies
from the Refinitiv integration.
Why this is important for LSEG
By successfully delivering against
our cost synergy programme,
we are demonstrating that the
integration of Refinitiv has helped
us build a more streamlined
and efficient Group. In 2022,
we increased our target
from £350 million to at least
£400 million of runrate cost
synergies by the end of 2025.
Analysis
By the end of 2023, we had
delivered £442 million of runrate
cost synergies, surpassing our
£400 million target two years
ahead of schedule. To date,
we have incurred total costs
to achieve these synergies of
£564 million, though there are a
few more synergies to deliver in
2025 to close out the programme.
We primarily delivered these
savings by consolidating our
property footprint, closing data
centres, renegotiating supplier
agreements and deduplicating
roles where appropriate.
Even though the Refinitiv cost
synergy programme is now largely
complete, we will continue to
deliver cost efficiencies as we
improve profitability further.
Annual runrate cost synergies
£442m
2022: £297m
2023
2022
2021
£442m
£297m
£151m
Link to strategic objectives
Cost synergies help us to manage
our expenses, so achievement
against this KPI aligns to our
Efficiency objective.
Adjusted EBITDA
margin
Runrate revenue
synergies
Adjusted earnings
per share
Runrate cost
synergies
London Stock Exchange Group plc
Annual Report 2023
22
Key performance indicators continued
2023 Non-Financial KPIs
At LSEG, we’re committed to creating
an environment where diverse talent can
thrive, and to driving the growth of a green
and sustainable economy.
These five core non-financial KPIs measure
our progress, but also help us highlight the
areas where we can still improve.
These KPIs align to our Group
Strategic Objectives (GSOs) which
help determine Executive Director
remuneration and performance-
related pay for all employees.
Further detail on the GSO performance
assessment can be found in our
Directors’ Remuneration Report
on pages 139 to 141.
For more detail on LSEG’s sustainability
targets, including Equity, Diversity
& Inclusion targets, refer to pages
58 to 68.
1 Our 2023 Sustainability Report can be found on our website at www.lseg.com/en/
sustainability-strategy/disclosures-and-reports.
2 We have developed a new methodology to help us review our Equity, Diversity & Inclusion
goals to ensure that they remain relevant and appropriate. More details can be found on
page 61. LSEG collects ethnicity and gender data from our executive management and
company board based on individual’s voluntary self-disclosure and their consent for the use
of this data in company reporting. All company board and executive management gender
data is collected on a global basis. Global ethnicity representation only includes colleagues
based in countries where we collect ethnicity information.
3 The Green Economy Mark recognises London-listed companies and funds that derive more
than 50% of their revenues from products and services that are contributing to environmental
objectives such as climate change mitigation and adaptation, waste and pollution reduction
and the circular economy.
4 Reduction of Scope 1, Scope 2 (market based) and selected Scope 3 (business travel, home
working , commuting, FERA) emissions vs a 2019 baseline. For 2023 reporting, we have
expanded this metric to apply to all of the emissions within scope of our Climate Transition
Plan (CTP). For more information on our CTP, refer to pages 63 and 64.
Definition
Our engagement index reflects
employee satisfaction, specifically
the likelihood that colleagues
would recommend LSEG as
a great place to work.
Why this is important for LSEG
We recognise the importance of
establishing a diverse, inclusive
workplace where opinions can
be openly shared, contributions
recognised and individual and
team achievements celebrated.
Analysis
We saw stronger participation
in this year’s Group-wide
engagement survey, LSEG
Engage, with 88% of colleagues
taking part. The results showed
engagement remained at the high
levels seen in 2022, with a score
of 75 (out of 100). The survey
showed an improvement in our
colleagues’ understanding of
LSEG’s strategy, opportunities to
learn and develop and support
from their people leaders. Going
forward, we need to continue
addressing barriers to execution
to better enable our employees.
See page 24 of our 2023
Sustainability Report
1
for more
information on the actions we
are taking.
LSEG Engage engagement index
75
2022: 75
2023
2022
2021
75
75
73
Link to strategic objectives
This KPI aligns to our
Culture objective: to cultivate
leadership capability and
embed values to foster
a diverse and inclusive culture.
Definition
The proportion of female
representation in senior
leadership roles.
Why this is important for LSEG
We strongly believe in promoting
diverse gender representation
across our organisation, ensuring
we provide equal opportunity
to progress to leadership roles,
regardless of gender. We are
committed to building a leadership
team that incorporates a broad
range of perspectives and
management styles in order to
make LSEG a better business.
Analysis
In 2023, we were proud to
continue increasing female
representation at senior
leadership level to 42%. Our goal
now is to maintain this level of
representation above a minimum
level of 40% over the next
four-year period to 2027.
One of the key elements to
our philosophy on diversity is to
create equitable and inclusive
processes that enable the
attraction, retention and promotion
of a global diverse pipeline
of talent and this will remain
an important area of focus
going forward.
Female rep at senior leadership
42%
2022: 40%
2023
2022
2021
42%
40%
33%
Link to strategic objectives
Promoting diversity aligns to
our Culture objective.
Engagement index Gender diversity
in leadership
2
23 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Key performance indicators continued
Definition
The proportion of ethnically
diverse representation in
senior leadership roles.
Why this is important for LSEG
We are committed to building a
richly diverse team of leaders,
recognising exceptional talent
from a wide range of different
backgrounds. This enables us
to foster an environment where
a blend of different perspectives
goes into making the most
important decisions for
our business.
Analysis
With respect to underrepresented
ethnic and racial groups, we did
not achieve our goal of 20%
representation within the leadership
community, reaching 14% by the end
of 2023. However, we remain firmly
focused on closing this gap through
a range of measures. We are
continuing to grow the global
Leadership Development
programmes that we launched in
2022 (eg Illuminate – targeted
towards black and Latinx colleagues
– and APAC Accelerator) and we
introduced inclusive hiring training
for all people leaders in 2023.
Our revised goal is to ensure 25%
of senior leadership roles are held
by those from underrepresented
groups by 2027.
Minority rep at senior leadership
14%
2022: 15%
2023
2022
2021
14%
15%
16%
Link to strategic objectives
Promoting diversity aligns to
our Culture objective.
Definition
The total number of issuers
across the Green Economy Mark
3
,
the Sustainable Bond Market
and the Voluntary Carbon Market.
Why this is important for LSEG
Stimulating the green economy is
central to our purpose. We can
measure the progress we are
making here by tracking the
overall level of issuer engagement
in sustainable finance across the
London Stock Exchange, with
the goal of growing the number
of issuers over time.
Analysis
In 2023, we continued to facilitate
increasing sustainable investment
and growth in the green economy.
As at the end of the year, we have
236 total issuers across our
Sustainable Bond Market and
Voluntary Carbon Market or
that proudly display the Green
Economy Mark
2
, (2022: 217). In
total, £232 billion has now been
raised on our Sustainable Bond
Market since inception.
FTSE Russell has also launched
the UK ESG-Risk Adjusted Index
Series and the FTSE Fixed Income
EU Climate Benchmarks series
to help investors integrate
sustainability into their
investment strategies.
Number of sustainable issuers
236
2022: 217
2023
2022
2021
236
217
217
Link to strategic objectives
This KPI aligns to our Sustainability
objective: to support the Group’s
ambition to establish LSEG as
a strategic enabler of sustainable
economic growth.
Definition
The change in the amount of
carbon emissions we produce as
a direct result of Group activities,
relative to our 2019 baseline.
Why this is important for LSEG
We are a member of the United
Nations Climate Change ‘Race to
Zero’ and we have set science-
based targets to reduce our
carbon emissions with an ambition
of reaching net zero by 2040.
We aim to halve our operational
emissions by 2030 from
a 2019 baseline.
Analysis
By the end of 2023, we had
reduced our carbon emissions
(Scope 1, Scope 2 (market based)
and selected Scope 3) by -29%
from a 2019 baseline.
Like many companies, we saw
a steep reduction in our carbon
emissions in 2020 and 2021,
driven in large part by lockdowns
and travel restrictions
implemented as a result of the
Covid-19 pandemic. As we have
emerged from the pandemic
and as the Group continues to
grow, emissions have naturally
increased, but we remain fully
committed to our target to halve
these emissions vs a 2019
baseline by 2030.
Reduction of Scope 1, 2, 3 (FERA)
4
-29%
2022: -57%
2023
2022
2021
-29%
-57%
-77%
Link to strategic objectives
This KPI aligns to our
Sustainability objective.
Ethnic diversity
in leadership
2
Carbon emissions
4
Sustainable issuers
London Stock Exchange Group plc
Annual Report 2023
242424 London Stock Exchange Group plc
Annual Report 2023
Partnering to transform
our industry: BlackRock
CASE STUDY
Left
Satvinder Singh
Head of Data & Analytics
LSEG
Right
Joseph Chalom
Managing Director
BlackRock
Left
Dmitri Sedov
Head of Data Intelligence
LSEG
Right
Cornelia Andersson
Head of Sustainable Finance
& Investment, Data & Analytics
LSEG
In the meeting pictured here, BlackRock and
LSEG’s data intelligence and sustainability
teams come together to discuss business
strategies and roadmaps for the upcoming year.
We meet with BlackRock regularly, in order to
keep up to date on progress and opportunities
across our respective firms.
25 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Partnering with BlackRock continued
A strategic partner to data and workflow providers
Although we often supply our data and analytics services to customers
directly, we can also reach a significantly broader market by working
with third-party data and workflow providers to help power their
offerings. This is particularly relevant in the asset management
industry, where there is a major structural trend towards the adoption
of centralised enterprise technology platforms, such as Portfolio
Management systems (PMS) and Enterprise Data Management (EDM)
platforms. These platforms centralise many important, complex trading
and investment operations and give management a better overarching
view of their business. Naturally, they rely on the redistribution of
high-quality content and that is where LSEG can be a trusted partner.
Powering BlackRock’s workflow and ETF offering
One such example is BlackRock’s Aladdin, which has become the
industry leader in the PMS space, combining sophisticated risk analytics
with comprehensive portfolio management tools to power end-to-end
workflows for over 100,000 investment professionals globally. LSEG
is a key partner in the Aladdin ecosystem, and is the preferred data
source for Fixed Income, Equity and public reference data. Meanwhile,
BlackRock’s iShares suite has been a leader in the ETF marketplace
for over 20 years. Through FTSE Russell, LSEG partners with BlackRock
to help drive growth, providing key benchmarks, indices and ETFs.
Today, there is over $430 billion in AUM tied to over 125 FTSE Russell
products that help power the iShares suite.
Significant expansion potential
Third-party data distribution is a growing source of revenue for us,
in particular because of the breadth of content and services that we’re
now able to offer as a combined group. Historically, we have only
maintained a handful of these partnerships with a small number of global
providers. However, as we build out a cloud-based data architecture
that lends itself more to redistribution, we’ll be looking to create many
more of these relationships to power a growing number of partner
applications worldwide.
LSEG is the preferred data source for Fixed Income, Equity and
public reference data in Aladdin
No.1
AUM tied to FTSE Russell products through iShares
>$430bn
Unlocking new potential with BlackRock
and other channel partners
We’ve built a true working model
strategically aligning across the
two firms and having our teams
work together to create a shared
roadmap of innovation and new
product development for the
benefit of our mutual clients.
We believe that the future of
investment management and the
future of technology are highly
aligned, and our collaboration
with LSEG is a core component
of how we will ultimately deliver
for client needs.
Sudhir Nair
Head of Aladdin, BlackRock
Our purpose and strategy
London Stock Exchange Group plc
Annual Report 2023
26
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 stability
…by operating businesses that are of systemic
importance, fundamental to the financial
ecosystem and critical to our customers.
We empower economies
…by helping our customers to raise capital,
support employment, innovate and access
global financial networks, across multiple
asset classes.
We enable customers to create
sustainable growth
…by providing the tools and data that
enable financial markets to manage risk
and make informed investment decisions.
This purpose underpins everything
we do and sets the foundation for
our strategy, our operations and
our culture.
27 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
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?
Our customers and their demands are
increasingly borderless and complex.
Our global coverage and comprehensive
offering underpins our customers’ critical
workflows and supports the allocation of
capital across international financial markets.
Our purpose and strategy continued
Case study
Our global customer base, critical
infrastructure and regulatory footprint
We are truly a global business, providing
services to over 45,000 customers in over
170 countries, with differentiated engagement
models tailored to support their needs.
These customers include 100 of the top
100 global banks and 78 of the top 100 asset
managers, with more than 400,000 end users.
We provide solutions (many of which are highly
regulated) that solve business critical issues
for our customers, as we seek to create safer,
more efficient and more liquid markets, and to
reduce risk. As a result, we are overseen
by regulators across the globe, and have
built deep, long-standing relationships with
these regulators. This allows us to better
support our customers as they navigate
complex regulatory environments and
ever-changing requirements.
End users
>400k
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
incorporating a greater mix of asset classes,
broadening 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
critical processes.
Case study
Scope of asset class coverage within
FTSE Russell
We are a world-class provider of benchmark
and index solutions, serving customers
throughout the investment ecosystem.
We provide globally recognised indices
across several asset classes, including
Equities, FX, Fixed Income, Sustainable
Investment and Digital Assets. We are
continuing to invest in our established asset
classes, while leveraging our expertise from
across the Group to selectively explore new
asset classes – for example, our in private
markets and in digital asset clearing.
Number of new indices delivered in 2023
1,951
3
Seamlessly connected
A trusted 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 can.
Case study
NDF Trading and Clearing
Our new NDF Matching platform combines
LSEG’s capabilities across our three divisions;
a Central Limit Order Book (CLOB) for FX
trading via LSEG Workspace that is fully
integrated with LCH ForexClear. This delivers
multiple benefits for our clients, including
a genuine all-to-all market, improved
transparency via a “cleared price” for the
market, margin saving and capital benefits,
safer and more accurate credit management
and simpler administration. Hosting the venue
in Singapore, brings customers latency
improvements, leading to improved access
to liquidity and delivery of the trading GUI
in Workspace. We are delivering a more
connected and efficient FX workflow for our
clients via integration with LSEG’s capabilities
in Data & Analytics. For more information on
this and other initiatives in our Capital Markets
division, see pages 38 and 39.
Improved latency speed by a factor of
10
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, often driving that
evolution ourselves.
London Stock Exchange Group plc
Annual Report 2023
Improving executionOur progress in 2023
Continuing delivery of Group Strategic Programmes
We are moving from integration to transformation with greater focus
on growth, scaling our platforms and delivering customer outcomes.
We have made steady progress across our transformation agenda:
migrating customers to our strategic platforms, e.g. Workspace and
Real-Time Optimised, improving order management, modernising our
network and reducing time to market for the creation of new indices.
Progressing on resilience and cyber security initiatives
We continue to invest in the resiliency and security of our products and
infrastructure, ensuring we uphold our duty to provide stability to the
global financial ecosystem. This is embedded in our risk culture and
reflective of our deep market infrastructure heritage. Our investment
in resilience has seen technology key risk events reduce by ~58% in
the last two years. It remains a key priority to minimise these events,
such as the outages on the London Stock Exchange in 2023.
Delivering on the Sales Transformation journey
We have introduced a new solution selling team and targeted sales
specialists for our high-touch customers, alongside actively developing
our ecommerce strategy for our low-touch customers. Our account teams’
active engagement has resulted in 74%
1
of customers connecting with
us on new products and services, among whom we see better product
satisfaction (+11pp)
2
and higher likelihood to recommend (+73pp)
3
.
Embedding a high-performance culture
We created and launched new LSEG values to underpin our purpose
and outline how we work with our customers, partners and together.
Our senior leaders participate in masterclasses on high-performance,
and our career navigator tool, launched globally this year, empowers
development and progression. With refreshed EDI ambitions, priorities
and practices, we are building belonging and inspiring our people to
perform at their best.
Improving the customer experience
We have invested in and simplified our Data & Analytics offering,
consolidating our product portfolio into integrated workflow solutions
and moving from over 30+ legacy desktop variants down to just a
handful for Workspace. Customer satisfaction scores have increased
across a range of metrics including “powerful analytics” (+11pp)
4
,
“ease of sharing news/analysis” (+13pp)
4
and “functionality across
multiple devices” (+11pp)
4
.
% of customers who have discussed new or existing product features,
functionality or content in the last 12 months
74%
1
Our purpose and strategy continued
28
1 Covers top 250 customers and managed accounts, i.e. customers who are serviced
on a 1:1 basis who have had contact with their account teams (Jan 2023 to Dec 2023).
2 % of customers who returned 9 or 10 (out of 10) for product satisfaction (customers who
have had a discussion with their account team vs those who have not). As at Dec 2023.
3 % of customers who returned a 9 or 10 (out of 10) for our NPS question (customers who
have had a discussion with their account team vs those who have not). As at Dec 2023.
4 % of Trading & Banking users who gave a 9 or 10 rating (out of 10) against the specified
metrics (Workspace vs Eikon). As at Jun 2023.
29 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Investing in better products Harnessing our integrated offering
to create value greater than the
“sum of the parts”
Deploying Workspace across the Data & Analytics business
We have made significant improvements to our Workspace offering,
integrating key customer workflow solutions including Advanced
Dealing, TORA and SDC Platinum. We have also sent Eikon end
of life letters to our customers, notifying them of the sunsetting of
Eikon in 2025.
Unlocking business growth by investing in technology
We are investing in the infrastructure of our world-class indices business
through an index refactoring programme (IRF) and automation to
facilitate speed to market and meet market demands for customisation.
We are also enhancing our distribution capabilities to enable our
customers to receive data in the way that best meets their needs
(API and cloud solutions).
Partnering with customers to develop “next-gen” products
We launched our Design Partner Programme (DPP), where together
with Microsoft we are collaborating with some of our largest customers
to design and build products which address their pain points and
support their key workflows.
Pivoting toward agile commercial models to support shift to cloud
For some of our largest customers we are replacing product-level
agreements with enterprise-wide agreements, creating cost benefits
for them, whilst driving value for both our customers and LSEG.
See page 33 for more on how this is coming to life with one of our
largest strategic partners, HSBC.
Sunsetting Eikon in
2025
Driving value creation through aligned user experience
We have simplified our global branding, making it easier for our
customers to discover and access the full range of capabilities that
we offer through improved awareness. This involved retiring our
Refinitiv brand and creating six new sub brands: LSEG Data & Analytics;
LSEG Risk Intelligence; FTSE Russell; London Stock Exchange; LSEG FX;
and LSEG Post Trade. This unification of branding will allow us to better
cross-sell across our customer base and create more holistic, deeper
client relationships.
Executing on the LSEG Microsoft Partnership, enabling new growth
and scale
We have made excellent progress in mobilising our people to work
effectively in cross-firm teams with Microsoft and to build innovative
products together. We expect that our first solutions will become
available in the first half of 2024. For more information on our
partnership with Microsoft, see page 19.
Exploring innovation in high growth areas
We announced our ambition to be the first global exchange group to
deliver a seamless funding continuum, by supporting private and public
markets through a globally connected market infrastructure and being
a trusted partner in providing access to data and insights. This year,
we have focused on two key aspects: 1) our continuing partnership
with fintech Floww to establish our presence in the private markets
space; and 2) our work towards the creation of a new market under UK
regulation that makes it easier for private companies to raise funding.
New unified LSEG sub brands
6
Our purpose and strategy continued
London Stock Exchange Group plc
Annual Report 2023
30
Evolving priorities for 2024 and beyond
Our purpose and strategy continued
We continue to be well positioned to capitalise
on the strong underlying growth drivers of
our business.
In 2024, our priorities will evolve as we
continue our transformation and start to
realise the opportunities created by it:
Executing on the transformation
To execute on the transformation, we are focused on the continued
delivery of our Group Strategic Programmes, including upgrading our
tech platforms and the progression of our cloud migration. As our sales
transformation journey continues to take shape in 2024, we are also
transforming the organisational and operational structure of our
Data & Analytics businesses, separating out FTSE Russell and Risk
Intelligence. Underlying all this Group-wide change is a continued
focus on ensuring cost and capital discipline.
Monetising the integrated business
We are focused on the delivery of our commercial transformation and
continued price realisation of our integrated business, whilst continuing
to unify and improve the customer experience. We are bringing together
our FX capabilities across pre-trade, at-trade and post-trade in a more
connected and seamless offering for customers, all under the LSEG
FX brand. We are institutionalising this ‘One LSEG’ approach across
other asset classes and focusing on driving synergies with Tradeweb
through continued collaboration.
Launching new products and creating
new markets
Across the Group we are constantly looking for areas where we
can create new products and services. Through our partnership with
Microsoft we have three strategic initiatives in Workspace, Analytics
and Data Intelligence, enabling product development within these areas.
Moreover, in 2024 our vision for Post Trade Solutions will start to come
to life, helping customers drive down cost of capital and trading. We are
expanding our presence in private markets, and building asset-agnostic,
interoperable, digital market infrastructure to drive efficiencies across
the trade lifecycle.
Our strategy is clear as we look
ahead to the next phase of our
transformation in 2024 and
beyond. We will continue to put
our customers at the centre of how
we grow, partnering with them to
create innovative products and
services, allowing us to make
more possible together.
There is still work to do,
but through the actions we have
taken we are now well positioned
to deliver sustainable growth
into the future, unlocking exciting
opportunities in partnership
with our customers to create
shared value.
Daniel Maguire
Head of Post Trade, CEO, LCH Group
& Chief Strategy Officer
Our purpose and strategy continued
31 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Partnering to transform
our industry: HSBC
London Stock Exchange Group plc
Annual Report 2023
32
CASE STUDY
...including driving productivity gains for the
bank’s front line staff through the Microsoft
Design Partner Programme.
Here, members of LSEG’s Strategic Accounts
sales team and HSBC’s Chief Data Office
discuss areas for further partnership...
33 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Co-creating value with customers
like HSBC
Partnering with HSBC continued
A strategic partner to our customers
Since the acquisition of Refinitiv, we have spent three years building
a global, seamless, multi-asset class offering that spans the trade
lifecycle end-to-end. With the breadth of our services and the strength
of our longstanding relationships, we have elevated our customer
conversations to a strategic level, working with the C-suite to deliver
value throughout their workflows. Based on demand from our largest
customers, we are increasingly offering enterprise-wide deals that
provide the benefits of one efficient contract and greater certainty
around pricing. Often, these customers will work with several hundred
data providers. By engaging closely with the customer, we can
better understand their needs and displace a number of these
providers, generating significant cost efficiencies for the customer
through consolidation.
Creating value alongside HSBC
Our enterprise-wide deal with HSBC, one of the world’s largest banks,
is one example. Through this deal, over 750 terminals were switched
to LSEG Workspace and we significantly expanded our provision of
real-time data across the HSBC group. By rationalising its portfolio
of data vendors, we have generated significant cost savings for
HSBC – over $43 million per year. We are also partnering on bespoke
solutions to drive growth for HSBC, and recently the bank launched
a next-generation digital wealth management portal that is powered by
our data and underlying tech workflow. Additionally, HSBC has joined
our Design Partner Programme with Microsoft and the HSBC team is
providing valuable input into product development decisions as we
build the data and analytics solutions of the future.
Delivering growth for LSEG
As well as delivering value for our customers, these partnerships also
generate attractive commercial results for LSEG. In the case of HSBC,
we have taken an account that had been declining and turned it into
one that is now growing at over c.4% per year. Invariably we find that
these deals act as a foundation for further value creation as we look for
ways to build on the initial partnership through cross-sell opportunities.
HSBC is now consistently one of our top-performing accounts and our
relationship continues to go from strength to strength.
Annual cost savings delivered for HSBC to date
>$43m
Terminals switched to LSEG Workspace
>750
LSEG is a long-term trusted partner
of HSBC and provides us with the
core market data we need to run
our business.
The addition of Refinitiv to
LSEG’s portfolio brought new
capabilities that help boost
HSBC’s competitive advantage.
The unique combination of
HSBC’s expertise, LSEG’s data
and analytics, and Microsoft’s
infrastructure is helping us to get
great results now and build the
right solutions for the future.
John Hinshaw
Chief Operating Officer, HSBC
London Stock Exchange Group plc
Annual Report 2023
Divisional review:
Data & Analytics
We’ve continued to build excellent
momentum in our Data & Analytics
division in 2023, delivering another
significant acceleration in growth.
We’re innovating rapidly across
our product set and our customers
tell us they value the high-quality
experience that we’re providing.
We’re continuing to invest in the
infrastructure that underpins our
data offering and we’re developing
the solutions of the future
alongside Microsoft as we look
to further strengthen, innovate
and scale our business.
Satvinder Singh
Head of Data & Analytics
34
Recurring revenue
96%
Transactional revenue
4%
35 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Data & Analytics continued
Revenue split
1
Trading & Banking £1,656m 31%
Enterprise Data £1,411m 27%
Investment £1,423m 27%
Wealth £285m 5%
Customer & Third-Party Risk £492m 9%
1 Percentages do not add to 100% due to rounding.
We provide customers with high-value data and analytics services,
including investment solutions and indices, trading workflow, wealth
advisory and investment banking solutions and risk intelligence
capabilities. The quality, depth and integrity of our data gives our
customers the confidence to make critical decisions, create leading
investment and trading products and drive automation and efficiencies
across their operations.
In July 2023, Satvinder Singh joined LSEG as Head of Data & Analytics
(D&A). Most recently, Satvinder served on the management committee
at Mastercard and brings with him over 28 years of experience leading
global businesses in data and analytics, capital markets, post trade
services, payments and technology.
Our Data & Analytics division is split into five areas, each addressing
different customer needs:
Trading & Banking
Data, analytics and workflow solutions across trading and investment
banking lifecycles, including content and pricing, productivity tools,
trade execution and post trade management.
Structural market trends driving growth:
— Electronification of workflows and demand for customised solutions.
— Adoption of generative AI and cloud technology.
— Increasing demand for higher quality insight from data.
Performance:
+3.3% primarily driven by better price realisation following improvements
to our product offering (e.g. Workspace) and customer service.
Enterprise Data
Serving business-critical data needs across asset classes, latencies
and delivery mechanisms including real-time and historic market data,
evaluated pricing, news, text and reference and legal entity data.
Structural market trends driving growth:
— Rising importance of data trust across front, middle and back office
applications and risk management use cases.
— Increasing demand for higher quality data to meet emerging regulation.
— Customers outsourcing data management due to cost and complexity.
Performance:
+9.3% reflecting the continued enhancement and expansion of our
content, particularly in the fixed income space, and investment in
capabilities such as MayStreet’s super-low latency data feeds and our
cloud-based Real-Time Optimised solution. Building on the natural
linkages with FTSE Russell and other parts of the Group is driving
strong revenue synergy realisation.
Investment Solutions
Benchmarks, analytics and data solutions that serve customers in all
stages of the investment process, supporting consistency and accuracy
in investment strategy and asset allocation decisions.
Structural market trends driving growth:
— Growth in passive investing.
— Growing sophistication in fixed income indexing.
— Multi-factor investing.
— Sustainability and ESG investing.
Performance:
+7.9% – subscription revenue growth continued the acceleration seen
over recent years, with Benchmark Rates, Indices & Analytics growing
11.5%. Improvements to our sales process are achieving greater focus
on customers and discipline in how we meet strong demand for our
core benchmark products. Asset based revenues accelerated over the
course of the year, reflecting strong product inflows and a recovery in
market levels.
Wealth
Facilitating wealth manager workflows, enabling 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:
+4.4% driven primarily by Digital Solutions, though Workflows also made
a positive contribution to growth.
Customer & Third-Party Risk
Risk solutions that help regulated businesses and corporate
organisations conduct due diligence, meet Know Your Customer (KYC)
and Know Your Third Party (KY3P) commitments, onboard customers
and manage the risk of identity and payment fraud.
Structural market trends driving growth:
— Rising focus on reputational risk.
— Digitalisation.
— Regulation and ESG.
— Digital currency growth.
Performance:
+16.4% – the World-Check screening business continued to deliver
double-digit growth as regulatory and risk-driven customer demand for
Anti Money-Laundering (AML) and KYC solutions was complemented by
further expansion of World-Check’s offering. Customer & Third-Party Risk
Solutions also saw a small benefit from a full year contribution of last
year’s acquisition of the GDC identity verification data business.
London Stock Exchange Group plc
Annual Report 2023
36
Data & Analytics continued
2023 Highlights
Accelerating revenue growth in 2023
We continued to accelerate growth in our Data & Analytics business this
year, up from 3.8%
1
organic in 2022 to 6.7%
1
organic in 2023. Growth in
our Annual Subscription Value (the annualised value of our subscription
contracts) is up 370bps since the acquisition of Refinitiv.
Over the past three years, we have focused on partnering with
our customers to better understand their needs and build stronger
relationships, and on incentivising our salespeople more effectively
by, among other things, setting net (rather than gross) sales targets.
These improvements in operational execution have been key in
delivering the incremental growth to-date, largely through significantly
higher product retention.
This year, we increased the magnitude of our annual price review for the
first time since the Refinitiv acquisition. This drove approximately 100bps
of incremental growth in 2023 and was largely well accepted by our
customers who recognise the improvements we are making to our
offering and the overall user experience we deliver.
Workspace rollout progressing well
We have continued to make great progress with the rollout of
Workspace, our next-generation data and workflow solution that
combines cutting-edge technology with market-leading content sets,
delivering a best-in-class experience for customers across trading,
banking, portfolio management and wealth advisory.
Through Workspace, users can access our leading data, analytics
and news, covering multiple asset classes and all from highly
trusted sources.
Workspace is:
— Frictionless – delivering a seamless experience across devices
with quick installation and deployment.
— Intuitive – highly customisable and easy to navigate with predictive
discovery powered by generative AI.
— Connected – integrated with functionality from across our offering
(e.g. TORA) to deliver powerful workflow solutions, while open
infrastructure allows customers to plug in their own data and tools.
Customer feedback has been improving strongly, with Workspace
scoring higher than its predecessor product Eikon on a number of key
satisfaction metrics. We have also continued to improve Workspace
on a regular and ongoing basis, delivering double-digit increases to
customer experience scores that track “ease of sharing news and
analysis” and “power of analytics”. In 2023 alone, we launched over
380 updates to the product.
The rollout is progressing well and we expect to have migrated the vast
majority of customers by the end of 2024. In August, we announced that
we will permanently sunset Eikon in 2025.
Tradeweb/FTSE Russell partnership
Our relationship with Tradeweb continues to go from strength to
strength as we look for ways to utilise our joint offering to create
innovative and high-quality solutions for our customers. In October
2023, we announced a strategic partnership between Tradeweb and
FTSE Russell, to develop the next generation of fixed income pricing
and index trading products. We will use FTSE Russell’s innovative fixed
income index solutions and Tradeweb’s trading platform and data
capabilities to:
— Expand benchmark pricing across a wider range of regions and fixed
income asset classes, building on the recently launched European
Government bond pricing.
— Explore incorporating Tradeweb pricing into FTSE Fixed Income
indices, starting with the FTSE World Government Bond Index (WGBI).
— Expand and enhance electronic trading functionality for FTSE Russell
Fixed Income indices and customised baskets.
LSEG and Tradeweb also signed a new market data licensing
agreement, offering customers the benefits of LSEG’s distribution,
reach and technology alongside Tradeweb’s growing suite of valuable
market data.
Partnering with Microsoft to empower the future of financial markets
In December 2022, we announced a long-term strategic partnership
with Microsoft to co-innovate solutions that will transform the data,
analytics and workflow experience in financial services, and enable
us to accelerate value creation for our customers.
2023 progress:
— Our new cloud environment build is well advanced, with the first
migrations already under way. Already, over 250 million analytical
calculations are now run daily on Azure, with more being added.
— We have been engaging with major customers through the Design
Partner Programme.
— We announced that early product enhancements and new
applications will begin to launch in H1 2024.
Upcoming product launches:
— Meeting Prep – a Microsoft Teams app that will automatically
generate meeting preparation summaries and insights, pulling from
LSEG’s financial data and relevant content in Microsoft 365 including
documents, emails and chats. Pilots will begin in 2024.
— Open Directory – chat and collaboration experience with open
access across financial services user communities – through
Workspace Messenger, Microsoft Teams and other chat interfaces.
Pilots will begin in 2024.
— LSEG Workspace/Microsoft interoperability – enabling users to
seamlessly access, discover and share content across LSEG
Workspace and the Microsoft 365 productivity suite. Pilots will
begin in 2024.
— LSEG AI Insights – launch of a proprietary Q&A interface helping
end users gain instantaneous answers to questions summarised from
underlying documents and enriched with the latest data and analytics.
The first pilots will focus on fund analytics with Lipper, and fixed
income analytics powered by Yield Book.
— Data-as-a-Service – a new solution powered by Microsoft Fabric that
will enable customers to easily discover, interrogate, administer and
integrate our financial data and content. Pilots will begin in 2024.
For further information on our
partnership with Microsoft,
see page 41.
1 Growth rates are on a constant currency, organic basis. 2022 growth excludes the impact
of the Russia/Ukraine War.
STRATEGIC REPORTSTRATEGIC REPORT
Data & Analytics continued
37 London Stock Exchange Group plc
Annual Report 2023
Acceleration in ASV since the Refinitiv acquisition
370bps
Workspace updates launched in 2023
>380
London Stock Exchange Group plc
Annual Report 2023
Divisional review:
Capital Markets
38
Recurring revenue
30%
Transactional revenue
70%
Our Capital Markets division
delivered another solid
performance in 2023 despite
a volatile market environment.
This year also marked several
product and infrastructure
development milestones,
as we launched our new FX
Matching platform and delivered
innovative new connectivity
across our venues.
These achievements reflect
our continued ambition to
transform the way capital
markets function globally.
Murray Roos
Head of Capital Markets
39 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Capital Markets continued
Revenue split
Equities £227m 15%
FX £251m 16%
Fixed Income, Derivatives & Other £1,068m 69%
We offer our customers extensive access to capital markets and liquidity
across multiple asset classes. We operate a broad range of international
equity, fixed income, exchange-traded funds and products and foreign
exchange markets. We are home to several capital formation and
execution venues: the London Stock Exchange, AIM, Turquoise, FXall,
Matching and Tradeweb. The division is split into three areas:
Equities
Capital raising and trading venues for equities. A trusted long-term
partner to the market and the #1 exchange by capital raised in Europe.
Structural market trends driving growth:
— Globalisation.
— Electronic trading.
— Pipeline of PE-backed businesses seeking next stage of investment.
Performance:
-8.8% as subdued market volatility fed through to lower Secondary
Markets activity.
FX
A market leader in dealer-to-client and dealer-to-dealer FX trading,
we provide electronic trading, workflow and data to the institutional
foreign exchange community through FXall and FX Matching.
Structural market trends driving growth:
— Access to liquidity.
— Cross-border trading and business globalisation.
Performance:
-1.9% – weaker interbank FX activity, particularly in H2 2023,
adversely impacted volumes on our dealer-focused Matching platform.
Our dealer-to-client platform, FXall, also saw lower activity from
buyside participants.
Fixed Income, Derivatives & Other
Electronic marketplaces for rates, credit, equities and money markets
products, built and operated through Tradeweb.
Structural market trends driving growth:
— Electronification of fixed income markets.
— Expanding global markets.
Performance:
+12.1%, accelerating over the year as risk appetite returned to markets,
building on structural tailwinds from the ongoing electronification of
trading and Tradeweb’s continued share gains in key product lines.
Tradeweb made further progress in international markets with the
acquisition of Yieldbroker (see 2023 highlights opposite). Tradeweb also
announced the acquisition of algorithmic execution technology business
r8fin, which closed in January 2024.
2023 Highlights
Building out Tradeweb’s offering and global presence through M&A
Through Tradeweb, we operate leading global platforms in US
Treasuries and interest rate swaps trading and we hold a strong and
improving position in US credit. We have a clear strategy to continue
enhancing Tradeweb’s offering. This includes expanding Tradeweb’s
presence globally – in particular across EM and APAC regions –
and driving increased adoption of portfolio trading by building out
the functionality that Tradeweb’s platform can offer.
In 2023, Tradeweb announced two acquisitions that further this strategy:
— r8fin – a technology provider that specialises in algorithmic-based
execution for US Treasuries and interest rate futures, helping
Tradeweb reach a new and differentiated level of intelligent execution
through a powerful combination of algorithmic technology and
cross-market connectivity. The acquisition of r8fin closed in
January 2024.
— Yieldbroker – a leading Australian trading platform for Australian
and New Zealand government bonds and interest rate derivatives
covering the institutional and wholesale client sectors. The acquisition
of Yieldbroker closed in August 2023.
Plugging FX capabilities into our workflow offering
New NDF Matching platform launched
In November 2023, LSEG FX launched a new NDF Matching venue in
Singapore, the first deliverable of the FX Venues re-platforming initiative.
This venue supports the demand for NDF central limit order book
market infrastructure in Asia and around the globe, including from
LSEG’s network of over 5,000 FX trading desktop users in the region.
It also brings to market a trading platform on which a broader array of
market participants can agree to clear their NDFs on a pre-trade basis
with LCH ForexClear. Cleared settlement brings innovation to the FX
space, including improved liquidity, simplified credit management,
lower costs and easier adoption by non-bank participants.
Tradeweb/FXall interconnectivity
Tradeweb in collaboration with FXall this year launched an innovative
solution to help institutional investors trade Emerging Markets bonds
more efficiently. The new FX Swap Workflow solution allows mutual
clients of Tradeweb and FXall to buy or sell an EM bond and then
seamlessly hedge the local currency risk by executing an FX swap
trade via direct connectivity to FXall.
Increasing the attractiveness of the London Stock Exchange
as a listing venue
There are a wide range of reforms to the UK’s Capital Markets
underway, on which we continue to engage extensively, both directly
and through the Capital Markets Industry Taskforce (CMIT). These
reforms include changes to the UK Listing Rules; Prospectus rules;
how investment research is funded and procured; and Corporate
Governance, as well as measures to increase the availability of risk
capital being deployed into UK Capital Markets. These reforms are
expected to begin to be implemented from the middle of 2024 with
an active policy agenda into 2025.
London Stock Exchange Group plc
Annual Report 2023
Divisional review:
Post Trade
40
In a year of significant interest
rate volatility, LCH once again
demonstrated its robustness
as a critical financial markets
infrastructure provider and we
were able to translate very strong
demand for swaps clearing into
exceptional performance in 2023.
We’re continuing to invest
in our offering and there is
a significant opportunity to drive
growth through the capital
optimisation services we’re
building in Post Trade Solutions.
Daniel Maguire
Head of Post Trade, CEO, LCH Group
& Chief Strategy Officer
Recurring revenue
1
29%
Transactional revenue
1
71%
1 Post Trade recurring and transactional proportion excludes Net Treasury Income.
41 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Revenue split
OTC Derivatives £517m 44%
Securities & Reporting £254m 22%
Non-Cash Collateral £107m 9%
Net Treasury Income £289m 25%
We operate global, critically important clearing infrastructure, serving
customers in more than 60 countries and clearing across multiple asset
classes and in 27 currencies. We help customers optimise financial
resource consumption, satisfy their regulatory reporting obligations and
manage and optimise credit risk, while reducing operational complexity
and cost. Increasingly, we are extending this support across the
value chain, collaborating across the Group to deliver seamless
interoperability with our Capital Markets and Data & Analytics offerings.
We are well positioned in the context of key structural market growth
trends: increasing regulation for our customers and rising demand
for both risk management and capital optimisation solutions. Market
volatility is also an important driver of performance, and in 2023, rising
global inflation and shifting expectations around timing of interest rate
moves contributed to heightened clearing volumes, particularly in H1.
We are also driving strong underlying performance, in part through the
expansion of our global network — particularly in EMEA and Asia —
and we’re enhancing our product offering to secure long-term growth.
The division is split across four reporting segments:
OTC Derivatives
Clearing and capital optimisation solutions for OTC Derivatives,
including interest rate swaps, foreign exchange and credit default
swaps. The largest of these services is SwapClear, which is responsible
for over 90% of the global interest rate swap notional cleared.
Performance:
+28.9%, partly reflecting the benefit of acquisitions. Organic growth of
13.9% was also strong, with uncertainty around the timing and scale
of Central Bank interest rate moves driving increased client clearing
activity in SwapClear. We also generated £18 million of revenue helping
customers through US reference rate reform and delivered double-digit
revenue growth in both FX and CDS clearing.
Securities & Reporting
Securities clearing, capital optimisation and regulatory
reporting solutions.
Performance:
+7.0% as fees received due to the early termination of the Euronext
clearing agreement more than offset the impact of lost cash equity
clearing revenues. We expect some additional revenue attrition in
2024 as Euronext transition their remaining clearing activities.
RepoClear continued to grow well.
Non-Cash Collateral
Fees are earned from handling non-cash collateral balances.
Performance:
+7.5% as customers worked to optimise their collateral and clearing
volumes grew.
Net Treasury Income (NTI)
Income earned on cash deposited with LCH as margin and default funds
as part of the risk management process.
Performance:
+12.8% – as interest margins benefited from money market trends.
Higher levels of cash collateral year-on-year were also supportive in
the first half, but moderated in the second half as balances normalised.
2023 Highlights
A trusted partner to the markets
Delivering strong growth, supported by interest rate volatility
As central banks around the world grappled to contain rising inflation
in 2023, we saw unprecedented market volatility driven by interest rate
uncertainty – particularly in the first half – and this helped to drive
double-digit growth at SwapClear and in our NTI.
As we exit a period in which interest rates have hovered close to zero
for over a decade, we are seeing a spike in interest rate hedging activity
as customers look to secure their positions. In general, such market
volatility tends to be positive for Post Trade activity and we saw similarly
elevated volumes in 2022, partly also driven by geopolitical uncertainty.
As a leading and trusted provider of clearing and risk management
services, and with deep cleared liquidity pools across interest rate
swaps, CDS, FX, Equities and Repos, we are well positioned to support
customers through times of uncertainty like this.
Supporting customers through interest rate reform
Following the FCA’s decision to retire the London Interbank Offered
Rate (LIBOR), we have been actively supporting customers to transition
their existing swaps contracts away from LIBOR and onto alternative
risk-free reference rates. US dollar LIBOR, the most significant of the
outgoing rates, ceased to be published in June 2023 and so there has
been a significant market effort this year to transition these contracts
while providing seamless continuity to customers and removing the
need for them to take more expensive individual actions.
Across April and May 2023, we converted c.600,000 trades into SOFR
equivalents for over 1,300 member and client accounts, representing
c.$45 trillion in notional – also generating £18 million in fees for LSEG.
Throughout this process, there has been no market disruption and
customer feedback has been positive.
Targeting long-term growth through Post Trade Solutions
In 2023, we have made excellent progress in building out our Post
Trade Solutions offering, designed to help our customers reduce
their balance sheet risk by optimising their use of capital.
As changing regulation increases the incentive to clear some trades,
there is a growing need for banks to determine the most cost-effective
counterparty strategy, and our expertise will be vital in that process.
With the services we are building and have acquired (Quantile and
Acadia) we will be able to analyse a customer’s trade portfolio and
determine the best treatment for each transaction, processing cleared
trades through LCH and uncleared margin and trades through Acadia
and SwapAgent, while also providing customers with significant
compression and capital optimisation benefits through Quantile.
We’re very excited about the opportunity here and we have a number
of new organic services in the pipeline.
Find out more about this opportunity
and how we’re meeting it on page 43.
Post Trade continued
London Stock Exchange Group plc
Annual Report 2023
42
Partnering to transform
our industry: Post Trade Solutions
London Stock Exchange Group plc
Annual Report 2023
42
CASE STUDY
Colleagues from across LSEG’s Post Trade
Solutions businesses are coming together
to streamline our service delivery…
…and drive new levels of capital and operational
efficiency for our customers.
43 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
The capital crunch
Our customers are facing a persistent challenge, as they struggle to
maintain efficiency and deliver healthy returns at a time when capital
requirements and funding costs are soaring for OTC derivatives.
Increased regulatory focus, including the introduction of SA-CCR
1
,
is driving up costs and compelling banks to be more efficient with
their financial resources so they can continue delivering for their
clients. While the capital crunch impacts both cleared and bilateral
portfolios, the latter also face significant operational hurdles including
inconsistencies in contracting, reporting and dispute resolution
which can create friction across the post trade lifecycle.
Building a world-class financial resource management offering
We are tackling our customers’ key pain points through Post Trade
Solutions. By combining several innovative businesses, we are bringing
the clearing experience of LCH to the uncleared space – driving down
the expense of capital and delivering significant efficiencies for our
customers. Post Trade Solutions streamlines workflows, data, risk
management and optimisation via:
— SwapAgent – designed to simplify the processing, margining and
settlement of non-cleared OTC derivatives, including cross-currency
swaps and swaptions. Over time, we intend to expand these services
to a broader range of uncleared derivatives including FX and CDS.
— Quantile (acquired 2022) – a provider of financial resource
optimisation services, helping to reduce gross notional, margin and
capital requirements by reducing and rebalancing exposures.
— Acadia (acquired 2023) – a provider of standardised collateral and
multi-asset class workflow capabilities for uncleared OTC derivatives,
reducing costs and complexity through process optimisation.
By bringing this industry-leading expertise under one roof, we will
accelerate the launch of new innovations that respond to our customers’
needs and add further value across the post trade lifecycle.
Launched “FX Smart Clearing”
A recent example of Post Trade Solutions in action is “FX Smart
Clearing”, a service that launched in 2023 and has the potential
to revolutionise OTC FX. By using Quantile’s proven optimisation
techniques to identify FX Forwards for clearing – available through
LCH Forexclear – participants can significantly reduce their capital
requirements and counterparty risk while also benefitting from
multi-lateral trade compression. In a proof-of-concept, 19 participating
banks achieved an average reduction in capital requirements of 51%
without increasing initial margin significantly, and we believe there is
scope to increase this to over 70% as the network and products grow.
Average reduction in capital requirements driven by FX Smart Clearing
in a proof-of-concept
51%
Helping our customers achieve capital
and operational efficiencies through
Post Trade Solutions
Partnering through Post Trade Solutions continued
In consultation with Goldman Sachs
and market participants, LSEG is
seeking to import best practices
and innovation from the cleared
markets to the uncleared markets.
As a result, I anticipate that the
industry will benefit by having
quick access to much better tools.
Amy Hong
Head of Market Structure & Strategic Partnerships
Global Banking & Markets, Goldman Sachs
1 SA-CCR – Standardised approach to counterparty credit risk.
We have delivered strongly
against the stretching financial
targets we set at the time of
the Refinitiv acquisition.
As we look ahead, LSEG is well
placed to deliver against our
new medium-term targets,
as our investments in growth and
scalability begin to come through.
Anna Manz
Chief Financial Officer
Chief Financial
Officer review
For more information, see our Financial
Statements on pages 171 to 254.
44
Growth in total income excluding recoveries (reported)
+7.8%
2022: +19.6%
Growth in total income excluding recoveries (constant currency basis)
+8.3%
2022: +6.6%
1
Annual Subscription Value growth
+6.7%
2022: +6.2%
2
1 2022 growth rate excludes the Russia/Ukraine war impact,
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.
2 2022 growth excludes the impact of the Russia/Ukraine War.
London Stock Exchange Group plc
Annual Report 2023
45
Medium-term guidance
1. Revenue
Mid to high single-digit organic growth
annually, accelerating after 2024.
2. EBITDA margin
Underlying margin to increase
over time.
3. Capex
Remain around current levels
of 11-12% of income in 2024,
then declining over time to
high single-digit % of income.
4. Cash conversion
Cumulative free cash flow to exceed
adjusted profit after tax attributable
to equity holders.
2023 in review
We delivered strong top-line growth of 7.8%
2
on a reported basis,
and 8.3% on a constant currency basis in 2023, with underlying margin
expansion of 110 basis points. The annual dividend increased 7.5%,
and a further £1.2 billion of excess capital was returned to shareholders
in share buybacks.
We have demonstrated a strong performance against the long-term
targets we announced with the Refinitiv acquisition. We delivered
organic income growth of 6.5% CAGR
1
against a target of 5-7% growth,
as well as ongoing underlying expansion of our adjusted EBITDA
margin. We have achieved our cost synergies two years ahead of
plan against an upgraded target, and are on track to deliver revenue
synergies, also against an upgraded target.
New medium-term guidance
1. Accelerating growth – a step-up in growth expectations to mid to
high single-digit organic revenue growth annually, accelerating after
2024 as customers start to benefit from our investment in major
platforms and the Microsoft partnership.
We have several structural growth drivers that underpin our business.
In addition, we have opportunities to grow our market share.
The strategic combination of LSEG and Refinitiv continues to deliver
revenue synergies, and through our sales transformation we are able
to have more effective conversations with our customers.
With regards to pricing, as we improve the value of our services for
our customers; are more disciplined with the implementation of our
price reviews; and over time, move to a usage based pricing model,
we see lots of opportunity here.
We continue to develop new products and instil a real rhythm of
innovation and collaboration with customers. We also see opportunities
in new asset classes like private markets and digital assets alongside
geographic expansion.
The Microsoft partnership increases the potential for every one of
these levers, enabling new and adjacent market opportunities.
2. Improving profitability – underlying EBITDA margin to increase over
time, as the benefit from top-line growth more than offsets underlying
inflation and our reinvestments in growth.
Our Capital Markets and Post Trade divisions are scaled businesses,
but we see opportunity for further margin improvement in our
Data & Analytics business as we build an efficient and scalable
technology platform.
3. Sustained investment – total capex (including Refinitiv integration)
will remain around current levels of 11-12% of income² in 2024, then
decline over time to high single-digit % of income² as integration
related spend ceases.
We have been investing heavily in our business to address historical
underinvestment in the Refinitiv business, to integrate the LSEG and
Refinitiv businesses, and to build new capabilities to drive future growth.
4. Strong cash conversion – cumulative free cash flow to exceed
adjusted profit after tax attributable to equity holders.
Our business is highly cash generative, and as integration spend
ceases after 2025, our cash conversion will improve.
Chief Financial Officer review continued
STRATEGIC REPORT
London Stock Exchange Group plc
Annual Report 2023
1 Organic, constant currency income (excl. recoveries) growth, excluding deferred revenue
accounting adjustment in 2021 and 2022, and the impact of Russia/Ukraine war in 2022.
2 Total income excluding recoveries.
London Stock Exchange Group plc
Annual Report 2023
46
Chief Financial Officer review continued
Capital allocation
Our goal is to invest for growth using the cash we generate, building
a platform for long-term capital appreciation while rewarding investors
today through a progressive dividend, growing broadly in line with
adjusted earnings per share (AEPS).
We allocate capital within appropriate leverage bounds for our earnings
profile, and during the course of 2023 the Group moved to target
a leverage range of 1.5-2.5x operating net debt to adjusted EBITDA
before foreign exchange gains or losses (previously 1.0-2.0x). Our
intention is to maintain business-as-usual leverage around the middle
of this range. Leverage at the end of December 2023 remained at
1.8x (December 2022: 1.8x).
LSEG generated £3.2 billion in operating cash flow in 2023, which we
deployed as follows
1. Capex – £1.0 billion
Business-as-usual capex, on an accrued constant currency basis, was
£745 million. We continued to focus on programmes to support growth,
efficiency and resilience. Our growth investments touch every part of
our business given the breadth of opportunity in front of us. Key growth
programmes ongoing during 2023 included Workspace product
development, continued investment in Tradeweb, the replatforming of
the FTSE Russell index business and the development of Post Trade
Solutions. In addition, we began our joint product investments with
Microsoft and continued to upgrade our own infrastructure to provide
increased capacity, greater agility and better resilience.
In addition to these investments, and in line with our guidance, we
incurred a further £230 million of integration capex on an accrued
basis, the vast majority of which was related to delivering the synergies
relating to the Refinitiv acquisition. Total capex on a cash basis was
£1,031 million.
2. M&A – £618 million
In March 2023, we completed the acquisition of Acadia, which
significantly enhances our risk management, margining and collateral
optimisation capabilities across asset classes, particularly in the
uncleared derivatives space. Together with the 2022 acquisition
of Quantile, and our existing SwapAgent business, it will form the
backbone of our Post Trade Solutions platform described above.
Its services are of growing strategic importance to our customers
and we are well positioned to develop and scale them in a way that is
highly complementary to our existing Post Trade offering. For more
information on Acadia and Post Trade Solutions – see page 43.
We also extended Tradeweb’s geographical footprint through the
acquisition of Yieldbroker in Australia.
3. Dividends – £611 million
The proposed final dividend for 2023 is 79.3 pence – giving a total for
the year of 115.0 pence, up 7.5% on 2022. This is consistent with our
dividend policy and reflects a payout ratio of 36% of AEPS. The total
cash outflow for the year was £611 million, comprising the 2022 final
dividend and the 2023 interim dividend.
From 2024, our policy is to pay a progressive dividend with a pay-out
ratio of 33-40% of full-year AEPS, with the interim dividend set at around
one-third of the expected full-year dividend.
4. Share buyback – £1.2 billion
We remain very focused on capital discipline and will, from time
to time, return excess capital to shareholders to the extent that we
stay within our leverage range. The £1.2 billion returned during 2023
reflected £450 million of on-market buybacks to complete the original
£750 million programme announced in August 2022, and a £750 million
buyback directed at the holding of the former Refinitiv shareholders,
which we executed in September 2023.
Looking ahead, we intend to complete up to £1 billion of additional share
buybacks during 2024, which we intend to acquire directly from entities
owned by certain investment funds affiliated with Blackstone, an affiliate
of Canada Pension Plan Investment Board, an affiliate of GIC Special
Investments Pte. Ltd, and by Thomson Reuters (collectively, the former
Refinitiv shareholders). We believe this structure is in the best interests
of all shareholders. As part of this, we are seeking permission from
LSEG shareholders to renew the authority for directed buybacks at
this year’s AGM in April 2024.
Capital allocation split
Capex – £1.0 billion
M&A – £618 million
Dividend – £611 million
Share buyback – £1.2 billion
47 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Chief Financial Officer review continued
Revised reporting structure to better reflect
our business
From Q1 2024, we will be revising our reporting structure to align
divisional disclosures with management reporting lines. These changes
primarily impact the Data & Analytics division.
For the new Data & Analytics perimeter, revenues will be grouped by
product types under three business lines:
— Workflows – consolidates all of our user interface businesses,
comprising Trading & Banking, plus the desktop activities
previously reported within Investment Solutions and Wealth.
— Data & Feeds – consolidates all of our data businesses and
comprises Enterprise Data, plus the data and feeds activities
previously reported within Investment Solutions and Wealth.
— Analytics – previously reported within Investment Solutions.
The revised grouping allows for better identification of underlying trends in
products and usage, rather than focusing on user groups or communities.
Benchmark & Indices will be split out from Investment Solutions and
be renamed FTSE Russell as a separate division. Similarly, Customer
& Third-Party Risk will also become a stand-alone division, and be
renamed Risk Intelligence.
There will be no change to our Capital Markets or Post Trade reporting.
Revised reporting structure from 2024
Data & Analytics
Revenue (excl.
recoveries): £3,931m
FTSE Russell
Revenue: £844m
Risk Intelligence
Revenue: £492m
Capital Markets
Revenue: £1,546m
Post Trade
Income: £1,167m
Workflows Subscription
Data and feeds Asset based
Analytics
Equities OTC Derivatives
FX Securities and
Reporting
Fixed Income
Derivatives & Other
Non-Cash
Collateral
Net Treasury
Income
2023 reporting
Data & Analytics
Revenue (excl. recoveries): £5,267m
Capital Markets
Revenue: £1,546m
Post Trade
Income: £1,167m
Equities OTC Derivatives
FX Securities and
Reporting
Fixed Income
Derivatives & Other
Non-Cash
Collateral
Net Treasury
Income
Customer &
Third-Party
Risk
Wealth
Solutions
Investment
Solutions
Enterprise
Data
Solutions
Trading &
Banking
2023 income (excluding recoveries) re-presented under the new reporting structure – effective from Q1 2024.
London Stock Exchange Group plc
Annual Report 2023
48
Financial review
All growth rates are expressed on a constant currency basis, unless otherwise stated.
Reported
2023
£m
2022
£m
Variance
%
Constant
currency
variance
%
Organic
constant
currency
variance
%
Data & Analytics 5,267 4,944 6.5% 7.3% 6.7%
Capital Markets 1,546 1,459 6.0% 6.1% 5.8%
Post Trade 1,167 991 17.8% 17.4% 11.5%
Other 29 34 (14.7%) (13.7%) (13.7%)
Total Income (excl. recoveries) 8,009 7,428 7.8% 8.3% 7.1 %
Recoveries
1
370 315 17.5% 2.8% 2.8%
Total Income (incl. recoveries) 8,379 7,743 8.2% 8.1% 6.9%
Reported
Operating Profit 1,371 1,417 (3.2%)
Profit Before Tax 1,195 1,241 (3.7%)
Basic Earnings per Share2 (p) 138.9 141.8 (2.0%)
Dividends per Share (p) 115.0 107.0 7.5%
Adjusted
3
EBITDA 3,777 3,550 6.4% 8.6% 8.8%
EBITDA Margin 47.2% 47.8%
Depreciation, amortisation and impairment (915) (822) 11.3% 10.7% 10.0%
Operating profit 2,862 2,728 4.9% 7.9% 8.4%
Net finance costs (170) (160) 6.3%
Profit before tax 2,692 2,568 4.8%
Taxation (625) (540) 15.7%
Profit from continuing operations 2,067 2,028 1.9%
Equity holders 1,775 1,770 0.3%
Non-controlling interests 292 258 13.2%
Adjusted Earnings per Share
2
(p) 323.9 317.8 1.9%
The financial review contains revenues, costs, earnings on a continuing basis, and key performance indicators (KPIs) for the twelve months ended 31 December 2023. FY 2023 is compared against
FY 2022 on a statutory basis. Constant currency variances are calculated on the basis of consistent FX rates applied across the current and prior year period. Organic growth is calculated on a
constant currency basis, adjusting the results to remove disposals from the entirety of the current and prior year periods, and by including acquisitions from the date of acquisition with a comparable
adjustment to the prior year. Within the financial information and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes.
1 Recoveries relate to fees for third-party content, such as exchange data, that is distributed directly to customers.
2 Weighted average number of shares used to calculate basic earnings per share and adjusted basic earnings per share from continuing operations is 548 million (2022: 557 million).
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.
Total Income excluding recoveries of £8,009 million grew 8.3% on a constant currency basis, and included a 120bp benefit from acquisitions during
the year. Growth on a reported basis was 7.8%. Total Income including recoveries of £8,379 million was up 8.1% in constant currency, and 8.2% higher
on a reported basis. This growth was driven by good performance across all three divisions.
Adjusted operating expenses before depreciation, amortisation and impairment of £3,474 million, included £42 million of FX-related items
(2022: £68 million credit). Constant currency cost growth of 7.7% includes the in-year impact of acquisitions. Organic cost growth of 5.3% reflected
ongoing cost discipline, strong delivery of Refinitiv-related synergies and other efficiency gains. Our main costs relate to our people, with staff
costs of £2,085 million (2022: £1,896 million) incorporating an average salary increase of 6% for the year. IT costs amounted to £607 million
(2022: £567 million) with professional fees of £404 million (2022: £420 million).
Adjusted EBITDA of £3,777 million increased 8.6% in constant currency. EBITDA margin was 60bps lower year-on-year at 47.2% reflecting investment
in the Microsoft partnership, the in-year impact of acquisitions and the FX-related opex items noted above. Improvements in efficiency and scalability
drove a 110bp improvement in underlying EBITDA margin. Within EBITDA, income from Equity Investments was £15 million in 2023, up 25% from the
prior year following a meaningful increase in dividend payments from Euroclear.
49 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Financial review continued
Reported depreciation, amortisation and impairment of £2,143 million (2022: £1,900 million) includes £1,228 million (2022: £1,078 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 of £915 million grew by 10.7%. Our continued investment in technology and new services and the capex associated with
achieving the Refinitiv synergies was the main driver of this increase. In addition, we saw an impact from our move to an agile working methodology,
with depreciation of multi-release investment programmes now recognised earlier, and a greater proportion of capex was assigned a three-year
useful economic life.
Strong income growth across divisions
2023
2
£8,009m
2022
2
£7,428m
FX and other
3
+17.4%
Capital Markets Post Trade
+6.1%
Data & Analytics
+7.3%
Growth rates on a constant currency basis unless otherwise stated.
1 Growth rate for total income excluding recoveries.
2 Total income excluding recoveries.
3 Includes the impact of other revenues
Growth
1
+8.3%
EBITDA margin in line with guidance
2023 margin
comparable
to guidance
Items outside
of guidance
3
2023
margin excl.
FX-related
items
(0.7%)
(0.5%)
+1.1%
2022
adjusted
margin
47.8%
47.2%
M&A Underlying
business
performance
Microsoft
partnership
2023
adjusted
margin
FX
1
FX-related
items
2
(0.5%)
+0.5%
+0.3%
47.7%
48.0%
1 FX comprises FX-related items (2022: £68m benefit, 2023: £42m loss) and translational FX.
2 2023 FX-related items loss of £42m.
3 Items outside of guidance consist of: Acadia acquisition (-10bps) and difference between guidance and actual FX rates (-20bps).
London Stock Exchange Group plc
Annual Report 2023
50
Financial review continued
Reconciliation of Adjusted Operating Profit to Reported Operating Profit
2023
£m
2022
£m
Adjusted Operating Profit 2,862 2,728
Transaction costs (85) (85)
Integration, separation & restructuring costs (247) (304)
Profit on disposal of PPE & remeasurement gains 69 156
Depreciation, amortisation and impairment of intangibles and other assets (1,228) (1,078)
Operating Profit 1,371 1,417
Reported Operating Profit of £1,371 million was 3.2% lower, mostly due to higher amortisation, including purchased intangible assets. Adjusted
Operating Profit of £2,862 million grew 7.9% with the strong income growth and cost discipline highlighted above partially offset by higher
depreciation and amortisation.
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 previous acquisitions. Integration, separation and restructuring costs have mostly been incurred in relation to the integration
of Refinitiv and are in line with previous guidance. Depreciation, amortisation and impairment of intangibles and other assets of £1,228 million mainly
arise from the Refinitiv acquisition, with some additional amortisation associated with recent acquisitions.
Net Finance Expense/Tax/Non-Controlling Interest
Adjusted Net Finance Expense was £170 million (2022: £160 million), and £176 million (2022: £176 million) on a reported basis. Following a change
in presentation, Net Finance Expense now includes foreign exchange gains or losses on corporate treasury activities previously included as an
operating expense. These movements represented a £30 million charge in 2023 and mostly reflected interest rate differentials on FX hedges
1
.
Of this, £16 million was previously included in operating expenses in H1 2023.
An increase in interest rates drove greater interest income on cash and cash equivalents during the period, which was more than offset by
additional interest expenses on floating rate borrowing and the £30 million additional FX charge.
Reported Profit Before Tax decreased 3.7%, to £1,195 million from £1,241 million in 2022 as higher income was more than offset by an increase in
operating expenses and a higher depreciation and amortisation expense. Adjusted Profit Before Tax increased by 4.8% in the year to £2,692 million
(2022: £2,568 million) as EBITDA growth more than offset the increase in depreciation and amortisation on an adjusted basis.
The Group incurred a tax charge in the year of £247 million (2022: £262 million). The effective tax rate was 20.7% (2022: 21.1%), while the adjusted
effective tax rate was 23.2% (2022: 21.0%), with the increase from last year principally reflecting the impact of a higher UK corporate tax rate from
1 April 2023. We currently anticipate an adjusted tax rate of 24%-25% in 2024.
Adjusted profits attributable to non-controlling interests, mainly in Tradeweb and LCH, totalled £292 million for the year ended 2023, an increase of
13.2% from 2022 reflecting the strong performance of these businesses.
Earnings per share
Basic earnings per share from continuing operations was 138.9 pence (2022: 141.8 pence) with the decrease from last year mainly reflecting the
lower profit before tax.
Adjusted basic earnings per share (AEPS) from continuing operations was 323.9 pence (2022: 317.8 pence). The 1.9% increase in AEPS year-on-year
was driven by growth in underlying profitability partly offset by the higher depreciation and net finance expenses and an increased tax rate.
Dividend
The Board is proposing a final dividend of 79.3 pence per share, which together with the interim dividend of 35.7 pence per share paid to
shareholders in September 2023, results in a 7.5% increase in the total dividend to 115 pence per share. The final dividend of 79.3 pence per
share will be paid on 22 May 2024 to all shareholders on the share register at the record date of 19 April 2024.
1 The interest differential is the difference in interest rates between the two currencies embedded in an FX derivative for the tenor of the derivative.
51 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Financial review continued
Data & Analytics
Continuing operations
2023
£m
2022
£m
Variance
%
Constant
currency
variance
%
Organic
constant
currency
variance
%
Trading & Banking 1,656 1,612 2.7% 3.3% 2.5%
Trading 1,306 1,275 2.4% 3.0% 2.0%
Banking 350 337 3.9% 4.3% 4.3%
Enterprise Data 1,411 1,306 8.0% 9.3% 8.9%
Real-Time Data 895 837 6.9% 8.6% 7.9%
PRS 516 469 10.0% 10.6% 10.6%
Investment Solutions 1,423 1,326 7.3% 7.9% 7.9%
Benchmark Rates, Indices & Analytics 689 620 11.1% 11.5% 11.5%
Index – Asset-Based 281 280 0.4% 1.8% 1.8%
Data & Workflow 453 426 6.3% 6.7% 6.7%
Wealth 285 275 3.6% 4.4% 4.4.%
Customer & Third-Party Risk 492 425 15.8% 16.4% 14.1%
Total Revenue (excl. recoveries) 5,267 4,944 6.5% 7.3% 6.7%
Recoveries 370 315 17.5% 2.8% 2.8%
Total Revenue (incl. recoveries) 5,637 5,259 7.2% 7.0% 6.5%
Cost of sales (913) (879) 3.9% 4.7% 3.8%
Gross Profit 4,724 4,380 7.9% 7.5% 7.0%
Adjusted operating expenses before depreciation, amortisation and impairment (2,348) (2,142) 9.6% 5.7%
Adjusted EBITDA 2,376 2,238 6.2% 9.2%
Adjusted depreciation, amortisation and impairment (664) (607) 9.4% 8.9%
Adjusted operating profit 1,712 1,631 5.0% 9.3%
Adjusted EBITDA Margin 45.1% 45.3%
To better align with internal reporting, some small revenue items have been reallocated between business lines across 2022 from Real-Time Data and Data & Workflow into Benchmark Rates,
Indices & Analytics.
Data & Analytics provides high value data, analytics, indices, workflow solutions and data management capabilities. Total revenue excluding
recoveries of £5,267 million grew by 7.3%, driven by broad based strength across business lines and a 0.6% in-year contribution from acquisitions.
Trading & Banking revenue of £1,656 million increased by 3.3%. Adjusting for the NEST disposal in 2023 and the benefit of last year’s TORA
acquisition, organic growth was 2.5%. This performance was primarily driven by better price realisation following improvements to our product
offering (e.g. Workspace) and customer service.
Enterprise Data revenue of £1,411 million grew by 9.3%, reflecting the continued enhancement and expansion of our content, particularly in the fixed
income space with the addition of Yieldbook, Tradeweb and debt corporate actions, and investment in capabilities such as MayStreet’s low latency
data feeds and our cloud-based Real-Time Optimised solution. Building on the natural linkages with FTSE Russell and other parts of the Group is
driving strong revenue synergy realisation.
Investment Solutions revenue of £1,423 million was up 7.9%. Subscription revenue growth continued the acceleration seen over recent years, with
Benchmark Rates, Indices & Analytics growing 11.5%. Improvements to our sales process are achieving greater focus on customers and discipline
in how we meet strong demand for our core benchmark products. Asset-based revenues accelerated over the course of the year, reflecting strong
product inflows and a recovery in market levels. ETF AUM ended the year at an all-time high of $1.25 trillion, 23.4% higher than 31 December 2022.
Wealth contributed £285 million of revenue in 2023, with Digital Solutions the main driver of the 4.4% growth on the prior year.
London Stock Exchange Group plc
Annual Report 2023
52
Financial review continued
Customer & Third-Party Risk revenues of £492 million grew 16.4%. The World-Check screening business continued to deliver double-digit growth
as regulatory and risk-driven customer demand for Anti Money-Laundering (AML) and Know Your Customer (KYC) solutions was complemented by
further expansion of World-Check’s offering. Customer & Third-Party Risk Solutions also saw a small benefit from a full year contribution of last year’s
acquisition of the GDC identity verification data business.
Organic Annual Subscription Value growth (“ASV”) at December 2023 was 6.7%, reflecting continued strong demand for our services, the 2023 price
increase, ongoing improvements in retention and some loss of Credit Suisse business, as anticipated.
Cost of sales of £913 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 4.7% was below that of revenues.
Adjusted operating expenses before depreciation, amortisation and impairment increased to £2,348 million. Careful management of staff costs and
ongoing delivery of synergies related to the Refinitiv acquisition meant cost growth of 5.7% was below that of revenues despite investment in the
Microsoft partnership and other growth initiatives and the annualisation of expenses from businesses acquired in 2022.
Adjusted EBITDA of £2,376 million was up 9.2% on a constant currency basis, outpacing revenue growth. On an actual rates basis, adjusted EBITDA
margin decreased 20 basis points to 45.1%. Adjusted operating profit was up 9.3%.
Retention, sales and price driving ASV growth
H2 2023
2023
+6.7%
Mar-21
+3.0%
2023
H1 2023
+6.2%
2022
+4.6%
2021
+6.9%
+6.7%
Increase since
acquisition
+370bp
ASV growth rate
Annual Subscription Value (ASV) growth is a constant currency point-in-time year-on-year organic measure of subscription growth in our Data & Analytics business.
Impact of Ukraine/Russia conflict
Non-Financial KPIs
2023 2022
Variance
%
Annual Subscription Value (ASV) Growth (%)
1
6.7% 4.8%
Subscription revenue growth (%)
1,2
7.1% 4.6%
Index – ETF AUM ($bn)
– Period end 1,245 1,009 23.4%
– Average 1,108 1,024 8.2%
Index – ESG Passive AUM ($bn)
3
262 256 2.4%
1 Organic, constant currency variance.
2 12-month rolling.
3 ESG Passive AUM is at 30 June 2023 and prior period comparator is at 30 June 2022. The comparator has been revised from the previously published figure of $296bn.
53 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Capital Markets
Continuing operations
2023
£m
2022
£m
Variance
%
Constant
currency
variance
%
Organic
constant
currency
variance
%
Equities 227 248 (8.5%) (8.8%) (8.8%)
FX 251 258 (2.7%) (1.9%) (1.9%)
Fixed Income, Derivatives & Other 1,068 953 12.1% 12.1% 11.7%
Total Revenue 1,546 1,459 6.0% 6.1% 5.8%
Cost of sales (35) (34) 2.9% 3.2% 3.2%
Gross Profit 1,511 1,425 6.0% 6.1% 5.9%
Adjusted operating expenses before depreciation, amortisation and impairment (715) (665) 7.5% 8.2%
Adjusted EBITDA 796 760 4.7% 4.4%
Adjusted depreciation, amortisation and impairment (128) (103) 24.3% 23.2%
Adjusted operating profit 668 657 1.7% 1.5%
Adjusted EBITDA Margin 51.5% 52.1%
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 of £1,546 million grew 6.1% with the increase primarily driven by Fixed Income, Derivatives & Other.
Equities revenue of £227 million declined 8.8% as subdued market volatility fed through to lower Secondary Markets activity.
FX revenue of £251 million was down 1.9%. Weaker interbank FX activity, particularly in H2 2023, adversely impacted volumes on our dealer-focused
Matching platform. Our dealer-to-client platform, FXall, also saw lower activity from buyside participants.
Fixed Income, Derivatives & Other revenues are primarily driven by Tradeweb, a global operator of electronic marketplaces for rates, credit,
equities and money markets. Revenues of £1,068 million were 12.1% higher, accelerating over the year as risk appetite returned to markets.
Tradeweb’s solutions are supporting the ongoing electronification of trading and the group continues to make share gains in key product lines.
Tradeweb made further progress in international markets, complementing its strong organic expansion with the acquisition of Yieldbroker, which
added customers and liquidity in Australian and New Zealand government bonds. Tradeweb also announced the acquisition of algorithmic execution
technology business r8fin, which completed in January 2024.
Cost of sales grew more slowly than revenues, increasing 3.2% to £35 million. These costs primarily reflect expenses within the Tradeweb business
relating to data feeds.
Adjusted operating expenses before depreciation, amortisation and impairment of £715 million were up 8.2%, again driven by the strong revenue
growth and investment at Tradeweb.
Adjusted EBITDA rose to £796 million, growing 4.4% as a result of the topline growth at Tradeweb while adjusted EBITDA margin was slightly lower
at 51.5% (2022: 52.1%). Adjusted operating profit grew more modestly, up 1.5%. This reflects a higher adjusted depreciation and amortisation expense
following sustained investment in our offering, in particular the introduction of the non-deliverable forward (NDF) Matching platform in 2023, and the
move to more agile capex releases.
Non-Financial KPIs
2023 2022
Variance
%
Equities
UK Value Traded (£bn) – Average Daily Value 3.7 4.6 (19.6%)
SETS Yield (bps) 0.71 0.66 7.6%
FX
Average daily total volume ($bn) 442 452 (2.2%)
Fixed income, Derivatives and Other
Tradeweb Average Daily Volume ($m)
1
Rates – Cash 366,586 342,748 7.0%
Rates – Derivatives 529,757 341,948 54.9%
Credit – Cash 12,376 10,094 22.6%
Credit – Derivatives 14,030 17,618 (20.4%)
1 2022 volumes revised from previous reporting.
Financial review continued
London Stock Exchange Group plc
Annual Report 2023
54
Post Trade
Continuing operations
2023
£m
2022
£m
Variance
%
Constant
currency
variance
%
Organic
constant
currency
variance
%
OTC Derivatives 517 402 28.6% 28.9% 13.9%
Securities & Reporting 254 234 8.5% 7.0% 7.0%
Non-Cash Collateral 107 100 7.0% 7.5% 7.5%
Total Revenue 878 736 19.3% 19.0% 11.1%
Net Treasury Income 289 255 13.3% 12.8% 12.8%
Total Income 1,167 991 17.8% 17.4% 11.5%
Cost of sales (195) (150) 30.0% 27.5% 20.2%
Gross Profit 972 841 15.6% 15.7% 9.9%
Adjusted operating expenses before depreciation, amortisation and impairment (403) (324) 24.4% 20.6%
Adjusted EBITDA 569 517 10.1% 12.3%
Adjusted depreciation, amortisation and impairment (123) (112) 9.8% 9.8%
Adjusted operating profit 446 405 10.1% 13.0%
Adjusted EBITDA Margin 48.8% 52.2%
Post Trade provides clearing, risk management, capital optimisation and regulatory reporting solutions. Total revenue of £878 million grew 19.0%,
and 11.1% on an organic basis. Total income, including Net Treasury Income, was £1,167 million, up 17.4% year-on-year.
OTC Derivatives revenue increased to £517 million, up 28.9%, partly reflecting the in-year benefit of the Quantile and Acadia acquisitions. Organic
growth of 13.9% was also strong, with uncertainty around the timing and scale of Central Bank interest rate moves driving increased client clearing
activity in SwapClear. We also generated £18 million of one-time revenues helping customers renew contracts in response to US reference rate
reform.
Securities & Reporting revenue of £254 million grew 7.0% as payments received relating to the early termination of the Euronext clearing agreement
more than offset the in-year impact of lost cash equity clearing revenues and subdued equity market volumes. We expect some additional revenue
and Net Treasury Income attrition in 2024 as Euronext transition their remaining clearing activities. RepoClear continued to see good growth.
Non-Cash Collateral revenue of £107 million grew 7.5% as customers worked to optimise their collateral and clearing volumes grew.
Net Treasury Income (NTI) of £289 million increased 12.8% as interest margins benefited from money market trends. Higher levels of cash collateral
year-on-year were also supportive in the first half, but moderated in the second half as balances normalised.
Cost of sales of £195 million (2022: £150 million) include £10 million of additional expense from Acadia. The remaining organic increase was driven
mainly by revenue share arrangements relating to the SwapClear business.
Adjusted operating expenses excluding depreciation, amortisation and impairment increased to £403 million, up 20.6%. Additional costs relating to
Acadia and Quantile (both high-growth but not fully scaled businesses) drove much of the increase, though organic expenses also grew to reflect
higher volumes and investment in new capabilities. As a result, adjusted EBITDA of £569 million grew 12.3%, while adjusted EBITDA margin declined
to 48.8% (2022: 52.2%). Adjusted operating profit of £446 million was up 13.0%.
In July, LSEG completed the acquisition of the 11.1% minority interest in LCH SA for a total cash consideration of €111 million. In February 2024
LSEG acquired 3.24% of the share capital in LCH Group Holdings Limited from certain minority shareholders, taking LSEG’s ownership of LCH Group
Holdings Limited to 85.85%.
Financial review continued
55 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Non-Financial KPIs
2023 2022
Variance
%
OTC
Interest rate swap – notional cleared ($trn) 1,319 1,091 20.9%
Interest rate swap – client trades (‘000) 3,172 2,684 18.2%
FX – notional cleared ($bn) 27,320 24,659 10.8%
FX – ForexClear members 38 36 5.6%
Securities & Reporting
EquityClear trades (m) 1,471 2,163 (32.0%)
Listed derivatives contracts (m) 218.9 262.6 (16.6%)
RepoClear – nominal value (€trn) 304.9 288.4 5.7%
Collateral
Average non-cash collateral (€bn) 180.8 168.5 7.3%
Average cash collateral (€bn) 130.4 140.8 (7.4%)
Financial review continued
London Stock Exchange Group plc
Annual Report 2023
56
Cash Flow
Cash Flow
2023
£m
2022
£m
Operating Cash Flow 3,223 3,193
Net interest paid (64) (142)
Other items
1
(118) (110)
Net taxes paid (217) (351)
Capex (1,031) (926)
Equity Free Cash Flow 1,793 1,664
Lease payments (156) (150)
Disposal proceeds – 1,056
Acquisitions (618) (768)
Investments 223 (227)
Dividends to LSEG shareholders (611) (567)
Net borrowings 1,128 (209)
Share buybacks (1,235) (383)
Other (37) (56)
Net Cash Flow 487 360
The Group’s business continued to be strongly cash generative during the year, with operating cash flow of £3,223 million (2022: £3,193 million).
Cash outflows for purchases of property, plant and equipment and intangibles amounted to £1,031 million (2022: £926 million), which includes
our business-as-usual investment programmes as well as investments related to the Refinitiv integration.
Equity free cash flow was £1,793 million (2022: £1,664 million), representing 100% conversion of profits attributable to LSEG shareholders. During the
year the Group deployed £618 million on acquisitions, largely in respect of Acadia, Tradeweb’s acquisition of Yieldbroker and the acquisition of the
LCH SA minority interest. Dividends paid during the year were £611 million, with the increase from last year reflecting the continued strong growth in
dividends per share. £1,235 million was spent on share buybacks, of which £450 million related to the LSEG share buyback programme announced
in August 2022, £750 million was in respect of the directed buyback programme announced in March 2023, and a small component related to
Tradeweb’s share repurchase and other associated fees.
Cash generation, after organic and inorganic investments and other normal course payment obligations, was positive, contributing to cash and
cash equivalents growing from £3,209 million as at 31 December 2022 to £3,580 million as at 31 December 2023.
Financial review continued
1 Includes dividends received, dividends paid to non-controlling interests and sales commissions paid.
57 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Balance Sheet/Leverage/Ratings
Net Debt
At 31 December
2023
£m
2022
£m
Gross borrowings 9,063 8,151
Cash and cash equivalents (3,580) (3,209)
Net derivative financial (assets)/liabilities (23) 48
Lease liabilities 636 672
Net debt 6,096 5,662
Less lease liabilities (636) (672)
Regulatory and operational amounts 1,348 1,236
Operating net debt 6,808 6,226
At 31 December 2023, the Group had operating net debt of £6,808 million (31 December 2022: £6,226 million) after setting aside £1,348 million for
regulatory and operational amounts. The increase was driven by the Acadia acquisition, shareholder returns including the £450 million on-market
buyback and the £750 million directed buyback and an increase in the amount of cash held for regulatory and operational purposes.
At 31 December 2023 group leverage
1
was 1.8x, unchanged from the previous year (2022: 1.8x). During the course of 2023 the Group moved its
target leverage range to 1.5-2.5x (previously 1.0-2.0x), with an intention to maintain day-to-day leverage around the middle of this range.
The Group has access to committed revolving credit facilities of £3.0 billion, consisting of a £1,925 million facility and a £1,075 million facility,
both maturing in December 2027. No drawings were outstanding under either facility at 31 December 2023 (31 December 2022: £nil).
In September 2023, LSEG successfully returned to the debt capital markets, issuing €1.4 billion of 3-year and 7-year bonds, with proceeds used to
repay the remaining US dollar term loan entered into as part of the Refinitiv acquisition in 2021. The net effect was to extend the average maturity
of our financing.
LSEG is rated A with stable outlook by Standard & Poor’s and A3 with stable outlook by Moody’s. LCH Limited and LCH SA are rated AA- with stable
outlook by S&P.
Foreign Exchange
The majority of LSEG revenues and expenses are in US dollars followed by sterling, euro and other currencies.
USD GBP EUR Other
2023 Total Income
2
60% 16% 16% 8%
2023 Underlying Expenses
3
53% 24% 8% 15%
2023 Total Income by division USD GBP EUR Other
Data & Analytics
2,4
66% 11% 12% 12%
Capital Markets 63% 18% 18% 1%
Post Trade
4
26% 41% 32% 2%
Spot/Average Rates
Average rate 12 months
ended 31-Dec-23
Closing rate
at 31-Dec-23
Average rate 12 months
ended 31-Dec-22
Closing rate
at 31-Dec-22
GBP : USD
1.243 1.275 1.237
1.203
GBP : EUR 1.150 1.154 1.173
1.127
Financial review continued
1 Leverage is calculated as operating net debt (i.e. net debt before lease liabilities and after excluding amounts set aside for regulatory and operational purposes) to adjusted EBITDA before foreign
exchange gains or losses.
2 Total income includes recoveries.
3 Underlying expenses includes cost of sales and adjusted operating expenses.
4 Due to rounding, income percentages do not add to 100%.
Sustainability
Aligned with our purpose,
our central role in capital
markets and presence
throughout the trade lifecycle,
LSEG is uniquely positioned
to play a leading role
in enabling sustainable
economic growth.
London Stock Exchange Group plc
Annual Report 2023
58
LSEG colleagues eligible for our sustainability learning programme
2,000
The content in this section is complemented by our standalone
2023 Sustainability Report and our Sustainability Databook,
both available online at www.lseg.com/en/sustainability-strategy/
disclosures-and-reports.
59 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORTSTRATEGIC REPORT
Sustainability continued
Sustainability strategy
In this section we summarise our sustainability strategy and how we
address material sustainability risks and opportunities, with further detail
in the 2023 Sustainability Report and Sustainability Databook.
Our approach to sustainability is guided by LSEG’s purpose to drive
financial stability, empower economies and enable customers to create
sustainable growth. This shapes everything we do and helps us to
deliver long-term value for our stakeholders. One of LSEG’s Group
Strategic Objectives (GSO) is to establish LSEG as a strategic enabler
and leader of sustainable economic growth. This strategic objective is
embedded in the business as each division and function is required
to set an aligned divisional objective in support of the GSO, with KPIs
attached. Further information about our GSOs can be found on pages
139 to 141.
Sustainability themes
Our sustainability strategy is framed by three broad themes that are
shaping financial markets, and where we seek to amplify our impact.
Within each theme we have set objectives which are delivered via
our products and services, market engagement and policy advocacy,
and our operations. The themes are:
Climate transition
Decarbonising the global economy is critical to minimising adverse
social and environmental impacts associated with climate change.
This requires significant resources to be directed towards the transition
globally while ensuring that the costs and benefits of this are shared
fairly within and between countries. LSEG supports a just transition
through its market engagement and policy advocacy, alongside
a range of sustainable finance and investment solutions.
Growth of the green economy
Alongside decarbonising the economy, it is important that we create,
scale and deliver solutions to critical sustainability challenges. LSEG
enables sustainable economic activity in the capital markets through
its financial markets infrastructure, data and market engagement.
Inclusive economic opportunity
An inclusive economy enables people to participate in, and benefit
from, economic growth, regardless of their gender, ethnicity, religion,
social background, disability, or any other personal characteristic.
LSEG creates an inclusive culture internally and supports economic
empowerment programmes in communities.
Key sustainability topics
To help us prioritise sustainability topics we commissioned an
independent materiality assessment in 2021. This sought views from
key stakeholder groups including customers, colleagues, suppliers and
investors. It also included a wider review of the regulatory landscape
applicable to LSEG. Further detail about the assessment can be
found on page 8 of our 2021 Sustainability Report alongside a full
list of sustainability issues. The four sustainability issues of greatest
importance are: sustainable finance, climate risk management, talent
attraction and retention, and information security and data privacy.
These issues have the potential to affect our execution of business
strategy, revenues, operating costs, business continuity and reputation.
We are conducting a double sustainability materiality assessment which
will be finalised in 2024, considering the impact of LSEG on society and
the environment, as well as the risks and opportunities to our business
from sustainability. We will share the results of this in future reports.
Governance and oversight
The LSEG Board approves the Group’s sustainability strategy, including
the climate transition plan and sustainability reporting, and holds
executive management to account for its delivery. Sustainability is on
the Board agenda at least twice a year. The Audit Committee oversees
applicable sustainability-related reporting requirements, and the Board
Risk Committee oversees and advises the Board on the current risk
exposures and profile of the Group including sustainability risks,
emerging risks and future risk strategy and risk culture.
The Executive Committee is responsible for setting the Group’s
sustainability ambition, agreeing the strategy, monitoring progress
and approving sustainability reporting.
The Executive Risk Committee is an Executive Committee sub-
committee responsible for the consideration and oversight of risk
matters, including those which relate to sustainability. The Committee
focused on risk culture, risk profile oversight, risk policy oversight,
risk appetite and risk disclosure and reporting.
The Sustainability Committee is an Executive Committee subcommittee
responsible for providing direction and oversight of the Group’s overall
sustainability strategy and programmes, including LSEG’s Climate
Transition Plan. The Committee is chaired by the Chief Risk Officer.
The Committee meets at least four times a year and reports to the
Executive Committee at least twice a year. Several working groups
interact with the Committee, including the Sustainability Working
Group, the Climate Transition Steering Group and the Sustainable
Finance and Investment Business Forum.
The Chief People Officer is a member of the Executive Committee and
is accountable for all aspects of our People strategy, including talent
attraction, reward, compensation and benefits, training, development,
equity, diversity and inclusion, colleague wellbeing, employment
regulation and worker rights including collective bargaining.
Skills and competence
It is important that those involved in overseeing and delivering
LSEG’s sustainability strategy have appropriate skills and competencies.
With respect to the Board, in 2023, new sustainability learning resources
were made available to enable them to develop their knowledge.
This included the LSEG Sustainability Campus which is an online
resource with two core learning pathways and which is available to
all colleagues. For colleagues who need to develop a deeper level of
knowledge, we have also introduced an online sustainability learning
portal, Sustainability Unlocked. This is managed by a third party and has
tailored learning pathways. We have identified 2,000 colleagues who
will have access to this training.
Sustainability risk management
Sustainability is a Strategic Risk in the Group Risk Taxonomy and is
embedded in the Enterprise Risk Management Framework (ERMF). The
Sustainability Risk Framework builds on the ERMF and provides further
detail on the required control environment for sustainability-related risk
which specifically defines roles and responsibilities to deliver expected
outcomes in relation to sustainability risks. The dedicated Sustainability
Risk team is responsible for developing a Group-wide view of the
management and status of sustainability risks and provides second line
support to the business to review and challenge its sustainability risk
profile. The Sustainability Risk Team reports to the Non-Financial Risk
Committee (NFRC) when specific issues arise, and to the Board Risk
Committee no less than annually and as needed.
LSEG’s Internal Audit team incorporates sustainability into its audit
schedule, by looking at sustainability as an embedded part of other
audits, or auditing specific sustainability programmes, or sustainable
finance and investment products and services.
More information on our key sustainability topics can be found on
page 5 of our 2023 Sustainability Report.
London Stock Exchange Group plc
Annual Report 2023
Sustainability continued
People
People drive our performance and
productivity. Our inclusive culture and values
set us apart, leading the way to meeting the
needs of our customers and stakeholders,
advancing technology and creating
a workforce that is future ready. With more
than 25,000 people in over 60 countries,
we work with ambition and accountability.
Culture and values
Our purpose is the foundation on which our culture is built. Our values
underpin our purpose and set the standard for everything we do, every
day. They go to the heart of who we are and guide our decision-making
and everyday actions. Culture is one of LSEG’s GSOs which is focused
on fostering diversity, inclusion and a sense of belonging at LSEG,
alongside building and developing capability to deliver our goals.
During the year we launched LSEG’s new values, co-created with our
colleagues following extensive engagement and feedback from surveys,
virtual and in-person focus groups, feedback from customers, online
sentiment and interviews with media partners. Our values are being
embedded into our people processes and procedures including
recognition, recruitment and performance assessments. Further
information about our Sustainability Governance, including our People
strategy, can be found on page 24 of our 2023 Sustainability Report.
LSEG’s values
Integrity We stand by our principles and deliver on our promises.
We earn trust by acting responsibly.
Partnership Our open model is integral to how we do business. We forge
long-term relationships; we work together to solve evolving
needs and deliver strategic outcomes.
Excellence Our breadth of capabilities sets us apart, globally. We achieve
industry-leading outcomes by combining unique, diverse
perspectives and knowledge across markets.
Change We embrace change. We combine human ingenuity,
technology, risk management and insight to create the
products and services that lead and shape the industry.
Colleague engagement
We saw increased participation in this year’s Group-wide colleague
engagement survey, LSEG Engage, with 88% of colleagues responding
(2022: 86%). The results showed engagement at the same levels seen
in 2022 with a score of 75, against an external environment which saw
declining levels of overall engagement (source: Microsoft Viva Glint 2023).
The engagement score is a combined measure of responses to questions
on colleague satisfaction and likelihood to recommend LSEG as a place
to work. Results from the survey showed colleagues increasingly
understand LSEG’s strategy, saw improvement in opportunities to learn
and develop, and in the support they received from their people leaders.
The survey found that continued focus is needed around addressing
barriers to execution, representing an opportunity to make sure our
people are better enabled to deliver at their best.
Other forms of colleague engagement, such as Global and Divisional
townhall meetings, conversations with the Board and Executive
Committee Exchanges continue to have strong colleague interaction. The
latter involve members of the Executive Committee holding round table
discussions with small groups of colleagues, providing an opportunity for
listening, feedback and discussion. Twelve of these were held in 2023.
Learning and development
To ensure LSEG has the necessary skills and capabilities to execute its
business strategy and help colleagues define and achieve their career
ambitions, the My Career programme was launched. This programme is
founded on a skills-based career framework accessible through LSEG’s
Career Navigator talent-marketplace software, which connects individual
personal ambitions with roles across LSEG and helps colleagues build
associated development plans.
Aggregated level skill data from Career Navigator is informing the talent
strategy for 2024, identifying skill gaps in key areas such as product
development and management skills. In 2023, 36% of vacancies
(2,700 vacancies) were filled internally in part due to a number of
strategic programmes building skills and capabilities. We continue to
look for ways to drive internal mobility and expect this to rise over the
60
61 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Sustainability continued
medium to longer term. Voluntary colleague turnover continued
to stay low (less than 10%) in 2023, in line with external market trends,
a significant decrease versus prior year.
Equity, diversity and inclusion
We continued our focus on creating an inclusive culture during the
year. We introduced inclusive hiring training for all people leaders and
ran a data disclosure campaign to increase self-reported colleague
diversity data which increased our average data disclosure rate across
categories such as ethnicity, gender, disability and sexual orientation
from 42% to 69%.
In 2023, we made good progress relative to our diversity goals for
gender, however there is room to improve in relation to our goals for
underrepresented ethnic and racial groups. By the end of 2023, we
exceeded our goal for women in our leadership community, achieving
42% against a minimum goal of 40%. With respect to underrepresented
ethnic and racial groups, we did not achieve our goal to reach 20%
representation within the leadership community by the end of 2023,
closing the year at 14% (2022: 15%). However, we remain firmly focused
on closing this gap, building an inclusive environment for our diverse
talent through the leadership development programmes we launched
in 2022, including Illuminate – targeted towards black and Latinx
colleagues – and the APAC Accelerator for those based in Asia-Pacific
region. For more information on the measures we are taking, refer to
page 26 of our 2023 Sustainability Report.
In 2023, we developed an enhanced methodology to help us
review our EDI goals to ensure they remain relevant and can be
appropriately measured globally. We have therefore updated our
gender and ethnicity diversity goals for our senior leadership
community for 2024 and beyond:
— Gender: maintain at least 40% of women in senior leadership
(ExCo and Group Leaders) going forward
— Ethnicity: 25% underrepresented ethnic groups in senior leadership
roles (ExCo and Group Leaders) by 2027
Alongside these goals, we continue to focus on increasing diversity
among the wider leadership group (Group Director and Director
Leaders), to build a more diverse pipeline of future senior leaders.
Pay equity
LSEG is committed to building an equitable and inclusive environment
for all, including pay structures that are free of bias. We are committed
to pay equity which means ensuring that no discrepancies in pay result
from differences in personal characteristics, such as gender, ethnicity,
age or nationality. Our pay and performance policies are globally
adopted and regularly reviewed by LSEG’s Executive Committee and
Remuneration Committee, with the aim of ensuring market alignment
and compliance.
The review used data as of 5 April 2023 and quantified the Identifiable
Pay Gap, which shows the gap in pay between two groups that can
be attributed to explainable and objective factors (such as seniority,
job role, location, business sector, experience and performance) and
the Non-Identifiable Pay Gap which shows the remaining gap once
these factors have been accounted for.
The 2023 results found that we made progress on the previous year.
With respect to gender, we saw a raw pay gap of 29.2%, down from
32.6% in 2022, with a non-identifiable pay gap of 1.2% (down from 1.5%
in 2022), in favour of males. With respect to ethnicity (UK and US only)
we saw a raw pay gap of 13.4% (down from 17.8% in 2022), in favour of
white employees, with a non-identifiable pay gap of 0.8% (up from
0.3% in 2022), in favour of racial and ethnic underrepresented groups.
Further detail can be found in our 2023 Sustainability Report and the
Sustainability Databook.
Health and wellbeing
We take a holistic approach to wellbeing, with a wide range of
resources available to support colleagues’ emotional, physical,
financial and social wellbeing. This includes the Employee Assistance
Programme and a community of 170 Mental Health Champions.
Scope Unit 2023 2022 2021
Gender
Women on LSEG plc Board Global Number/
Percentage
5/42% 6/46% 6/46%
Men on LSEG plc Board 7/58% 7/54% 7/54%
Women in senior leadership roles (ExCo and Group Leaders) Global Number/
Percentage
41/42% 42/40% 34/33%
Men in senior leadership roles (ExCo and Group Leaders) 57/58% 64/60% 69/67%
Women People Leaders Global Number/
Percentage
1,488/36% 1,388/35% 1,024/33%
Men People Leaders 2,672/64% 2,568/65% 2,046/67%
Women in workforce Global Number/
Percentage
10,928/43% 10,513/43% 9,920/43%
Men in workforce 14,680/57% 13,783/57% 13,341/57%
Ethnicity
Underrepresented ethnic groups on LSEG plc Board Global Number 2 2 2
Underrepresented ethnic groups on LSEG plc Board Global Percentage 17% 15% 15%
Underrepresented ethnic groups in senior leadership roles
(ExCo and Group Leaders)
Global Number 13 14 14
Underrepresented ethnic groups in senior leadership roles
(Exco and Group Leaders)
Global Percentage 14% 15% 16%
Underrepresented ethnic groups as People Leaders UK and US Number 494 401 273
Underrepresented ethnic groups as People Leaders UK and US Percentage 26% 26% 22%
Underrepresented ethnic groups in workforce UK and US Number 2,256 1,933 1,859
Underrepresented ethnic groups in workforce UK and US Percentage 32% 33% 31%
London Stock Exchange Group plc
Annual Report 2023
62
Sustainability continued
Community
The LSEG Foundation is the main channel for our community investment
and engagement and is an independent charity partner registered with
the Charities Commission for England and Wales. The LSEG Foundation
Board is overseen by a Trustee Board, chaired by the LSEG Chief
People Officer, five employee trustees and two independent trustees.
The Foundation provides grants to charity partners and non-profit
groups that focus on economic empowerment, sustainable economy,
and disaster relief. During 2023 the LSEG Foundation gave almost
£4 million in grants to 103 charity partners. Charity partners were also
supported through employee volunteering with 4,933 colleagues using
their paid time off for volunteering. Funding for humanitarian relief
caused by conflict or natural disasters was granted to support those
impacted by earthquakes in Turkey and Syria, floods in Libya, and the
conflicts in Ukraine, Israel and Palestine.
This year we introduced new leave entitlements, in line with our values
and ambition to become one of the greatest places to work. These
include paid bereavement leave, ten days’ fully paid carer’s leave and
six weeks’ paid transitioning leave for those who need time as part
of a gender transitioning journey. We have also introduced policies to
support colleagues affected by HIV/AIDS and Menopause Guidance,
which includes a range of information and resources, supported by
trained menopause champions.
We support our people through crises and challenges due to global
conflict, prioritising their wellbeing and safety. We work with their
People Leaders to make sure anyone impacted has the immediate
and long-term support they need as the situation evolves.
Business conduct
All colleagues are required to complete mandatory training on our
Code of Conduct to ensure high standards of business conduct are
maintained. In 2023, 99.8% of colleagues completed the training.
The Group has zero tolerance for financial crime as it undermines the
rule of law, democratic processes, and the wellbeing and human rights
of citizens. It also distorts free trade and competition. Our Financial
Crime Policy sets out requirements to minimise financial crime, which
encompasses, but may not be limited to, money laundering, terrorist
financing, breach of international trade sanctions, bribery and corruption,
fraud and false accounting, insider trading, market abuse, theft or misuse
of confidential information or other malpractice. This is supported by
mandatory training for all colleagues.
Human rights
We are committed to respecting and preserving the human rights of
all colleagues, contractors and those in our supply chain. Our Human
Rights Policy commits us to: the freedom of association and the effective
recognition of collective bargaining; eliminating all forms of forced and
compulsory labour and the abolition of child labour; and eliminating
discrimination in respect of employment and occupation.
We regard all forms of modern slavery and human trafficking as a crime
and a violation of fundamental human rights. While LSEG operates in
a sector where the risk of modern slavery and human trafficking in the
workforce is inherently low, we are committed to implementing and
promoting practices which combat modern slavery in all its forms.
As a UK headquartered business, we are committed to adhering or
complying with the UK Modern Slavery Act 2015 and our Modern
Slavery Act Statement can be found on lseg.com.
Whistleblowing
Colleagues, contractors and suppliers can raise concerns about
adherence to our Code of Conduct, relevant laws and regulations or
conduct which is potentially unethical or harmful. LSEG’s Speak Up
Policy sets out how concerns can be raised confidentially while
offering individuals protection from retaliation such as demotion
or the withholding of promotion, reduction of wages, discrimination,
victimisation, harassment or unjustifiable disciplinary proceedings.
Reports can be made confidentially, and anonymously if preferred, via the
24-hour Speak Up hotline (phone and online) which is independent from
LSEG or with the Legal & Compliance or Risk functions. All whistleblowing
reports are reviewed by a Speak Up triage team and reported to the Audit
Committee. Between 1 January and 31 October 2023 there were 136 reports
made
1
. All reports are investigated fully and action taken as appropriate.
The LSEG Foundation supports
economic empowerment
programmes in the communities we
operate in and it also supports the
transition to a sustainable economy
through key strategic partnerships.
David Schwimmer
Chief Executive Officer
1 FY2023 Speak-up data is for the period 1 January 2023 to 31 October 2023. FY2022 data
is for the period 1 April 2022 to 31 December 2022 because in April 2022 LSEG’s new
“Speak Up” programme came into effect. Moving forward this data will be reported from
31 October every year for a 12-month period to align with external audit process.
63 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Sustainability continued
Climate
This section sets out LSEG’s approach to climate change, including the
related risks, opportunities and impacts. Here, we also set out targets in
relation to our operational emissions and we discuss the progress we
are making towards setting targets for our products and services, and
with respect to our engagement with stakeholders and policy-makers.
This section responds to disclosure requirements under Listing Rule
9.8.6 R (8) for reporting in line with the Taskforce for Climate-related
Financial Disclosure (TCFD) and the Companies (Strategic Report)
(Climate-related Financial Disclosure) Regulations 2022. Summary level
information is presented in this section, while further detail can be
found in the 2023 Sustainability Report.
Risks, opportunities and impacts
Climate change presents both risks and opportunities, which impact
LSEG in a number of ways over different timeframes:
Short-term 0–3 years
Medium-term 3–10 years
Long-term 10–30 years
The actual or potential impact on LSEG of these risks and opportunities
vary in magnitude. When identifying and assessing climate-related risks
or opportunities we define the “substantive financial or strategic impact”
according to the magnitude of the financial cost or reputational impact
on the Group, as well as the likelihood that the risk will occur. These
risks and opportunities are likely to impact business strategy and
operations, our product portfolio, client target and/or resource mix.
We quantify the minimum threshold necessary to evaluate a potentially
substantive financial or strategic impact as a climate-related disruption
to the Group resulting in an impact greater than £10 million. Alongside
this, we consider emerging risks, which are newly developing risks that
cannot yet be fully assessed but that could, in the future, affect the
viability of the Group or a Division over a longer-term time horizon.
Transition-related risks and opportunities arise from the transition to
a low carbon economy; while not an exhaustive list, examples of some
of those relevant to LSEG are as follows:
— Policy and legal: introduction of regulation, such as that related
to disclosure, impacts LSEG as we are required to comply with
international and national reporting requirements, or those associated
with climate-related products and services. These introduce new
Director duties, increase operational and compliance costs, and
impact the management of our climate-related risks and opportunities.
These regulatory changes also affect our customers which in turn
creates an opportunity for LSEG to support them with appropriate
market data and infrastructure.
— Technology: we rely on technology to deliver our products and
services to customers, including data management in data centres.
Changes to technology, energy prices or carbon costs could
potentially impact LSEG’s operations.
— Market: as we transition towards a net zero economy our customers’
needs are changing. There is growing demand for sustainability-
related market data and infrastructure that help investors, corporates
and financial institutions inform decision-making around strategy,
capital raising and allocation and investment. LSEG provides a large
and growing range of sustainable financial investment products and
services to its customers.
We have conducted analysis of transition risk specifically looking at the
potential costs of carbon under three recognised climate scenarios
from the Network for Greening the Financial System (NGFS). This work
underscored the importance of pursing our emission reduction targets,
as failure to meet these could lead to significant annual costs if we
become subject to carbon pricing in the future as defined by these
scenarios. Further detail about the analysis can be found in the 2023
Sustainability Report, on pages 16 to 17.
Physical risks arise from changing weather patterns associated with
climate change and can affect LSEG as follows:
— Acute physical risks: the notable increase in the frequency and
severity of extreme weather events, such as floods, windstorm and
drought, are relevant to LSEG’s international property portfolio.
Extreme weather events could adversely impact our properties, data
centres, our employees or surrounding infrastructure, which could
cause business interruption. Given recent incidences of flooding in
India and Sri Lanka which impacted LSEG over the course of 2022,
we continue to carry out extensive reviews, including the initiation
of a detailed environmental assessment of our property locations.
— Chronic physical risks: increasing global average temperatures could
negatively impact LSEG. Some parts of our international property
portfolio are at greater risk of extreme temperatures which in turn
could require greater cooling to ensure business continuity, which
adds to operational costs.
We have conducted an analysis of physical risks to LSEG by using
recognised climate scenarios set out by the Intergovernmental
Panel on Climate Change (IPCC). LSEG locations at greater risk from
chronic climate risks include Southeast Asia and the Middle East.
Further information about this analysis can be found in the 2023
Sustainability Report, on pages 18 to 19.
We recognise the opportunity to fulfil customers’ changing needs as
demand for sustainable finance and investment products and services
grow. As a leading provider of financial market data and infrastructure
LSEG can provide products and services which help to support the
transition to a low carbon economy. Our offerings span data, analytics,
indices, capital raising and corporate services. For over 20 years
we have been playing a leading role in sustainable finance, bringing
together expertise, powered by transparent and robust data for our
customer and market participants. Further information about our
products and services can be found in the 2023 Sustainability Report
pages 9 to 11.
Climate Transition Plan
We published our first Climate Transition Plan in 2022 which sets
out how we are aligning with the goals of the Paris Agreement
1
in
our operations, market engagement and our products and services.
We have set targets to address our operational emissions and
engagement with our supply chain, and we’re in the process of setting
targets related to our market engagement, products and services,
through our membership of the Net Zero Financial Service Provider
Alliance (NZFSPA).
1 Through the 2015 Paris Agreement, world governments committed to limiting global
temperature rise to well-below 2°C above pre-industrial levels and pursuing efforts to limit
warming to 1.5°C. In 2018, the Intergovernmental Panel on Climate Change (IPCC) warned
that global warming must not exceed 1.5°C above pre-industrial temperatures to avoid the
catastrophic impacts of climate change. To achieve this, GHG emissions must halve by
2030 – and drop to net zero by 2050.
London Stock Exchange Group plc
Annual Report 2023
64
Sustainability continued
Our targets to reduce our operational emissions and engage suppliers
are approved by the Science Based Target Initiative (SBTi). While we
have an ambition to reach net zero
1
by 2040 we have not set a formal,
SBTi approved target in this respect to date as we have been prioritising
work to achieve our 2030 targets. In future we will review whether, and
if so when, we will formalise our net zero ambition into
an SBTi approved target.
Our targets:
— Reduce absolute Scope 1 and 2 GHG emissions 50% by 2030
from a 2019 base year.
— Reduce absolute Scope 3 GHG emissions from fuel and energy
related activities (FERA), business travel, home working and
employee commuting by 50% by 2030 from a 2019 base year.
— 67% of Scope 3 emissions from purchased goods and services
covered by science-based targets by 2026.
An important part of our climate transition plan is our range of products
and services which help our customers achieve their climate goals.
LSEG is a founding member of the NZFSPA, which comprises a group of
financial service providers who are committed to aligning their business
with net zero and integrating this into relevant products and services
offered to capital market participants. Subject to legal, regulatory and
professional standards, Alliance members commit to align relevant
products and services to achieve net zero by 2050 or sooner, scaling
and mainstreaming Paris-alignment into the core of the business.
The commitment also incorporates capability building, stakeholder
engagement and operational impacts. The Alliance works through
several sub-groups and given its diverse business model, LSEG is
involved in three of these, including exchanges, data providers and
indices. Each sub-group has defined a target-setting framework which
is in the process of being approved by the UN Race to Zero, after
which Alliance members will set and publish their firm-level targets.
We will share these in future reports when available.
Progress against our targets
We publish comprehensive data regarding our GHG emissions in our
Sustainability Databook which is a companion document to the 2023
Sustainability Report. In line with The Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and Carbon Report) Regulations
2018, we also publish our Streamlined Energy and Carbon Report (SECR)
table on page 68.
In 2023, our Group carbon footprint increased by 13% relative to 2022.
This is principally due to increased levels of office occupancy and
business travel, as well as an increase in spend on goods and services,
returning to more normal levels following the global pandemic. There
has also been a material increase to UK DEFRA emission factors which
are used to calculate air travel emissions which has driven a significant
in-year increase.
Despite the increase in 2023 emissions relative to 2022, we remain well
on track to meet the 2030 targets that we set out above. With respect
to our target on Scope 1 and 2 (market) emissions we closed the year
having reduced 90%, against our 2019 baseline. With respect to our
target on Scope 3 emissions from business travel, home working and
employee commuting, we closed the year having reduced 13% against
our 2019 baseline. When including FERA, this meant that by the end of
2023, we had reduced our carbon emissions addressed by our Climate
Transition Plan by -29% from a 2019 baseline. Scope 3 emissions from
purchased goods and services account for over 90% of our total carbon
footprint. In order to reduce these emissions, we are focused on
engaging with our supply chain. Our target is to ensure that suppliers
responsible for at least 67% of our Scope 3 (purchased goods and
services) emissions have adopted their own science-based emission
reduction targets by end 2026. We are on target to achieve this,
closing the year at 44%.
TCFD/CFD Statement of Compliance
We have been a supporter of the Task Force on Climate-related
Financial Disclosures (TCFD) recommendations since 2017. LSEG plc
has complied with the requirements of 9.8.6 R (8) by including climate-
related financial disclosures consistent with the TCFD recommendations.
The climate-related financial disclosures made by LSEG plc comply
with the requirements of the Companies Act 2006 as amended
by the Companies (Strategic Report) (Climate-related Financial
Disclosure) Regulations 2022 (CFD). Please see the TCFD summary
table for an overview of our approach, and further detail in the
2023 Sustainability Report.
Further detail about our Climate Transition Plan, including progress
against targets, can be found in our 2023 Sustainability Report and
comprehensive climate data is in our Sustainability Databook. We have
adopted this approach due to the comprehensive and technical content
of the climate-related financial disclosures and are better able to
provide comprehensive and decision-useful reporting in our 2023
Sustainability Report.
We are monitoring the development of reporting standards and
requirements including the International Sustainability Standards Board
(ISSB), The Taskforce on Nature-related Financial Disclosure (TNFD) and
the EU Corporate Sustainability Reporting Directive (CSRD) and will align
with these in a timely manner. Further detail on how LSEG intends to be
an early adopter of the TNFD can be found on page 22 of our 2023
Sustainability Report.
1 Our working definition of net zero is that of the SBTi Corporate Net Zero Standard V1.1 2023
which states that a state of net zero emissions involves: (a) reducing scope 1, 2 and 3
emissions to zero or a residual level consistent with reaching net-zero emissions at the
global or sector level in eligible 1.5°C scenarios or sector pathways and (b) neutralising any
residual emissions at the net zero target date – and any GHG emissions released into the
atmosphere thereafter.
65 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Sustainability continued
Climate-related Financial
Disclosure – TCFD and CFD
Cross-reference
to CFD requirements
Governance
Disclose the
organisation’s
governance around
climate-related risks
and opportunities.
The Board’s oversight of climate-related risks and opportunities
The LSEG Board has ultimate oversight of the organisation’s sustainability strategy, including
its management of climate-related risks and opportunities, ensuring the long-term success of
the Company and that stakeholders’ expectations are understood and met.
During 2023 sustainability was on the Board agenda twice. The Audit Committee is responsible
for overseeing climate-related reporting, and held a deep dive on reporting regulation in 2023.
The Board Risk Committee is responsible for overseeing the Group approach on sustainability
risks, including those arising from climate. The Board is responsible for holding executive
management to account for the delivery of its sustainability strategy.
Management’s role in assessing and managing climate-related risks and opportunities
The Executive Committee is responsible for setting the Group’s sustainability ambition and
strategy, monitoring progress and approving disclosures. The Sustainability Committee is
responsible for providing direction and oversight of the Group’s overall sustainability strategy
and programmes, including its Climate Transition Plan. The Sustainability Committee is chaired
by the Chief Risk Officer and meets four times a year or more frequently as required. It reports
to the Executive Committee and Board at least twice a year.
Further detail can be found in our 2023 Sustainability Report on pages 7 and 15.
The governance
arrangements in relation
to assessing and
managing climate-related
risks and opportunities
(414C – a)
Strategy
Disclose the actual and
potential impacts of
climate-related risks
and opportunities
on the organisation’s
businesses, strategy
and financial planning
where such information
is material.
The climate-related risks and opportunities we have identified over the short,
medium and long term
Risks and opportunities arise from regulatory, technology and market changes as we transition
to a low carbon economy as well as acute and chronic physical risks from a changing climate.
We have evaluated actual and potential impacts of climate-related risks and opportunities which
helps us understand the resilience of our strategy, taking into consideration different climate-
related scenarios. In 2023, we updated analysis of physical risks associated with our property
and datacentre portfolio. We also updated our assessment of transition risks under Network for
Greening the Financial System (NGFS) scenarios, including the financial quantification of risks.
From a transitional perspective, carbon pricing could have a significant financial impact if our
Climate Transition Plan is not effectively executed. From a physical risk perspective, a third of
our locations are exposed to a high level of heat stress, predominantly located in Southeast
Asia and the Middle East. When looking at longer-term exposure to 2050, drought and fire
risks substantially increase in a 4°C world.
The impact of climate-related risks and opportunities on our businesses,
strategy and financial planning
In our analysis we used the predicted carbon price in each NGFS scenario in the short, medium
and long-term to estimate the potential costs associated with LSEG’s three possible emission
pathways, assuming we pay for all emissions in scope of the analysis. The results show that
significant costs associated with carbon pricing could be avoided through the implementation
of our planned decarbonisation pathway, reducing our emissions in line with our SBTi targets.
Conversely, if LSEG fails to achieve its targets, significant cost would be associated with
a business-as-usual scenario in a world that is trending towards net zero in 2050.
Looking ahead, we remain fully committed to acting as a strategic enabler of sustainable
economic growth, in line with our purpose statement (see page 26 of this report). Throughout
2024, we will continue developing our product offering in SFI in areas such as ESG indices,
the Green Economy Mark, and our Sustainable Bond Market.
The resilience of our strategy, taking into consideration different climate-related scenarios,
including a 2°C or lower scenario
We have disclosed the assessment of climate-related risks and opportunities on the business, and
how it pertains to our science-based targets and decarbonisation trajectory. We have quantified
across short-, medium- and long-term time horizons the impact of transitional risk as assessed
against NGFS carbon pricing scenarios, as well as our physical risk exposure. This assessment
includes a 2°C or lower scenario under both physical and transitional analysis.
This analysis re-emphasises the need to continue to deliver on our Climate Transition Plan,
as our decarbonisation initiatives will mitigate the impact of potential carbon pricing on the
business. From a physical risk perspective, the output of our scenario analysis will feed into
our location strategy, ensuring climate change is considered when thinking through longer-term
strategic location plans. The physical risks we face are also mitigated by the fact that the majority
of our locations are leased, and we have robust business interruption plans in place.
Further detail can be found in our 2023 Sustainability Report pages 15 to 19.
The principal climate-
related risks and
opportunities arising
in connection with the
Company’s operations
and the time periods
they are assessed
(414C – d)
Actual and potential
impacts of the principal
climate-related risks
and opportunities on
the Company’s business
model and strategy
(414C – e)
Analysis of the resilience
of the Company’s
business model and
strategy, taking into
account consideration
of different climate-
related scenarios
(414C – g)
London Stock Exchange Group plc
Annual Report 2023
66
Sustainability continued
Climate-related Financial
Disclosure – TCFD
Cross-reference
to CFD requirements
Risk
management
How we identify,
assess and manage
climate-related risks.
Our processes for identifying and assessing climate-related risks
We identify climate-related risks as part of our Group Risk Taxonomy. Sustainability is a specific
strategic risk which pulls out climate transition as an underlying risk. We use scenario analysis
to identify and assess climate-related risks, using NGFS scenarios for transition risk and IPCC for
physical risk. This analysis re-emphasises the need to continue to deliver on our climate transition
plan, as our decarbonisation initiatives will mitigate the impact of potential carbon pricing on the
business. From a physical risk perspective, the output of our scenario analysis will feed into our
location strategy, ensuring the evolution in climate is considered when thinking through longer-
term strategic location plans. The physical risks we face are also mitigated by the fact that the
majority of our locations are leased, and we have robust business interruption plans in place.
Revenues are not location or site dependant to a large degree.
Our processes for managing climate-related risks
Climate risks identified in the risk taxonomy are managed through the ERMF. Responsibility for
management, mitigation and adaptation of climate-related risks rests with the business units and
corporate functions. This process is supported by the Group Risk function and by the governance
groups which provide oversight, independent assessment and, as appropriate, challenge back
to the business.
Risks and opportunities with a potential substantial impact will be raised and factored into
business strategy and operations. Principal risks are those considered to have the highest
potential financial or strategic impact and are defined based on magnitude of financial costs to
the Group as well as reputational impact. In addition to ongoing assessment, climate risks are
specifically assessed as part of climate risk modelling activities.
How our processes for identifying, assessing and managing climate-related risks
are integrated into overall risk management
The Group is subject to a variety of risks which may have an impact on our ability to deliver our
strategic plan. These include sustainability-related risks which have been integrated into LSEG’s
risk-management processes and procedures and are reflected in our risk taxonomy and ERMF.
Sustainability is a specific strategic risk, manifesting in product risk strategy (the risk that the
products we create do not meet customers’ needs and expectations), greenwashing, worsening
ESG ratings and a failure to deliver on our climate transition targets. Sustainability risks are also
embedded within a wide range of other existing strategic and non-strategic risks within our risk
taxonomy, including Operational Resilience; People; Regulatory, Compliance, Legal and Corporate
Disclosure; and Financial and Model Risks.
Further information can be found in our 2023 Sustainability Report on page 38.
How the Company
identifies, assesses and
manages climate-related
risks and opportunities
(414C – b)
How processes for
identifying, assessing
and managing
climate-related risks
are integrated into
overall risk management
(414C – c)
Refer to pages 20 to 23 for more
information on the Group’s
key performance indicators.
67 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Sustainability continued
Climate-related Financial
Disclosure – TCFD
Cross-reference
to CFD requirements
Metrics and
targets
The metrics and targets
used to assess and
manage relevant
climate-related risks and
opportunities where such
information is material
The metrics used to assess climate-related risks and opportunities in line with our strategy
and risk management process
Metrics used to assess climate-related risks include our operational emissions footprint
(tonnes of CO2e), number of suppliers with science-based targets, actual and potential cost of
carbon and physical risk exposures (including total value insured and value at risk).
Metrics used to assess climate-related opportunities relate to our suite of sustainable finance
and investment products and services.
Further information and data relating to these metrics can be found in the KPIs section of this
report on pages 20 to 23, in our 2023 Sustainability Report on pages 9 to 11, 20 to 21 and our
Sustainability Databook on pages 4 to 6.
Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions,
and the related risks
We disclose our Scope 1, Scope 2 and some Scope 3 emissions which can be found in
our Sustainability Databook on pages 4 to 6.
Further detail about progress against our emissions targets can be found in our 2023
Sustainability Report on pages 20 to 21.
The targets used to manage climate-related risks and opportunities and performance
against targets
With respect to our operational emissions, we have set science-based targets, aligned with the
goal of the Paris Agreement, approved by the Science Based Targets initiative (SBTi) as described
on the preceding pages. These targets include our Scope 1 and 2 emissions, and Scope 3
emissions from fuel and energy related activities (FERA), business travel, home working and
employee commuting. We also have a supplier engagement target which relates to Scope 3
emissions from purchased goods and services.
While decarbonisation is the primary focus to reduce our operational emissions we also recognise
the need to take responsibility for the emissions we are generating from our day-to-day activities.
We offset our Scope 1, 2 and 3 (FERA, business travel and employee commuting) by buying carbon
credits which meet recognised quality standards. We have a work programme in place to monitor,
manage and reduce our emissions covered by these targets.
This programme is organised into four key glidepaths: Places, People, Travel and Procurement.
We have summarised progress towards these targets in this report and further detail can be
found in our 2023 Sustainability Report and the Sustainability Databook.
As members of the Net Zero Financial Service Provides Alliance we will set targets related to
our products and services and disclose these in future reports.
Further detail about progress against our emissions targets and use of carbon offsets can be
found in our 2023 Sustainability Report pages 20 to 22.
Key performance
indicators used to assess
progress against targets
used to manage
climate-related risks and
realise climate-related
opportunities and
a description of the
calculations on which
those key performance
indicators are based
(414C – h)
The targets used by
the Company/LLP to
manage climate-related
risks and to realise
climate-related
opportunities and
of performance
against those targets
(414C – g)
London Stock Exchange Group plc
Annual Report 2023
68
Streamlined Energy and Carbon Reporting (SECR) Requirement
LSEG calculates all available emissions sources required under The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018, along with the addition of fugitive and process emissions and the extension of the scope to global emissions,
rather than UK emissions only. LSEG calculates greenhouse gas emissions to cover all material sources of emissions for which the Group is
responsible. The methodology used was that of the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (revised edition,
2015). Responsibility for emissions sources was determined using the operational control approach.
Unit 2023 2022 2021 2020 2019
% change
vs 2022
Total Energy Consumption Kilowatt-hours 164,011,741 164,955,639 262,134,466 276,810,614 371,895,033 -1%
UK Energy Consumption Kilowatt-hours 51,699,028 56,452,497 54,401,256 80,552,486 118,956,031 -8%
Scope 1 Metric tonnes 209 458 556 716 1,381 -54%
Scope 2 – Market Based Metric tonnes 7 612 422 577 153 -99%
Scope 2 – Location Based Metric tonnes 10,438 10,672 10,908 17,758 27,805 -2%
tCO
2
e/FTE
(Scope 1 and 2 Location Based)
Metric tonnes 2 3 2.53 4.07 6.75 -8%
tCO
2
e/FTE
(Scope 1 and 2 Market Based)
Metric tonnes 0.05 0.24 0.22 0.28 0.35 -81%
EMEA Energy Consumption Kilowatt-hours 5,495,228 5,646,972 12,353,859 14,077,652 42,882,337 -3%
Scope 1 Metric tonnes 100 7 4 5 34 1,255%
Scope 2 – Market Based Metric tonnes 38 71 586 755 1,082 -47%
Scope 2 – Location Based Metric tonnes 1,917 2,061 4,928 4,709 9,043 -7%
Americas Energy Consumption Kilowatt-hours 69,943,043 73,162,491 155,778,235 130,961,747 158,530,000 -4%
Scope 1 Metric tonnes 444 547 187 450 393 -19%
Scope 2 – Market Based Metric tonnes 164 3,188 1,786 2,431 6,550 -95%
Scope 2 – Location Based Metric tonnes 39,175 40,476 77,060 63,969 80,463 -3%
APAC Energy Consumption Kilowatt-hours 36,874,442 29,674,070 39,189,207 49,521,785 48,161,602 24%
Scope 1 Metric tonnes 161 438 253 788 356 -63%
Scope 2 – Market Based Metric tonnes 78 297 343 2,729 2,405 -74%
Scope 2 – Location Based Metric tonnes 21,393 16,627 13,670 25,208 25,895 29%
Sustainability continued
Board engagement
with stakeholders
The Board recognises the
importance of engaging with
the Group’s stakeholders
throughout the year.
Meaningful engagement and
two-way dialogue allows the
Board to understand: the
interests, needs and concerns
of the stakeholders relevant to
the Company’s success; how
they influence the operation
of the business model; the
delivery of strategy and
decision-making; and the
actions that the Board and
management need to take
in response.
The following pages set out how the Board has engaged with,
and sought to understand the views of, our key stakeholders:
Customers
Workforce
Policymakers, Regulators and Supervisors
Engagement with our stakeholders has been achieved through
a combination of direct Board engagement and indirect engagement,
for example via executive management. Our management team is
constantly engaged with stakeholders. The content from these
interactions is fed into our business planning processes and Board
reports as routine practice. In addition, the Board recognises that the
Company’s shareholders are a key stakeholder, and the views and
interests of shareholders influence the decisions and actions taken
by the Board.
The Board seeks to engage with shareholders throughout the year
with more detail provided in the Corporate Governance Report
on page 99. The Board will seek to continue its engagement with
stakeholders throughout 2024. Further information on the activities
of the Board can be found on page 100.
Read more about the activities
of the Board in the Corporate
Governance Report beginning
on page 90.
STRATEGIC REPORT
69 London Stock Exchange Group plc
Annual Report 2023
London Stock Exchange Group plc
Annual Report 2023
70
Board engagement with stakeholders continued
How the Board has engaged
The Board considers customer feedback in order to understand our
customers’ views on the Group’s products and services as well as
the ways that they would like us to improve our offering. Customer
engagement meetings help senior management to understand
customer views and build strategic relationships with them.
During 2023, the Group CEO and other executives engaged with
customers in a number of ways, including: an extensive global outreach
programme to key customers; individual meetings with particular
emphasis on product offerings, technology transformation and
operational resilience; and attendance at various round tables and
conferences, including the COP28 and the FTSE Russell World
Investment Forum to meet asset owners and asset managers in person.
In 2023, the Board met with a strategic customer, to hear first hand
about how the Group could further support them across the entire
financial markets value chain.
Customers
Our diversified global business is built on
customer partnership, delivering value across
the trading lifecycle in Data & Analytics,
Capital Markets and Post Trade.
We believe that aligning our strategy, services
and products to the needs and interests of
our customers is central to driving sustainable
long-term value growth.
Customers we serve
45,000+
Many of our shareholders are also customers and so the Group
regularly receives informal customer feedback through investor
outreach programmes. The Board also received an update on the
Group’s relationships with the major banks who are both customers
and suppliers of finance to the Group.
Key matters for stakeholder group
Key matters for customers include product offering, product innovation,
a focus on digitisation/transformation, managing and reducing costs,
and system stability.
How this engagement influenced Board discussions
and decision-making
Customer feedback is regularly communicated by the Group CEO,
CFO and members of the Executive team to the Board and this is
taken into account when decisions and actions are taken which could
impact customers. A specific agenda item is also included at each
Board meeting focusing on a particular customer relationship or
issue relating to customers.
A key area of focus for our customers is the development of new
products and services. Following the announcement of the strategic
partnership with Microsoft, the Board reviewed initial customer
responses to the partnership including their insights on the proposed
Workspace, analytics and cloud platform solutions. The Board discussed
the launch of the Design Partner Programme which seeks to enhance
the innovations generated by the Microsoft partnership by gathering
and analysing data and insights from customers while validating product
concepts to ensure the delivery of meaningful customer solutions.
The close engagement with strategic customers established by the
Design Partner Programme aims to place customer engagement at
the centre of the product development process.
During the year, the Board also reviewed LSEG FX product offerings
and partnership opportunities to ensure that products continue to solve
client needs. The Board discussed FX product strategy and solutions
to address issues identified by FX customers. For more information
on FX, please see page 39.
The Board considered actions taken to strengthen a longstanding
relationship with a key customer to better understand their needs.
The outcomes of the engagement process resulted in the customer
signing a long-term strategic partnership to deliver a range of
capabilities across the full trade lifecycle.
In 2023, the Board also considered the launch of a brand transformation
programme in order to increase stakeholder awareness and clarity
around the LSEG brand. A new brand architecture and advertising
campaign was introduced aimed at educating existing and prospective
customers about the Group’s brands and business areas. This is
a multi-year project and the Board will continue to receive updates
on the brand transformation programme, particularly customer insights
and sentiment towards it. Further information can be found in our
Strategic Report on page 29.
71 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
How the Board has engaged
Engagement with our employees includes formal and informal meetings,
an annual employee engagement survey and townhall meetings.
The Board seeks to engage with a wide cross section of employees to
better understand their perspectives on the business. Board members
engaged in person with employees during their visit to the Paris office
in 2023. The Board met and received presentations from EMEA-based
management on the Group’s operations in the region and also engaged
more informally over lunches and dinners.
Non-Executive Directors also continued their programme of
engagement, meeting virtually with employee forums in key regional
locations across the world. Colleagues who took part in these
conversations were encouraged to canvas views from other employees
to share with Board members; which provided Board members with
an opportunity to gain insight into the culture and any concerns at
different levels of the business. Directors provided feedback to
the Board at the next Board meeting and the engagements were
shared with the workforce via intranet articles and videos. These
engagements included:
— Don Robert, Tsega Gebreyes, and William Vereker meeting with
colleagues from the North and Southeast Asia region.
— Martin Brand and Kathleen DeRose meeting with colleagues
from the EMEA region.
— Martin Brand and Val Rahmani meeting with colleagues in the
South Asia region.
— Cressida Hogg and Tsega Gebreyes meeting with colleagues
from the Americas region.
During 2023, the Group launched its new values via a global streaming
event, watched by over 19,000 employees. The event was led by
the Group CEO and other members of the Executive Committee.
The values were developed with input from employees via focus
groups, workshops and an all-employee survey. Further information
on the new values can be found on page 60.
Townhalls were held at the Group and at Divisional levels, and topics
were tailored to the different audiences with interactive Q&A sessions.
A number of these townhalls were led by the CEO, CFO and other
members of the Executive Committee. Over 13,000 colleagues
participated in the global townhall for the 2022 full-year results.
The Group CEO and the Group CFO (and other members of the
Executive Committee) hosted in-person and virtual engagement
sessions with colleagues across the Group’s global locations to discuss
topics of interest to colleagues. These sessions provided business
updates and helped the Board and management to better understand
employee concerns and key themes of interest to them.
The annual “LSEG Engage” employee survey provided colleagues
with an opportunity to share their views on working at LSEG. 88% of our
colleagues participated, sharing over 25,000 comments, representing
our highest level of participation to date. The results were then
discussed with the Board.
More information on employee engagement can be found on pages 60
to 62 of the Strategic Report.
Workforce
The Group’s workforce is over 25,000 people
in over 60 countries. Our global exposure and
customer base are one reason why our diverse
workforce is fundamental to the success of the
Group. Regular two-way dialogue with, and
feedback from, employees at every level is
sought to ensure that there is meaningful
dialogue between the Board and our workforce.
Group workforce
25,000+
Board engagement with stakeholders continued
London Stock Exchange Group plc
Annual Report 2023
72
Board engagement with stakeholders continued
Key matters for stakeholder group
The key themes arising from the Board conversations and other
engagements included were:
— Ease of doing business – making it easier to get things done,
including increasing agility and empowering local client facing teams.
— Culture and values – focus from colleagues on developing an
integrated and inclusive culture. Colleagues were supportive of the
new values.
— Communications – colleagues emphasised the importance of
regular communication, including receiving updates on business
performance, Group change projects and communications during
times of crisis.
— Career development – talent acquisition and the desire for
opportunities to develop their careers within the Group.
— Customers – colleagues expressed to the Board the importance
of being able to successfully deliver products and services for
our customers.
— Sustainability – the Board’s strategy on sustainability and achieving
net zero.
How this engagement influenced Board discussions
and decision-making
Employee feedback led to increased focus on communications to
regional offices, including via Town Halls and visits to those locations.
The results of the Engage survey were presented to the Board as part
of the annual presentation of People Strategy and culture by the Chief
People Officer, including feedback which led to the development of the
new values. The Board also reviewed areas of focus identified in the
2023 Engage survey and reflected on themes such as barriers to
execution that had also been highlighted in the 2022 Engage survey
and actions taken to address these issues.
Colleagues tell us that they
value the engagement with Board
members and the opportunity to
provide honest feedback on their
experiences at LSEG. Directors
appreciate the Board conversations
with colleagues as an invaluable
way to understand the needs and
feedback from the Group’s
25,000+ employees.
Anna Manz
Chief Financial Officer
73 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
How the Board has engaged
The Board considers policy, regulation and supervisory guidance
globally and in the countries in which we operate that may affect
the Group’s businesses. These matters are also discussed as part
of the Chairs’ Forum (composed of the Chair of the Group Board
and the chairs of a number of regulated subsidiaries), the outputs of
which are provided by the Chair to the Group Board at subsequent
Board meetings.
Key matters for stakeholder group
Relevant key matters include: market competitiveness, including
the attractiveness of the UK as a global financial centre; data issues
including localisation, privacy, sovereignty and regulation; sustainability
and ESG issues; innovation and technology, including artificial
intelligence and digital assets; and resilience and financial stability,
including clearing, cloud and operational resilience.
How this engagement influenced Board discussions
and decision-making
The Group Board takes into consideration the priorities and focus
areas of policymakers and regulators when discharging its duties and
responsibilities. This includes Board discussions on setting strategy
and assessing the delivery of key objectives.
The Group CEO updates the Group Board on the views and priorities
of regulators and policymakers.
The Board takes into consideration relevant regulatory issues when
taking decisions, including in relation to matters such as M&A.
Policymakers, regulators and supervisors
Maintaining an open and cooperative
relationship with policymakers and regulators
on matters that affect our Group, industry,
customers and people is critically important.
The Group has a significant number of
regulated entities around the world. These
entities are supervised at the legal entity level,
with our primary regulators predominantly
engaging with the boards of those entities
rather than with the Group Board.
Countries we serve
170+
Board engagement with stakeholders continued
Suppliers
Our third-party suppliers are also important stakeholders of the Group.
Given their significance, management regularly reassesses the tiering
of our suppliers based on factors including the degree of criticality of
the goods/services being provided to LSEG, financial spend and risk.
The Board approves all supplier contracts with a financial value of
£50 million or more (over the lifetime of the contract), and receives
updates on the management of, and relationships with third-party
suppliers where appropriate.
The Risk Committee provides oversight of the risk relating to third-party
suppliers to ensure these arrangements are managed within risk
appetite and any issues are appropriately remediated.
In addition to the procurement and ongoing management of suppliers,
a number of the Group’s subsidiaries are required to report their
supplier performance and policies as part of the Small Business,
Enterprise and Employment Act 2015. All payment terms and conditions
are negotiated with our suppliers, and we ensure that purchase orders
are raised and receipted in accordance with the Group’s policies.
The Company continues to be a signatory to the Prompt Payment Code,
a voluntary code of practice for businesses, administered by the Office
of the Small Business Commissioner on behalf of the Department for
Business and Trade. It sets standards for payment practices between
organisations of any size and their suppliers.
As a signatory, the Company has agreed to:
— pay suppliers on time, within agreed terms;
— give clear guidance to suppliers on terms, dispute resolution,
and prompt notification of late payment; and
— support good practice throughout their supply chain by encouraging
adoption of the Prompt Payment Code.
Each year we publish a statement setting out the Group’s approach to
managing its supply chain. More information on the Group’s approach
to managing its supply chain, including the Group Modern Slavery
Statement, can be found at: www.lseg.com/en/sustainability-strategy/
disclosures-and-reports
Board engagement with stakeholders continued
London Stock Exchange Group plc
Annual Report 2023
74
75 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Section 172(1) Statement
Section 172 of the Companies
Act 2006 (Section 172) requires
a director of a company to act
in the way he or she considers,
in good faith, would most likely
promote the success of the
company for the benefit of
its members as a whole.
This section forms our Section 172 disclosure, detailing how the
Board considered the matters set out in Section 172 (1) (a) to (f)
of the Companies Act 2006.
Section 172 requires a director to have regard, amongst other matters,
to the:
— likely consequences of any decisions in the long term;
— interests of the company’s employees;
— need to foster the company’s business relationships with
suppliers, customers and others;
— impact of the company’s operations on the community
and environment;
— desirability of the company maintaining a reputation for high
standards of business conduct and;
— need to act fairly as between members of the company.
Throughout the year, the Board engaged directly and indirectly with
stakeholders to ensure it had a detailed understanding of the impact of
the Group’s strategy on key stakeholders, as well as their interests and
views. This engagement seeks to ensure the Board is well-informed on
key issues to enable the Directors to comply with their Section 172(1)
obligations. The Directors recognise that having a good understanding
of the views and interests of the Group’s stakeholders is critical in
delivering the Group’s strategy, and in relation to material decisions
that were taken by the Board during the course of the year. The Board
acknowledges that every decision it makes will not necessarily result
in a positive outcome for all stakeholders.
The following principal decisions and activities demonstrate how the
Board assessed and addressed different stakeholder interests and
impacts in making decisions that support the implementation of the
Group’s strategy. Principal decisions are those decisions taken by the
Board that are deemed to be of strategic importance to the Group, or
are significant to LSEG’s stakeholders. Examples of how the Board has
considered key stakeholders, can be found below. Additional details
on how our Board and its Committees operate, their responsibilities and
key matters considered during 2023 are contained in the Committee
Reports starting on page 106.
Read more about the activities
of the Board in the Corporate
Governance Report beginning
on page 92.
London Stock Exchange Group plc
Annual Report 2023
76
Section 172(1) Statement 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
Capital
Allocation
The Board reviews and approves capital allocation across the Group and its business divisions.
This is within the context of the current market conditions and macroeconomic outlook. The Board
seeks to optimise the use of capital resources taking into account applicable regulatory
requirements, strategic objectives and LSEG’s risk appetite. LSEG’s capital allocation approach
focuses on: i) investing organically within the business; ii) investing in inorganic opportunities in
line with the Group’s strategy; and iii) returns to investors. The Group continues to manage capital
expenditure in line with strategic directions of growth and resilience. In 2023, the Group allocated
45% of total capital expenditure to our Group strategic and transformational programmes, with
the rest of the investment focusing on maintaining business resilience and operational needs.
The impact of these capital allocation decisions was beneficial for key stakeholders such as
customers, employees and shareholders.
Dividend
As a result of the Group’s strong performance in 2023, the Board is recommending a final ordinary
dividend of 79.3 pence per share, bringing the total ordinary dividend for 2023 to 115.0 pence
per share, an 7.5% increase on 2022 (2022: total dividend 107 pence per share). As part of
LSEG’s Capital Markets Day (additional information can be found below), LSEG announced
a new simplified dividend policy, which will focus on paying progressive dividends, a targeted
c.33-40% payout based on expected full-year adjusted earnings per share (AEPS); and a split
of approximately one-third/two-thirds between the interim and final dividends. The simplified
dividend policy aims to provide shareholders with consistent distributions, while retaining the
flexibility to invest and continue to grow the business.
Directed Share Buyback (DSBB)
The Directors utilised the authority obtained at the 2023 AGM to conduct a DSBB with the
former Refinitiv shareholders. On 6 September 2023, the Company announced the off-market
purchase of 9,500,466 limited voting ordinary shares for a total consideration of £750 million.
The purchased shares were immediately cancelled. The purchased shares represented 1.73% of
the Company’s issued share capital at the time (excluding treasury shares).
The Board took into account the views of a wide range of stakeholders, when reviewing the
impact of the DSBB. Board discussions considered matters such as the impact on the Group’s
credit rating and leverage, capital demands, potential M&A, debt capacity, delivery of sustainable
returns and, from a colleague perspective, ensuring support for the growth and investment plans
of the business. The DSBB aligned with LSEG’s capital allocation policy, and resulted in a strong
positive impact on investor sentiment. More information about the DSBB is included in the Chief
Financial Officer review on page 46. In connection with LSEG’s Capital Markets Day (additional
information can be found below), LSEG announced the intention to complete £1 billion of
additional share buybacks during 2024.
M&A
Increasing ownership of LCH SA
In January 2023, Euronext submitted an early termination of its Derivatives Clearing Agreement
with LCH SA. The termination notice triggered an option for LCH Group to buy back Euronext’s
11.1% stake in LCH SA. The acquisition provided a prudent opportunity to simplify LCH’s
governance structure and also demonstrated the strategic importance of LCH SA to the LCH
Group. The acquisition resulted in the LCH Group’s controlling stake in LCH SA increasing from
88.9% to 100%. The acquisition of Euronext’s 11.1% stake in LCH SA was for a total consideration
of €111 million, which was valued by an independent valuer.
The Board received updates on the status of the acquisition, considering key themes such
as market landscape and the business performance outlook and approved the acquisition.
The updates covered the financial metrics of the acquisition, particularly looking at significant
trends impacting the LCH Group’s remaining business lines over the medium to long term and
considering the implications for both LSEG and the wider industry. The Board acknowledged that
the acquisition would be beneficial to employees and customers, as it provides greater certainty
around LCH’s future.
— Shareholders
— Regulators
— Credit Rating
Agencies
— Employees
— Pension Schemes
77 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Section 172(1) Statement continued
Key matter Decision Stakeholders considered
Leverage
Target &
Funding
Change in Leverage Target
LSEG’s previous capital allocation policy included a leverage range of 1.0-2.0x operating net
debt/adjusted EBITDA. In 2023, the Board reviewed whether this leverage range was an optimal
capital structure for the Group. Post the Refinitiv acquisition, LSEG has become a demonstrably
stronger, more diversified business with increased scale, quality of revenue, cash flow and stability.
The Board concluded that a leverage range of 1.5-2.5x was more appropriate for LSEG and would
enhance the Group’s ability to support organic or inorganic growth.
The Group intends to largely operate around the centre of the new range. The increased leverage
range means that the Group will typically not operate below 1.5x (which would be relatively less
efficient in terms of capital structure) and will have additional flexibility for capital allocation that
will support investment in the business for the benefit of customers and help yield greater
shareholder returns. When considering the change of leverage range, the Board carefully
considered the impact on the Group’s credit rating. The Board also considered stakeholders
such as regulators and the Group’s pension schemes.
2023 Refinancing Activities
Euro Medium-Term Note Programme (EMTN)
In August 2023, the Company updated its EMTN programme, which was last used to issue bonds
in 2018. Under the updated programme, in September 2023, the Group issued €1.4 billion of
three-year and seven-year bonds, with proceeds used to repay the remaining term loan entered
into as part of the Refinitiv acquisition in 2021.
The Board considered different varieties of shelf long-term debt issuance programmes,
considering each programme’s market depth, currency availability, execution flexibility and ease
of administration. The Board considered whether it was in the Group’s best interests to complete
the EMTN in the context of opportunities in other markets. It was concluded that it was the best
course of action. In taking the decision to approve the EMTN and in overseeing the Group’s debt
commitments, the Board gave due regard to the Section 172 factors, in particular the impact of
the decision on shareholders and the long-term success of the Company.
— Customers
— Employees
— Shareholders
— Regulators
— Credit Rating
Agencies
— Pension Schemes
Capital
Markets Day
LSEG hosted its Capital Markets Day (CMD) on 16 and 17 November 2023, which was an
opportunity to better inform investors about the LSEG business and its future plans. Management
demonstrated to stakeholders LSEG’s differentiating factors and the plans to accelerate growth,
both through continued organic investment in LSEG’s leading businesses and progress on the
strategic partnership with Microsoft. LSEG announced updated “medium-term guidance,” with the
Board noting the benefits this would bring to its shareholders. These included: i) committing to
mid to high single digit organic revenue growth annually, accelerating after 2024 as customers
start to benefit from our investment in platforms and the Microsoft partnership; ii) an increase to
its EBITDA margin; iii) a decline in capital expenditure to a high single-digit percentage of income
over time as integration related spend ceases; and iv) cumulative free cash flow to exceed
adjusted profit after tax attributable to equity holders.
As mentioned above, in connection with the CMD, LSEG also announced the intention to return
£1 billion to shareholders via additional share buybacks during 2024. In advance of doing so,
the Board considered other potential uses of capital and the importance of being proactive in
decisions around LSEG’s use of excess capital.
— Shareholders
— Investors
— Customers
London Stock Exchange Group plc
Annual Report 2023
78
Section 172(1) Statement continued
Key matter Decision Stakeholders considered
Strategic
Partnership
with Microsoft
In December 2022, LSEG announced its strategic partnership with Microsoft. During 2023, the
Board considered progress of the strategic partnership at every meeting and reviewed a number
of its key initiatives. Key developments during 2023 included: i) the combination of Microsoft’s
strong expertise in generative artificial intelligence in conjunction with LSEG’s unparalleled
breadth and depth of trusted data and analytics to enable LSEG to further streamline workflow
and generate new insights; ii) the launch of Microsoft Fabric, which will be the cornerstone of
LSEG’s Data Platform; iii) the Design Partner Programme, which is engaging a number of global
financial institutions operating across the trade lifecycle to help inform product development,
trial prototypes and give feedback as part of an agile and iterative process; and iv) a number
of applications entering external pilot and general availability from H1 2024.
The Microsoft partnership demonstrates how the Group remains competitive and ensures it
maintains a strong market position, investing to transform the customer experience. The Board is
committed to further strengthening LSEG’s product offering, optimising technology infrastructure
and increasing efficiencies within LSEG’s operations. The Board considered and took into account
the views and interests of customers in respect of the strategic partnership, with LSEG and
Microsoft engaging with strategic customers during 2023. This influenced the development of
technology solutions and was an opportunity for customers to provide their insights, expertise
and key needs.
— Customers
— Suppliers
— Shareholders
— Investors
— Employees
Sustainability
LSEG is committed to being an enabler of sustainable economic growth. During 2023,
the Board continued to consider both internal and external stakeholders when reviewing
LSEG’s sustainability approach and the management of climate risks, opportunities and impacts.
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. LSEG’s
sustainability approach, including the public targets and activities, also affects the Group’s supply
chain, as well as the communities within which we operate. More details on LSEG’s approach to
sustainability, can be found in the Sustainability section on page 58 and in the separate 2023
Sustainability Report.
— Communities
— Customers
— Employees
— Shareholders
— Suppliers
79 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Principal risks
and uncertainties
Managing risk is fundamental
to the successful execution
of our strategy and to the
resilience of our operations.
In addition to our principal risks, we continue to identify and monitor
emerging risks which are newly developing external risks and are
difficult to quantify due to their remote or evolving nature. In most
cases, the mitigation for such emerging risks is to establish appropriate
contingency plans and monitor the development of the risk until it
can be quantified and removed or included as a principal risk.
For each principal risk, the Group has executive leads with the
Chief Risk Officer and Risk function providing a second line of
oversight. The risk trend, shown for each principal risk, is based
on the Group’s 2023 risk profile.
Further information
Our strategic risk objectives, current risk focus, a narrative description
of our risk appetite, how LSEG’s Risk Management Framework operates,
and an overview of the Central Counterparty (CCP) risk management
and operations, are well established and are described below.
Risk management
The effective management of risk is critical to the execution of the
Group’s strategy. Accordingly, the Group maintains a robust enterprise-
wide Risk Management Framework which sets out the Group’s approach
to risk management and its appetite for taking risks. Our regulated
entities, including clearing houses, manage their risks in-line with both
local regulation and internal risk and investment policies.
Risk culture
A strong risk culture requires everyone to understand and embrace
their role in managing risks as this is critical to the effective embedding
of the Risk Management Framework.
Risk culture is a key enabler of the three lines of defence model,
used to manage risk within LSEG, and is promoted by the Risk
Management Framework in three ways:
1. It sets expectations by articulating risk appetite and desired
behaviours through policies
2. It ensures risk is considered in key business decisions through
frameworks and tools
3. It ensures risk is made transparent and included in accountability
and performance management
Three lines of defence
The three lines of defence model provides appropriate segregation
of duties and clear roles and responsibilities across LSEG business
divisions, corporate functions, Risk, Compliance and Internal Audit.
It clearly defines roles and responsibilities, with accountability for
risk management sitting within the first line of defence.
Three Lines of Defence
1st line of defence
Business units
— Implementation of
business strategy
— Day-to-day risk management
and decision-making
— Effective implementation
of the Risk Management
Framework, including
reporting and escalation
Board/Board Risk Committee/Board Audit Committee
3rd line of defence
Internal audit
— Independent assurance of
business risk management
activities, including that
the Risk Management
Framework is both designed
and operating effectively
Overview of principal risks
Strategic risks
Global economic and geopolitical
Reputation/Brand/IP
Transformation
Financial risks
CCP risk
Model risk
Emerging risks
Disruptive technology
Sustainability risk
Non-financial risks
Technology
Information and cyber security threats
Business continuity
Third-party risk
Data governance
People and talent
Regulatory change and compliance
2nd line of defence
Risk and compliance
— Review and challenge
of business units
— Oversee the level of risk
appetite within LSEG
— Development of the Risk
Management Framework
— Provide specialist advice
and training across
the organisation
London Stock Exchange Group plc
Annual Report 2023
80
Principal risks and uncertainties continued
Risk management approach
The Enterprise Risk Management Framework manages risk throughout
the full risk lifecycle. It is in place to support the ongoing and systemic
identification, evaluation, management, monitoring and reporting of the
significant risks faced and the mitigating controls in place against them.
This process is supported by robust risk governance, designed to give
a coherent view of risk across the full Group.
In order to maintain a risk management system that applies effectively
and consistently across all areas of the business, we have in place a
“risk taxonomy”. This is an inventory of all types of risk that are identified
as inherent in business strategies and objectives, including strategic,
non-financial and financial risks.
These risks are reflected in the Group risk appetite statements
and are managed through principles set out in the Group’s policies.
Risk assessments determine whether risks are within the appetite set
by the Board and are reported to senior management and the Board.
Risk governance
Risk governance and oversight is enabled through an effective
governance structure comprising Board level committees (Board,
Audit and Risk) and executive level committees to promote active
discussion and resolution of risk issues.
The risk framework defines the risk roles, responsibilities and
governance structure. The risk governance structure ensures the
appropriate expertise and overall input in order to adequately
oversee and challenge the risk positions across the Group.
The Risk committees, subcommittees and relevant working groups
are embedded within the overall governance structure of the Group.
A group and divisional committee structure provides risk oversight
with escalations between forums as needed (see the diagram below).
Group level committees: An overall Group Executive Risk Committee
and Group-level subcommittees, including the Financial Risk (which
includes a Model Risk subcommittee), Technology, Cyber and Resilience
Risk and Non-Financial Risk Committee which meet on a regular basis.
Other sub committees, such as the Reputational or New Product and
Market Committee meet on an ad-hoc basis, as required.
Each of the risk committees has detailed terms of reference, approved
by the Board or their parent committee, setting out their respective
roles and responsibilities.
Group risk appetite
Risk appetite is the level of risk that LSEG will accept in pursuit of its
strategic objectives and is aligned with the Group’s strategy. The risk
appetite is a central pillar of the Enterprise Risk Management Framework
and is used as a benchmark for both risk assessment and monitoring,
with regular reporting of aggregated risks to both the Board Risk
Committee and Group Executive Risk Committee.
The Board approves LSEG’s risk appetite annually. This is cascaded
throughout the organisation with divisions and functions establishing
more detailed risk appetite statements and monitoring their risk profile
against the agreed appetite levels.
Risks that are outside risk appetite are escalated to Executive
Committee members and to the appropriate Risk Committee
and Boards.
Risk Governance Structure
Board Risk Committee
Group Executive Risk Committee
Group Executive Risk Committee subcommittees
Divisional Risk Committees
Enterprise, Financial and
Model Risk Committee
LCH Ltd and SA
Risk Committees
Technology, Cyber and
Resilience Committee
Capital Markets
Risk Committee
Non-Financial
Risk Committee
Data & Analytics
Risk Committee
Escalation as needed
Escalation as needed
Escalation as needed to relevant Group subcommittee
Escalation of cross-divisional and/or material items
Read more about the activities of the
Board in the Corporate Governance
Report beginning on page 92.
81 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Principal risks and uncertainties continued
Risk category Risk Mitigation
Global
economic
and geopolitical
risk
Executive lead
Chief Executive Officer
Risk trend
Risk overview
Whilst the Group is well diversified, global economic
underperformance or the influence of geopolitical relations
on global financial markets could have an adverse impact
on LSEG’s people, businesses, operations and financial
performance.
Risk description
The Group operates in a broad range of equity, fixed income,
foreign exchange and derivative markets, servicing customers
who increasingly seek global products and innovative solutions.
If the global economy underperforms, or there is reduced
activity in LSEG’s markets, it may lead to lower revenues.
As central banks have taken steps to counteract inflationary
pressures, mainly through raising interest rates, financial
markets have been impacted. This has heightened the risk of
recession in advanced economies and the risk of default in
some emerging economies. An environment that exposes
banks’ weaknesses and leads to sector consolidation may also
lead to lower revenues. More broadly, geopolitical relations
continue to influence global financial markets, particularly
the ongoing conflict between Russia and Ukraine which is
impacting global food supplies, the conflict between Israel
and Hamas, and Western relations with China.
The Group’s income streams benefit from diversification
across both a broad global footprint and large customer base,
helping to mitigate the exposure to localised economic and
credit downturns. Furthermore, a significant proportion of
income streams across LSEG’s business divisions comprise
subscription-fee based recurring revenues, limiting the
Group’s exposure to shorter-term movements in the global
credit cycle. In conditions of volatility, the Group benefits from
market infrastructure capabilities exposed to trading volumes
and pricing movements, including FX venues, LSE Plc
secondary markets, Tradeweb and LCH Group.
Additionally, the Group performs regular monitoring and
assessment of the potential impacts of market prices
and volume movements. It also monitors and manages
exposures to the market through hedging both foreign
exchange and interest rate risks, tracking key risk indicators
and stress testing financial resilience.
The Group also regularly monitors external threats and
emerging risks including geopolitics and incorporates
the output into business continuity and strategic plans.
Furthermore, the Enterprise, Financial and Model Risk
Committee monitors and reviews multiple financial
metrics and scenarios including response to changes in
macroeconomic conditions, with mitigating actions agreed.
Sustainability
risk
Executive lead
1
Chief Corporate Affairs
and Marketing Officer,
Divisional Group Heads
Risk trend
Risk overview
Sustainability risk can be defined broadly as an environmental,
social or governance event or condition that, if it occurs, can
cause significant negative financial or non-financial impact
on the Group. Sustainability risk also includes the opportunity
that may be available to LSEG as a result of changing social,
economic or environmental as well as regulatory factors.
Risk description
Sustainability risk encompasses a wide variety of other
individual risks which are diverse in nature, from regulatory
reporting and diversity and inclusion, to greenwashing and
net zero, amongst others. Sustainability remains an area of
policy development, impacting financial market participants
and corporates, bringing with it reputational, regulatory and
potential litigation risks.
The scope of climate risk encompasses both physical and
transitional risks. Physical risks are acute and chronic risks
which may impact LSEG’s people as well as its global,
geographically dispersed property portfolio. Transitional risks
are factors such as product availability, policy, regulatory and
market related developments that may impact the Group’s
business as the world transitions to a Paris-aligned carbon
emission trajectory.
Please see the Sustainability section on pages 58 to 68 and
LSEG’s 2023 Sustainability Report for more information on
LSEG’s approach to sustainability.
Sustainability risks are managed in line with LSEG’s Enterprise
Risk Management Framework and integrated within the
Group’s risk taxonomy. The specificities associated with the
management of sustainability-related risks, which are
embedded within multiple other risks within the taxonomy,
are defined in LSEG’s Sustainability Risk Management
Framework, which was approved by the Board in 2023.
With regards to climate change, LSEG has taken proactive steps
to develop its methodology to understand the impact on its
businesses, both from a risk and opportunity perspective.
The Group aims to reinforce its resilience to both physical
and transitional risks, including how the transition will impact
demand for financial products and services. The Group has
advanced its assessment of climate risk and continues to
undertake an assessment of its global infrastructure portfolio,
utilising climate diagnostic models to identify future physical
climate change risks. The intention is to use this work to quantify
exposure to physical climate risk for property damage and
business interruption, as well as integration into its Group-wide
property location strategy. From a transitional climate risk
perspective, the Group has also made progress mapping
out and quantifying the potential impact of utilising carbon
pricing internally, initially piloting on business travel with a view
to a future Group-wide rollout.
Furthermore, in 2023, the Group’s risk taxonomy was
updated to provide more visibility for sustainability risks,
with sustainability added at a strategic level, including
greenwashing. Sustainability was also considered as part
of the annual risk and control assessment process.
Strategic risks
Strategic risks are risks that could impact
the execution of our strategy, as well as the
implementation of our strategic initiatives.
Risk trend key
Increasing
Stable
Decreasing
1 Change in executive
lead during the year to an
interim co-lead structure.
For more information
on the Group’s financial
risk management,
refer to note 17.5 to the
financial statements
on page 223.
London Stock Exchange Group plc
Annual Report 2023
82
Principal risks and uncertainties continued
Risk category Risk Mitigation
Reputation/
brand/IP risk
Executive lead
Chief Executive Officer
Risk trend
Risk overview
The Group’s globally recognised and trusted brands, now
unified under a single brand name, face the risk that an event
or incident could damage their value or the Group’s reputation.
Risk description
The strong reputation of LSEG’s businesses is valuable for its
credibility with regulators and its attractiveness to customers
and potential workforce. As these businesses are now more
closely aligned under one Group, there is greater potential for
a single event or incident to damage the reputation and value
of the LSEG brand and also impact LSEG-branded products
more broadly. Some of the Group’s products and processes
may also include material which are not subject to intellectual
property protection by the Group, and competitors of the Group
may also independently develop or otherwise protect similar
or the same products or processes. This could result in
reputational damage, impacting LSEG’s ability to attract new
or retain existing business and could cause the Group to incur
financial costs to defend or enforce intellectual property rights.
LSEG actively monitors the use of its brands to identify,
address and prevent any infringements. Policies and
procedures including brand guidelines are in place to
ensure the appropriate use of the Group’s brands and
to manage the integrity of the Group’s reputation. Where
material reputational issues arise, Group Committee
meetings are held to address such issues. Further,
corporate affairs, marketing and corporate responsibility
plans are in place to govern internal and external
stakeholder engagement. Our new Group values outline
the way we work with our customers, our partners and each
other and our Code of Conduct continues to support the
protection of our reputation. We each have a duty to act
with the highest levels of integrity, at all times, to maintain
the legacy of trust that LSEG has developed with its many
stakeholders. In addition, the Group protects its intellectual
property by relying upon a combination of trademark,
copyright, patent and design laws, trade secret protection,
database rights, confidentiality agreements and other
contractual arrangements with its employees, affiliates,
customers, suppliers, strategic partners and others.
Transformation
risk
Executive lead
Chief Executive Officer,
Chief Operating Officer
Risk trend
Risk overview
The Group is materially exposed to risk of loss or failure
resulting from transformation or integration as it continues
to grow rapidly both organically and inorganically.
Risk description
In 2023, LSEG continued to deliver on its transformation agenda,
including material change delivered through the Group Strategic
Programmes, mobilisation of the LSEG-Microsoft Partnership
and its M&A strategy. While acquisitions required the Group to
operate and integrate different technology platforms and
systems, divestments required the Group to provide transitional
support to divested businesses. Challenges for the Group
included 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 third-party contractual commitments.
As LSEG makes acquisitions, these may be complex or
necessitate change to operating or business models, technology
and people. The LSEG-Microsoft partnership will also result in
changes to LSEG’s products, commercial models and go-to-
market distribution. LSEG’s success will depend on its ability to
integrate all parts of the business (including acquisitions), realise
synergies and ensure it can compete globally. Failure to align its
businesses may result in additional cost without a commensurate
revenue increase, a failure to capture future product and market
opportunities, and increased risk relating to capital requirements,
regulatory relationships and management time.
Furthermore, since the Group’s markets for data, information,
services and products are highly competitive and subject to
rapid technological change and evolving customer demands
and needs, the Group has a sizeable strategic change agenda
to transform its products, services and platforms as it leverages
growth synergies, upgrades and replaces legacy infrastructure,
and transitions to the cloud.
Transformation Risk is reduced by the application of the
Group’s Enterprise Risk Management Framework deploying
consistent, appropriate risk management and mitigation
across the Group, both during strategic transformation
activity and throughout acquisitions and divestments.
The Group Transformation Forum, a subcommittee of the
Executive Committee, is responsible for the successful
delivery and risk management of the Group Strategic
Programmes. Furthermore, a partnership governance
structure has been implemented to oversee the delivery
of the LSEG-Microsoft Partnership. Oversight and assurance
across the Group’s change portfolio is provided by Group
Risk and Internal Audit.
The Group’s Change Framework provides a robust
governance and programme management structure
that has delivered an effective track record of integrating
acquisitions, separating disposals and delivering
tangible synergies in an evolving regulatory and
technological landscape.
Strategic risks continued
Risk trend key
Increasing
Stable
Decreasing
83 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Principal risks and uncertainties continued
Risk category Risk Mitigation
Central
Counterparty
(CCP) risk
Executive lead
Group Head of
Post Trade
Risk trend
Risk overview
The Group’s CCP activities – through LCH – expose it to a
number of financial risks that arise from the CCP’s obligation
to guarantee the performance of cleared contracts between
its members in the event of a member default.
Risk description
In the event of a member default, the CCP must restore
a matched book by liquidating or transferring the defaulting
member’s positions held with the CCP. This can expose the
CCP to both adverse changes in the market value of the
positions (such as changes in asset prices, interest rates,
credit spreads and foreign exchange) and liquidation costs
(such as the cost of finding liquidity to exit the positions).
In addition, the CCP has market, credit and liquidity risks
arising from the investment of members’ cash and its ongoing
payment obligations. Non-financial risks such as operational,
legal and compliance and reputational risks, arise as a result
of the CCP’s day-to-day operations.
CCPs by design are financially resilient against the largest
default risks. The CCP rulebook is the foundation of its
resilience and is a legally binding document, signed by
members, that governs all clearing activities. It details the
authority of the CCP to assess appropriate margins, to
place a member in default and to liquidate a defaulting
member’s positions and collateral. The key lines of defence
laid out in the CCP rulebook include minimum standards
for member eligibility, initial and additional margins posted
by members, a portion of the CCP’s own capital, and then
member default funds and mutualisation of losses.
Additionally, the CCP can perform assessment to further
absorb losses beyond the default fund. The resiliency
of these mechanisms is tested via an annual fire-drill.
In its cash investment activities, the CCP’s primary objective
is to protect principal and liquidity and to ensure prompt
availability of cash when needed. Establishing strict criteria
for the eligibility of counterparties and investment types
and a limits structure minimises investment risk, however
the risk will not be completely eliminated.
Additionally, unsecured commercial bank deposits are
strictly limited to 5% of the investment portfolio. Outright
bond purchases are limited to high-quality short-term
sovereign bonds or equivalent, and deposits at central
banks and secured placements (reverse repos) are
preferred where possible. All issuers and counterparties
are subject to internal credit scoring and regular reviews.
Furthermore, 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 resiliency, as well as annual
default fire-drills.
Model risk
Executive lead
Divisional Group Heads,
Chief Risk Officer
Risk trend
Risk overview
The advent of Artificial Intelligence and Large Language Models
necessitates new approaches for model risk management. As
such, the Group’s model risks could arise from the omission of
models from the model inventory and from errors made during
the data sourcing, development and implementation stages.
Risks can also arise from the incorrect use of models, and/or
from errors in the decisions made based on model outputs.
Risk description
The Group utilises an increasing suite of models, including
Artificial Intelligence, across all of its divisions (e.g., margin
models used within our CCPs, D&A client facing analytics,
market abuse detection models within the Capital Markets
division, and stress models used to calculate capital and
climate risk). Model risks could impact both the reputation
and the financial condition of the Group.
LSEG businesses have an industry standard model risk
control and governance framework in place, including
a model risk policy and model management system.
In addition, robust model validation is performed across
LSEG’s full suite of models to ensure that the Group’s
critical models are fit for purpose. Model lifecycle
controls are also in place, including ongoing performance
monitoring for key models and tracking of changes for
all models. In addition, risk oversight is provided by the
Model Risk Committee which is a subcommittee of the
Enterprise, Financial and Model Risk Committee, and model
risk management undertakes reviews to identify models
that could impact the Group.
Financial and model risks
The risk of financial failure and loss of earnings
and/or capital as a result of investment activity,
lack of liquidity, funding or capital, and/or the
inappropriate use of models.
Risk trend key
Increasing
Stable
Decreasing
London Stock Exchange Group plc
Annual Report 2023
84
Principal risks and uncertainties continued
Risk category Risk Mitigation
Technology risk
Executive lead
Chief Information Officer
Risk trend
Risk overview
LSEG is highly dependent on the development and operation of
its sophisticated technology and advanced information systems
and those of its third-party service and outsourcing providers.
Risk description
Technology failures potentially leading to system outages may
impact the Group’s customers and the orderly running of its
markets, data services and distribution.
The resilience of technology systems and processes
underpinning important business services remains a high
priority for the Group, with significant investment allocated
to the improvement of the technology estate. Key
performance and risk indicators provide a view across
the Group’s systems and enable tuning of improvement
activity to maximise benefits to resilience. Enhancement to
monitoring tools allow for preventative measures to avoid
issues, and a prompt response to any potential service-
impacting incident. Overall, the number and severity of
incidents linked to the legacy estate continues to decline.
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 risks associated with change are mitigated by
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 ensure that 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.
Non-financial risks
The risk of loss or other adverse consequences
to the business resulting from inadequate,
or failures associated with, internal processes,
people and systems, or from external events.
Risk trend key
Increasing
Stable
Decreasing
85 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Principal risks and uncertainties continued
Risk category Risk Mitigation
Information
and cyber
security threats
Executive lead
Chief Information Officer
Risk trend
Risk overview
As a global financial markets infrastructure and data provider,
LSEG is exposed to cyber risk. The cyber threat landscape
continues to increase in sophistication with the evolving
geopolitical landscape and emerging technology.
Risk description
The financial sector and the wider economy continue to
experience notable cyber incidents, showcasing the advanced
capabilities of cyber adversaries and the significant impact
they can have on the targeted organisation. Cyber risk arises
from the use of data, technology and digital services by
LSEG and its supply chain. In addition to the direct impact that
a cyber event can pose on LSEG and its customers, the Group’s
role as a financial markets infrastructure provider means that
a significant cyber event could create a systemic impact
to the financial sector and the global markets that it services.
To remain competitive in this era of data and digitalisation,
cyber risk cannot be eliminated, however, it can be managed
to a level of risk that the Group is prepared to take as a cost
of doing business.
The Group continues to make significant investments in
cyber security and has a dedicated Cyber Security function
led by the Chief Information Security Officer (CISO) whose
role is focused on protecting and defending LSEG against
cyber attacks. Due to the increasing sophistication of cyber
adversaries and their techniques, the Group proactively
collects and evaluates actionable threat intelligence. While
LSEG recognises that the prevention of cyber attacks may
not always be possible, the Group’s priority is on remaining
resilient to withstand cyber-attacks with minimal disruption
to its business.
Furthermore, LSEG’s approach to cyber security aligns
with industry frameworks such as the Cyber Risk Institute
profile version of the National Institute of Standards
and Technology cyber security framework. In addition,
given that some of LSEG’s divisions are highly regulated,
the Group ensures that the requisite assurance
requirements are met. LSEG has made significant
investments in cyber security and will continue to
invest in, and advance its cyber defence, protect,
detect, respond and recover capabilities.
Business
continuity risk
Executive lead
Chief Operating Officer,
Chief Risk Officer,
Divisional Group Heads
Risk trend
Risk overview
The Group is exposed to the risk of operational disruptions
that may impact its customers and the financial stability of
capital markets. As a result, business continuity is one of the
key objectives of the Group’s operational resilience strategy.
It helps to address the Group’s ability to prevent, adapt to,
respond and recover from operational disruptions and to
minimise their impacts.
Risk description
While the Group has processes and controls in place to ensure
the continuity of its services and operations, unforeseen
events such as physical security, cyber security and increased
geopolitical incidents could impact the continuity of the Group’s
services. Annual crisis management training is completed at the
Group and business unit levels, focusing on staff wellbeing and
any impact on critical business areas. A robust incident and
crisis escalation process is in place and routinely in use.
The Group has been updating its business continuity plans
for critical services, including important business services
throughout 2023, in line with operational resilience
requirements. These plans have been made available
on a central Group-wide risk platform.
LSEG continues to operate a three-tiered Group crisis
management framework, allowing effective and relevant
escalations and decision-making, based on any given
incident impact or severity. A Group crisis management
manual and one-page plan are in place, routinely updated
when management changes occur and used in training
exercises. Additionally, scenario-specific crisis playbooks
(e.g., for an energy crisis or potential geopolitical events)
are in place to guide the crisis team decision-making.
The Group has also completed location-specific business
continuity plans for key LSEG locations. These include
crisis playbooks together with a summary of business and
people exposure and related business continuity strategies.
We have also launched plans to test crisis management
teams in these locations.
Risk trend key
Increasing
Stable
Decreasing
London Stock Exchange Group plc
Annual Report 2023
86
Principal risks and uncertainties continued
Non-financial risks continued
Risk category Risk Mitigation
Third-party
risk
Executive lead
Chief Operating Officer,
Divisional Group Heads,
Chief Information Officer
Risk trend
Risk overview
The Group’s ability to deliver its strategic objectives may be
impacted by failure to manage the financial, regulatory and
reputational risks associated with the selection, management,
and oversight of critical third parties.
Risk description
The Group and its entities engage third-party service providers,
including cloud service providers, that are exposed to a range
of non-financial, operational risks such as geopolitical and
cyber security threats and regulatory compliance risk. The
Group has engaged cloud service providers to host critical
services and data. It 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 events may result in these third parties being unable
to meet their contractual, regulatory, confidentiality or
other obligations to the Group which in turn could lead to
material financial loss, higher costs, regulatory actions and
reputational harm.
The Group continues to refine its third-party Risk
Management Framework to provide controls across all
stages of the third-party lifecycle, covering: planning and
selecting, contracting and onboarding, managing and
monitoring, and termination and exit. The framework helps
to ensure that the Group identifies, assesses, remediates,
monitors and reports risk at key stages in the lifecycle,
and actively manages relationships with critical third
parties to avoid a breakdown in service provision.
Additionally, LSEG focuses on the ability of critical
third parties to continue to supply goods and services
in accordance with requirements and in compliance
with contractual obligations. Throughout the year,
there have been no significant impacts to the supply
chain for the Group.
Data
governance
risk
Executive lead
Divisional Group Heads,
Chief Operating Officer
Risk trend
Risk overview
LSEG collects, processes, licenses, calculates, owns, transforms,
administers and distributes data in many formats. Failure to
govern its data successfully could result in those data being
unfit for purpose with respect to quality and usage.
Risk description
LSEG plays a significant role in the financial markets
infrastructure and data landscape with commitments to its
customers, counterparties, owners, vendors, regulators and
the public in the proper usage of its data.
If the Group’s data becomes unfit for purpose, resulting in the
Group or its customers and/or stakeholders utilising deficient
data for decision-making, the Group’s reputation, financial
condition and operating results could be adversely impacted.
Furthermore, data privacy breaches, unauthorised data access,
misuse of personal data or failure to protect confidential
information could adversely affect the Group’s reputation or
financial performance, or expose it to litigation or other legal
or regulatory actions.
LSEG’s Enterprise Information Governance function,
together with divisional Chief Data Officers, work to
develop and institute a comprehensive governance
framework to ensure LSEG data is of the highest quality
in order to support its intended use and the needs of its
stakeholders, customers and regulators. The Group data
policy and its framework promote a data culture that
embodies customers’ needs, improves efficiency and
quality of decision-making, and ensures adherence to
regulatory obligations. As such, the Group has defined
and implemented a standardised approach to data
management oversight, governance, controls, measures
and monitoring, as well as efficient issue resolution to
mitigate any adverse impacts to the business.
In addition, the Group’s data protection and privacy policy
sets out a framework for privacy compliance to ensure
that personal data that is processed during the Group’s
business is used fairly, lawfully and in compliance with all
applicable data protection and privacy legislation. The
Group’s information security policy includes a framework
for data leakage prevention and information security
incident management. LSEG employees complete annual,
mandatory training courses on the Group’s policies.
Data is an aspect of the operational resilience programme.
This means it is subject to a governance and control
framework which ensures identification and management
of data vulnerabilities as well as driving effective data
recovery and the overall resilience of the Group’s important
business services.
Risk trend key
Increasing
Stable
Decreasing
87 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Risk category Risk Mitigation
People
and talent risk
Executive lead
Chief People Officer
Risk trend
Risk overview
The Group’s people and talent risks could arise from a lack
of critical skills, talent and knowledge, resulting in the Group
being unable to achieve its objectives.
Risk description
People and talent risks can arise from multiple factors including
insufficient career development, inadequate compensation
processes and ineffective organisational structures and
leadership, all of which could lead to lack of engagement
and wellbeing of its people. Furthermore, increased market
competition and challenging geopolitical or economic
conditions could result in inability to attract and retain
diverse, high-performing talent, and/or it could lead to
a disengaged workforce.
In the year, we launched new values to underpin its
purpose, ensuring consistency in behaviour and culture
across the Group. There continues to be focus on equity,
diversity and inclusion, including refreshed ambitions and
priorities, active inclusion networks, and enhanced policies
and benefits to foster a culture of belonging. Talent
identification, succession planning and career development
frameworks initially launched in 2022 were expanded and
evolved in the year, along with launching the Career
Navigator platform, to support colleagues in ensuring they
have appropriate skills and resources available to
undertake their roles effectively and to support their career
journey at LSEG. The Group continued with leadership
development engagements across all stages of leadership,
and delivered a framework for promotion and progression.
LSEG operates a hybrid working model, driving
connectivity, collaboration, productivity and development.
Regulatory
change and
compliance risk
Executive lead
General Counsel,
Chief Executive Officer,
Divisional Group Heads
Risk trend
Risk overview
LSEG is a global business operating in many regulatory
environments and is exposed to changes to those environments
and how it manages compliance with regulatory requirements.
Risk description
Regulatory risks that LSEG may face include: risks arising from
the conditions under which the Group can access a particular
market (e.g. EU equivalence for UK CCPs); the regulation and
supervision of new activities; market competitiveness, including
the attractiveness of the UK as a financial centre; data issues
including localisation, privacy, sovereignty and regulation;
sanctions issuance; sustainability and ESG issues; innovation
and technology, including artificial intelligence and digital
assets; and resilience and financial stability, including clearing,
cloud and operational resilience.
The Group has a dedicated Compliance function which
is focused on identifying and remediating areas where
compliance controls need to be improved. There are
centralised compliance resources supporting the
organisation as a whole with application of Group
level controls, and resources carrying out compliance
assurance controls.
In addition to the overall Group Compliance function,
compliance resources with specialised knowledge of
each of the regulated services provided by the Group are
aligned with the regulated entities operating within each
business division. They provide regulatory advice to the
business, corporate functions and committees to support
them in seeking to ensure that both day-to-day operations
and business developments are undertaken in accordance
with the relevant regulatory obligations.
Furthermore, 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.
Principal risks and uncertainties continued
Risk trend key
Increasing
Stable
Decreasing
London Stock Exchange Group plc
Annual Report 2023
88
Principal risks and uncertainties continued
Risk category Risk Mitigation
Disruptive
technology
developments
Executive lead
Chief Information Officer,
Divisional Group Heads
Risk trend
Risk overview
The markets that LSEG serve could be changed by an increase
in competitive pressures and lower entry barriers, caused by
structural market changes, new business models and new
advances in cloud, Artificial Intelligence, quantum computing
and distributed ledger technology.
Risk description
Change driven by developments in disruptive technology could
negatively impact the Group’s core business performance and
disrupt its commercial models. This risk could impact the entire
business, given the pace of change of business models,
technological advancements and the continued increasing
pace of market entrants.
Cloud providers are expanding their capabilities from storage
to a wide range of data management and analytics solutions.
They also enable a whole new ecosystem of providers,
including new market entrants, who can now take advantage
of cloud providers’ customer bases and fast development cycle.
The increased use of AI internally and among customers brings
with it associated risks such as inherent bias and automated
decision-making and data management. It will also introduce
new challenges for cyber security defence and detective
mechanisms. Quantum computing could revolutionise the field
of cloud and AI by enabling faster machine learning, facilitating
new commercial opportunities, but may potentially amplify some
cyber security and AI risks.
As technology and regulatory clarity improves, aggressive
competitor activity in distributed ledger technology could
increase risk of disruption. Distributed ledger technology
presents potential disruptive risk to parts of LSEG’s business
as it may result in a reduced need for centralised intermediaries,
thereby bypassing some of the services offered by the Group.
The Group actively monitors new technological
developments and the pace of change, developing robust
innovative strategies to mitigate the risk resulting from
emerging technology. The Group, including through its
Strategy function, actively scans for potential investment
opportunities in emerging technology. In addition, the
Group partners with advisers and builds proof of concepts
to test new hypotheses and, by collaborating with its
customers, can identify and quickly react to changing
consumption preferences.
Regulators are actively exploring the application of new
frameworks to manage the development of innovative
financial services technologies. It is expected that these
will be important for maintaining resilience and stability
in the market while enabling innovation with emerging
technology. The Group also participates in relevant industry
and academic forums, partnering closely with regulators.
Furthermore, the Group continues to maintain systems
and controls to mitigate the risk resulting from emerging
technology. Risk arising from the Group’s use of cloud,
AI and distributed ledger technology is identified,
assessed, managed and reported through the risk
framework. LSEG is aligned with industry best practices
and guidance when considering increased use of AI and
distributed ledger technology. In 2023, the Group also
launched its own Responsible AI Framework.
Emerging risks
Newly developing external risks which are
difficult to quantify due to their remote or
evolving nature.
Risk trend key
Increasing
Stable
Decreasing
89 London Stock Exchange Group plc
Annual Report 2023
STRATEGIC REPORT
Financial viability
statement
In accordance with provision 31 of the Code, the Directors confirm that
they have a reasonable expectation that the Group will continue to
operate and meet its liabilities, as they fall due, for the next three years.
A period of three years has been chosen for the purpose of this viability
statement, in line with the Group’s business plan.
Viability period
The Directors’ assessment has been made with reference to the
Group’s current position and prospects, the Group’s three-year
business plan, the Group’s risk appetite and the expected impact
of severe but plausible downside scenarios.
Given the Group’s acquisitive nature in recent years and future
organic growth strategy, a three-year window is considered the most
appropriate horizon for the Group’s management to make its viability
statement because it is the period over which it can forecast with
reasonable clarity, the Group’s financial performance, cash flows and
strategic position. A 12-month period from the expected date of the
signing of the financial statements is considered for the going concern
assessment (see note 1.2 to the financial statements on page 176).
Business planning process
The business plan makes certain assumptions about the performance
of the core revenue streams and segments, using existing product lines
as well as assumptions on take-up of new product lines. It considers
known inorganic activity, as well as assumptions on: the appropriate
levels of investment to support expected performance; the ability to
refinance debt as required; and expected returns to shareholders.
Assessment of viability
The principal risks and uncertainties facing the Group are set out on
pages 79 to 88 of the Strategic report. In addition, the Financial Risk
management note on page 223 of this report includes: the Group’s
objectives, policies and processes for managing its capital; its financial
risk management objectives; and its exposure to credit risk, liquidity
risk and market risk.
The business plan is stress tested using severe but plausible downside
scenarios as determined relevant by the Financial Risk Committee,
over the full three-year plan period. These scenarios are then
assessed against the Group’s risk appetite parameters. Impacts
on the performance of core revenue streams and segments are
modelled through business inputs, with appropriate mitigating factors
also considered.
The scenarios modelled are discussed in the table opposite.
The results show that a repeat of the Global Financial Crisis would have
the largest impact on Group EBITDA. No scenario over the three-year
period leads to a breach of the Group’s risk appetite thresholds, or an
inability to meet the Group’s financial obligations through insufficient
headroom. The likelihood of these scenarios materialising is viewed
as remote.
Borrowing facilities
The Group’s borrowing facilities and respective repayment dates,
and the net debt position of the Group, are included in note 7 to
the financial statements, on pages 245 to 246.
Conclusion
The Directors assessed the prospects and viability of the Group in
accordance with provision 31 of the UK Corporate Governance Code
taking into account the Group’s three-year business plan, and the
principal risks to the Group’s future performance and liquidity.
The Directors have a reasonable expectation that the Group has
the ability to meet its obligations over the viability period.
Scenario Assumption Associated
principal risk
Global Financial
Crisis (with and
without inflation)
A replay of the 2008 crisis,
reassessed for purpose and
fitness with current market
conditions. The scenario
considers the collapse of
a major financial institution
and a simultaneous default of
one medium-sized (domestic
rather than international)
bank. Additionally, the
scenario includes the
consolidation of four globally
systemic banks into two.
Global economic
and geopolitical.
See page 81
for more
information.
Global Pandemic The scenario considers the
proliferation of Covid-19,
or a similar pandemic, with
significant impacts throughout
the global value chain.
There are severe, highly
synchronised downturns
associated with a persistent
loss of output in developed
and emerging economies.
Governments worldwide
implement restrictions on
human interaction and travel
to control virus contagion
and interest rate changes.
Global economic
and geopolitical.
See page 81
for more
information.
Cyber Security
Threats
The scenario considers
a cyber ransomware attack
impacting the Group’s ability
to serve a large portion of
its customers.
Information and
cyber security
threats. See
page 85
for more
information.
Supply Chain
Disruption
This scenario assumes
key supplier unavailability
due to geopolitical or
technological issues, which
results in the delayed
delivery of one of the Group’s
key strategic programmes.
Transformation.
See page 82
for more
information.
Technology Outage This scenario assesses the
impact of a service disruption
to one of the Group’s key
databases which supports
a number of Important
Business Services.
Technology.
See page 84
for more
information.
This section of the Annual
Report describes how LSEG
is governed and the control
structures we have in place.
Good corporate governance is
key to promoting the long-term
sustainable success of the
Company, achieving the
Group’s objectives, generating
value for shareholders and
contributing to wider society.
Governance
London Stock Exchange Group plc
Annual Report 2023
90
Corporate governance introduction 92
Board of Directors 94
Corporate governance report 98
Complying with the provisions of the Code 105
Report of the Nomination Committee 106
Report of the Audit Committee 109
Report of the Risk Committee 115
Directors’ Remuneration Report 117
Directors’ Report 154
Statement of Directors’ responsibilities 159
91 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
In this section
London Stock Exchange Group plc
Annual Report 2023
92
Dear Shareholders,
I am very pleased to present the Corporate Governance Report for the
year ended 31 December 2023. This report provides an overview
of how LSEG is governed, the activities of the Board 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 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 over 25 years and currently holds position
as Executive Vice President, Cloud and AI Group. Further information on
the strategic partnership with Microsoft can be found on page 18 and 19.
In accordance with the terms of the Relationship Agreement, Erin Brown,
representative of Thomson Reuters, stepped down from the Board
on 17 March 2023, and Doug Steenland, representative of Blackstone,
stepped down from the Board on 20 September 2023. On behalf
of the Board, I would like to thank Erin and Doug for the significant
contributions they made since the acquisition of Refinitiv in January 2021.
On 14 September 2023, William Vereker took over from Cressida Hogg
as Chair of the Remuneration Committee. Cressida Hogg continues
to serve as Senior Independent Director and a member of the
Remuneration Committee. I would like to thank Cressida for her
contribution as Chair of the Remuneration Committee.
On 20 November 2023, the Group announced that it had appointed
Michel-Alain Proch as CFO and Executive Director from 1 March 2024.
This followed the announcement in May 2023 that Anna Manz would
step down from the Board as CFO and Executive Director. I would like
to thank Anna for the key role she has played in the successful delivery
of the Group’s strategy over the last three years, and I am happy to
welcome Michel-Alain to the Board.
The Board continues to seek opportunities 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
we meet the Parker Review recommendations, and that we meet all
recommendations set out by the FTSE Women Leaders Review. Two of
the four senior positions in the Company outlined in the Listing Rules
are currently held by women and two of the Board’s Directors are from
a minority ethnic background. At the end of 2023, the Board was over
40% female, however, following Anna’s departure and Michel-Alain’s
arrival, this will drop to below 40%. For more information on Board
diversity and the process followed in relation to Board appointments,
please see the Nomination Committee report on pages 106 to 108.
Corporate governance
introduction
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
93 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Remuneration Policy
Our proposed Directors’ Remuneration Policy will be put to shareholders
for approval at the 2024 AGM. The proposed changes are focused
on updating our policy to ensure that it remains appropriate for
our transformed business. Details of the proposed policy and the
implementation of the current policy during the year, can be found
in the Directors’ Remuneration Report on pages 117 to 153.
Board effectiveness review
This year’s effectiveness review was conducted by the Group Company
Secretary using a detailed questionnaire provided with the aid of an
external provider, Lintstock. Results and agreed areas of focus for
the Board are described on page 102 and 103. The Board will ensure
that these focus areas are acted upon to further improve Board
performance. I can confirm that the actions from the 2022 effectiveness
review have been completed.
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. During the year, the Board visited the Paris
office and met with colleagues to hear more about their areas of the
business and provided a forum for colleagues to share their views with
the Board. Further information on workforce engagement can be found
on page 71.
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, gain
real insights into the Group’s culture and any concerns from colleagues
at different levels of the business and have meaningful, two-way
dialogue with the workforce. This was particularly important in 2023 as
we continued with the integration of the Refinitiv business, progressed
the partnership with Microsoft and embedded the Company’s culture
and new values across the Group. More information of the Company’s
culture and values can be found on page 60. The feedback that Board
members received from this direct engagement was shared with the
wider Board at the following meeting and the Board has encouraged
management to respond to feedback and to take appropriate action.
Further information can be found on pages 71 and 72.
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 to meet with shareholders.
Sustainability
As described in the Sustainability section of the Strategic Report
(pages 58 to 68), 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.
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 2023 and to the date of this
report, and complied with all provisions of the Code, except for provision
32. Provision 32 of the Code states that the Chair of the Remuneration
Committee should have served on a remuneration committee for at least
12 months before becoming chair. William Vereker was appointed as
Chair of the Remuneration Committee having served for over 11 months
on the Committee. The decision to appoint William as Committee Chair
shortly before 12 months on the Committee was taken in order to allow
William to lead on the proposed changes to the Remuneration Policy,
including consultation with shareholders. Further information on
compliance with the Code is detailed on page 105.
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 98 to 105 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 2024, even
if you are unable to attend in person. Details of the AGM will be included
in the Notice of Meeting.
Don Robert
Chair
28 February 2024
Corporate governance introduction continued
London Stock Exchange Group plc
Annual Report 2023
94
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.
Don Robert
Chair of the Company and
the Nomination Committee
Appointed to the Board in
January 2019 and Chair of
the Company in May 2019.
Skills, knowledge
and contribution
— Strong track record in global
financial services, international
business and mergers and
acquisitions
— Expert regulatory knowledge,
accompanied with a deep
understanding of technology
and data and analytics
— Significant executive and
non-executive listed board
experience
Experience
Don spent 18 years at multinational
information company Experian plc,
where he most recently served as
Chairman (2014-2019). Prior to that
he was Group Chief Executive
(2005-2014) and CEO of the North
American business (2001-2005).
Don has served in a variety of senior
roles including Chair of the US
Consumer Data Industry Association,
Senior Independent Director of
Compass Group plc and Non-
Executive Director of the Court
of Directors, Bank of England.
Other current appointments
Chair, Keywords Studios plc; Chair
of Council, The London School
of Hygiene & Tropical Medicine;
Partner, Corten Capital; Chair,
Ekco (a portfolio company of Corten
Capital); Non-Executive Director,
Validis Group Holdings Limited;
Non-Executive Director, FlexCharge;
Visiting Fellow, Oxford University;
Honorary Group Captain, Royal
Air Force.
Committee membership
Nomination (Chair)
Remuneration
David Schwimmer
Group Chief Executive Officer
Appointed to the Board in
August 2018.
Skills, knowledge
and contribution
— A wealth of knowledge
surrounding market structure,
investment banking and
emerging markets
— Extensive experience in corporate
finance, capital markets, and
mergers and acquisitions
— Deep understanding of the
business and the markets within
which the Group operates
Experience
Prior to joining the Group in August
2018, David spent 20 years at
Goldman Sachs, where he held
a number of senior roles, most
recently as Global Head of Market
Structure and Global Head of Metals
& Mining. During his tenure, he also
served as Chief of Staff to Lloyd
Blankfein, who was then President
and COO of Goldman Sachs, and
spent three years in Russia as
Co-Head of Russia/CIS. Prior to
joining Goldman Sachs, he practised
law at Davis Polk & Wardwell.
Other current appointments
Non-Executive Director,
Centre for New American Security
(Not-for-Profit).
Board of Directors
Director changes in 2023
Scott Guthrie
Joined the Board on
1 February 2023.
Erin Brown
Stepped down from the
Board on 17 March 2023.
Doug Steenland
Stepped down from the
Board on 20 September 2023.
* Director changes since
31 December 2023
Anna Manz
Anna will step down from the
Board on 29 February 2024.
Michel-Alain Proch
Michel-Alain joins the Board
as an Executive Director on
1 March 2024.
95 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Board of Directors continued
Anna Manz*
Group Chief Financial Officer
Appointed to the Board in
November 2020.
Skills, knowledge
and contribution
— Extensive expertise in accounting,
corporate finance and mergers
and acquisitions
— Significant financial and strategic
leadership in areas such
as risk, treasury management
and accounting
— Expertise in business
diversification and transformation
Experience
Anna is a qualified accountant. Prior
to joining the Group in November
2020, Anna was Chief Financial
Officer and Executive Director of
Johnson Matthey plc (2016-2020),
leading its Finance, Procurement,
and IT functions. Prior to joining
Johnson Matthey plc, Anna spent
17 years at Diageo plc in a number
of senior finance roles, including
most recently as Chief Strategy
Officer and member of the Executive
Committee. In addition, Anna served
as Non-Executive Director of ITV plc
(2016-2023).
Other current appointments
Non-Executive Director,
AstraZeneca PLC
Dominic Blakemore
Independent Non-Executive
Director and Chair of the
Audit Committee
Appointed to the Board in
January 2020.
Skills, knowledge
and contribution
— Extensive experience in corporate
finance, investor relations and
capital markets
— Significant financial leadership
experience from various
international financial institutions
— Strong strategic planning and
decision-making experience
Experience
Dominic is a chartered accountant
and has been Group Chief Executive
Officer of Compass Group plc since
2018. Previously, he served as
Group Finance Director (2012-2015),
Group Chief Operating Officer,
Europe (2015-2017) and Deputy
Chief Executive Officer in 2017.
Dominic was formerly a Non-
Executive Director and Chair
of the Audit, Risk and Compliance
Committee of Shire plc (2014-2018).
He previously served as Chief
Financial Officer of Iglo Foods Group
Limited (2010-2011). Before joining
Iglo, Dominic was European Finance
& Strategy Director at Cadbury plc
(2008-2010).
Other current appointments
Group Chief Executive Officer,
Compass Group plc; Vice-Chair,
University College London;
Non-Executive Director, FareShare.
Committee membership
Audit (Chair)
Nomination
Risk
Martin Brand
Non-Executive Director
Appointed to the Board in
January 2021.
Skills, knowledge
and contribution
— Significant board and
executive experience
across listed companies
— Highly accomplished in corporate
finance, with a focus on the
financial technology sector
— Extensive experience in strategic
planning, data and analytics,
and mergers and acquisitions
Experience
Martin’s work at Blackstone Inc.
has seen him involved in several
of their high-profile investments
including; Sphera, Ellucian, Refinitiv,
Bumble, IntraFi and Paysafe.
He is a member of several of
Blackstone’s investment committees.
He previously worked as a
derivatives trader with Goldman
Sachs in New York and Tokyo,
and with McKinsey & Company in
London. He was a Director of
Refinitiv until 2021 and was Chair
of Tradeweb Markets (a subsidiary
of LSEG) until February 2022.
Other current appointments
Head of North America Private
Equity, and Global Co-Head of
Technology Investing, Blackstone
Inc.; Director, UKG Software; Director,
Liftoff Mobile; Director, First Eagle;
Trustee, American Academy Berlin.
Committee membership
Nomination
Professor Kathleen DeRose
Independent Non-Executive
Director and Chair of
the Risk Committee
Appointed to the Board in
December 2018.
Skills, knowledge
and contribution
— Executive leadership experience
in capital markets and asset and
wealth management
— Significant non-executive listed
board experience
— Expertise in the financial
technology market, risk
management, and data
and analytics
Experience
Kathleen held a number of senior
roles at Credit Suisse Group AG
(2010-2015). Other positions
Kathleen has undertaken have
included Managing Partner, and
Head of Portfolio Management
and Research at Hagin Investment
Management (2006-2010), and
Managing Director, Head of Large
Cap Equities at Bessemer Trust
(2003-2006). Prior to 2003,
Kathleen also held a number of roles
at Deutsche Bank and JPMorgan
Chase (formerly Chase Manhattan
Bank). In addition to her senior
executive positions, Kathleen served
as a board member of EDGE
(Economic Dividends for Gender
Equality) (2014-2015), and she was
founding Chair of Evolute Group AG
(2016-2017).
Other current appointments
Non-Executive Director, Experian plc;
Non-Executive Director, Voya
Financial Inc.; Non-Executive
Director, Enfusion Inc.; Clinical
Associate Professor of Finance, New
York University Leonard N. Stern
School of Business; Director, Fubon
Centre for Technology, Business,
and Innovation.
Committee membership
Risk (Chair)
Audit
Nomination
London Stock Exchange Group plc
Annual Report 2023
96
Tsega Gebreyes
Independent
Non-Executive Director
Appointed to the Board in
June 2021.
Skills, knowledge
and contribution
— Deep financial services and
capital markets experience
gained from various global senior
executive and non-executive roles
— Significant expertise in
international business
and technology
— Strong background in strategy
and business development
Experience
Tsega spent seven years at Celtel
International, a leading mobile
telecommunications provider in the
Middle East and North Africa. During
her tenure at Celtel, Tsega held
a variety of senior roles including
Senior Group Adviser, Zain Africa BV
(2007-2016), Chief Strategy and
Development Officer (2005-2007),
Chief Business Development and
Mergers & Acquisitions Officer
(2003-2005) and Director, Mobile
Commerce and New Product
Development (2000-2003). In
addition to her senior executive
positions, Tsega has served as Vice
Chair of SES SA, and Non-Executive
Director of Hygeia Nigeria Limited
(2009-2015), ISON Group (2013-
2018) and Sonae SA (2015-2019).
Other current appointments
Founding Director, Satya Capital
Limited; Non-Executive Director,
Airtel Africa plc; Advisory Council
Member, Mo Ibrahim Foundation;
Non-Executive Director,
Mastercard Foundation.
Committee membership
Audit
Nomination
Risk
Cressida Hogg CBE
Senior Independent
Director
Appointed to the Board in
March 2019.
Skills, knowledge
and contribution
— Significant board and executive
level experience combined with
a strong corporate background in
infrastructure, private equity and
capital markets
— Strong Chair experience and
competency in embedding
corporate governance values
— Specialist knowledge in mergers
and acquisitions, financial
services regulation and pensions
Experience
Cressida spent nearly 20 years
with 3i Group plc and was one of
the co-founders of 3i’s infrastructure
business in 2005, before becoming
Managing Partner in 2009. During
this time, Cressida advised on all
of 3i’s infrastructure transactions.
She was also Global Head of
Infrastructure at Canada Pension
Plan Investment Board (2014-2018).
In addition to her senior executive
positions, Cressida served as
a Non-Executive Director of
Associated British Ports Holdings
Limited and a Non-Executive
Director of Anglian Water Group.
Other current appointments
Chair, BAE Systems plc; Non-
Executive Director, Troy Asset
Management Ltd.
Committee membership
Nomination
Remuneration
Dr Val Rahmani
Independent
Non-Executive Director
Appointed to the Board in
December 2017.
Skills, knowledge
and contribution
— Significant expertise and
knowledge of technology and
technical risk management
— Deep understanding of digital
transformation, innovation,
sales and marketing
— Extensive listed director
experience accompanied
by expert corporate
governance knowledge
Experience
Val worked for IBM for almost
30 years and was Chief Executive
Officer of cyber security start-up,
Damballa Inc., for four years.
Her past career also included
Non-Executive Director positions at
Aberdeen Asset Management plc,
Teradici Corporation and CTG, Inc.
Val previously ran the Innovation
Panel for Standard Life Aberdeen
and holds a Doctorate of Philosophy
in Chemistry from the University
of Oxford.
Other current appointments
Non-Executive Director,
RenaissanceRe Holdings Limited;
Non-Executive Director, Entrust.
Committee membership
Nomination
Remuneration
Risk
Scott Guthrie
Non-Executive Director
Appointed to the Board in
February 2023.
Skills, knowledge
and contribution
— Market-leading experience in
cloud infrastructure and data
and analytics
— A deep and valuable
understanding of the
technology market
— Specialist in digital transformation
Experience
Scott has over 25 years of
experience leading large technology
teams at Microsoft, and has been
Executive Vice President of
Microsoft’s Cloud and AI division
since 2014. He is responsible for
Microsoft’s Cloud Platform, Data and
AI solutions, Operating Systems,
Business Applications, Development
Tools, and Industry Solutions.
The products and services his team
delivers include Microsoft Azure,
Dynamics 365, Power BI, SQL
Server, Nuance, GitHub, Visual
Studio and the core Windows
operating system. Scott was
previously Corporate Vice President
of Microsoft Azure (2011-2014),
Corporate Vice President of
Microsoft’s Developer Division
(2008-2011), General Manager
Microsoft Developer Division
(2005-2008).
Other current appointments
Executive Vice President,
Microsoft Cloud and AI Group.
Committee membership
Nomination
Board of Directors continued
97 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Ashok Vaswani
Independent
Non-Executive Director
Appointed to the Board in
June 2021.
Skills, knowledge
and contribution
— Extensive experience in, and
understanding of, banking and
the financial services industry
— Deep knowledge and
comprehension of technology,
risk management, and
wealth management
— Expertise in data and analytics
and capital markets
Experience
Ashok held a number of senior roles
within Barclays Group, including:
Chief Digital Strategy Officer at
Barclays plc (2021-2022); CEO,
Global Consumer Banking &
Payments (2019-2021); CEO, Barclays
UK (2016-2019); CEO, Personal
and Corporate Banking (2014-2016);
CEO, Retail and Business Banking
(2012-2014); CEO, UK Retail and
Business Banking (2011-2012);
CEO, Africa (2010-2011); and CEO
of Barclaycard Europe (2010). Prior
to joining Barclays, Ashok was
a Partner at Brysam Global Partners
LLC (2007-2009), a private equity
firm specialising in consumer
financial services in emerging
markets. From 1987 to 2007,
Ashok held a number of senior roles
within Citigroup Inc. Ashok also
served as President and Adviser
at Pagaya, a FinTech based in
New York (2022-2023).
Other current appointments
Managing Director and Chief
Executive of Kotak Mahindra Bank.
Committee membership
Audit
Nomination
Risk
William Vereker
Independent Non-Executive
Director and Chair of the
Remuneration Committee
Appointed to the Board in
October 2022.
Skills, knowledge
and contribution
— Highly experienced banker,
including experience in
executive roles
— Significant knowledge
and experience of capital
markets, post trade and
investment banking
— Deep knowledge of financial
services and regulatory
and government relations
Experience
William began his career at Morgan
Stanley and held a variety of
investment banking roles with
a focus on the energy and utility
sectors, which culminated with him
being MD & Head of European
Utilities (2001-2005). He also held
a number of senior executive roles
in the investment banking sector
with Lehman Brothers (2005-2008),
Nomura (2009-2013) and UBS
(2013-2018). William’s time at UBS
saw him serve as Global Head
of Investment Banking from 2016
to 2018. William served as the
Prime Minister’s Business Envoy
(2018- 2020), before becoming
Vice Chair of the EMEA Investment
Bank at JP Morgan.
Other current appointments
Chair, Santander UK; Member,
UK Investment Council; Member,
Advisory Board, Celonis GmbH;
Chair, Advisory Board of Gonville
and Caius College, Cambridge.
Committee membership
Remuneration (Chair)
Nomination
Risk
Michel-Alain Proch*
Group Chief Financial
Officer-designate
Appointed to the Board with effect
from 1 March 2024.
Skills, knowledge
and contribution
— Significant financial leadership
experience in global listed
companies
— Deep experience across global,
financial infrastructure and IT data
solutions firms
— Extensive experience of mergers
and acquisitions and delivering
strategic growth
Experience
Prior to joining the Group on
26 February 2024, Michel-Alain
was Group Chief Financial Officer
of Publicis Groupe SA (2021-2024)
where he led the global finance
team across 100 countries.
Prior to joining Publicis Groupe,
Michel-Alain was CFO of Ingenico
until its acquisition by Worldline
(2019-2020), and then served as
adviser to the CEO in the integration
of the two companies. He previously
spent almost 13 years at Atos in a
number of senior roles, including
Group Chief Financial Officer,
CEO, North America and
Group Chief Digital Officer,
completing and integrating
several strategic acquisitions.
Other current appointments
Vice Chairman, Maisons du Monde;
Non-Executive Director, Pluxee N.V.
Board of Directors continued
London Stock Exchange Group plc
Annual Report 2023
98
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 Group’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; and
— 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 2023,
including details of certain Board decisions taken during the year,
can be found on pages 75 to 78 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.
The work undertaken by each Committee during the financial year is
detailed within the respective Committee reports on pages 106 to 123.
Board composition
As at the date of this report, the Board is composed of 12 members:
the Chairman, seven independent Non-Executive Directors, two
Non-Executive Directors (the Shareholder-appointed Director
1
and the
Director appointed in connection with the strategic partnership with
Microsoft
2
), and two Executive Directors. Five 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. The Board’s statement of
division of responsibilities can also be found on this web page.
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 6/6 4/4 6/6
David Schwimmer 6/6
Anna Manz 6/6
Dominic Blakemore 6/6 5/5 4/4 4/4
Martin Brand 6/6 4/4
Kathleen DeRose 6/6 5/5 4/4 4/4
Tsega Gebreyes 6/6 5/5 4/4 4/4
Scott Guthrie 6/6 4/4
Cressida Hogg 6/6 4/4 6/6
Valerie Rahmani 6/6 4/4 4/4 6/6
Ashok Vaswani 6/6 5/5 4/4 4/4
William Vereker 6/6 4/4 4/4 6/6
Directors who left during the year
Erin Brown 1/1
Doug Steenland 4/4 2/2
The Non-Executive Directors meet privately without the Executive Directors being present after every Board meeting. Comprehensive Board and
Committee papers, comprising an agenda and formal reports and briefing papers are sent to Directors in advance of each meeting. Directors are
also updated with written and verbal reports, from senior executives and external advisers during the meeting.
Corporate governance report
1 Director appointed under the Relationship Agreement by 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.
2 Appointed under the lock-up agreement with Microsoft Corporation.
99 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Stakeholder engagement
The Board seeks to understand the interests, needs and concerns
of shareholders and other key stakeholders (including customers, the
workforce and regulators) to enable the Company to pursue long-term
sustainable success. For more information on how we engage with our
stakeholders as well as how the Board has discharged its duties under
Section 172 of the Companies Act, please see pages 69 to 78 of the
Strategic Report.
Relations with shareholders
We believe that regular and ongoing engagement with our key
stakeholders and, in particular, our shareholders is central to good
corporate governance. The Group’s Investor Relations (IR) function,
reporting to the Chief Financial Officer, manages a shareholder
engagement programme throughout the year.
The Chair, Senior Independent Director and Chairs of each Board
Committee are available to engage with major investors, typically to
discuss corporate governance matters. In 2023, the Chair engaged
with shareholders on matters including sustainability, remuneration
and Board composition, as well as performance against the Company’s
strategy. The Chair of the Remuneration Committee consulted with
major shareholders and proxy voting agencies to understand their
views on the proposed approach for our Remuneration Policy and key
executive remuneration decisions. Further details and the outcome of
this engagement are included within the Directors’ Remuneration Report
from page 117.
Senior management and the Investor Relations (IR) team engage with
investors to discuss strategy, performance, sustainability and other
matters. We continued to ramp-up investor engagement in 2023
and demand for the stock proved to be strong, with the Blackstone
consortium executing three successful share placings during the course
of the year, each of which was significantly oversubscribed. In total,
the former Refinitiv owners successfully placed over £6 billion worth of
LSEG stock in 2023. Across the year, we held over 470 engagements
with institutional equity and debt investors (significantly higher than the
FTSE 100 average), with interest primarily from the UK and USA but
with increasing interest from countries such as Canada and Australia
as we look to broaden our outreach more globally. Senior executive
management and the IR team took part in 9 conferences this year,
across the US, Canada, the UK and Continental Europe, hosted by
banks or industry organisations.
As well as expanding our conference schedule, we also ran a number
of roadshows with executive management both internationally and in
the UK as we continued to step up our efforts to explain our investment
case and strategy to a wider range of prospective global investors.
We achieved broad coverage of our existing register, meeting with
over 85% of our active shareholder base.
In 2022, we ran a comprehensive investor perception study through our
external advisers, Makinson Cowell. One of the key pieces of feedback
from that study was that investors expressed a desire for more deep
dives into the various businesses that make up the Group and to hear
more often from divisional management. In 2023, we held a landmark
two-day Capital Markets Event, at which we welcomed more than 90
institutional investors and sell-side analysts to our London headquarters.
Hundreds more watched the plenary presentations via a live webcast.
The guests were invited to hear presentations from our CEO, CFO, Head
of Data & Analytics and Head of Sales & Account Management, as well
as to take part in Q&A sessions with management teams from across
our business in break-out sessions. Feedback on the event was very
positive. From those who provided feedback scores, 92% of attendees
said they found the event useful. In addition, 90% of attendees said they
now think of LSEG more as an information services company than an
exchange, representing the shift in LSEG’s market perception since the
acquisition of Refinitiv.
The Board receives a report on IR matters at each of its scheduled
meetings, including feedback from investors, market expectations
of financial performance and updates on share register composition.
Sell-side analyst research notes on LSEG are regularly circulated
through the business, including to the Board and senior executives. The
Group’s corporate brokers also provide the Board with advice on market
sentiment, input on market communications and share register analysis.
In addition to information on financial and operational performance,
the Group engages with shareholders and relevant shareholder
advisory agencies on environmental, social and governance (ESG)
matters. The Group produces an annual Sustainability Report that details
its approach to ESG matters: www.lseg.com/investor-relations/sustainability.
Our AGM provides the opportunity for all shareholders to meet
and to put questions to the Board of Directors. Our 2023 AGM was
held on 27 April 2023 at Butchers’ Hall in London and provided the
opportunity for all shareholders to meet and put questions to the
Board of Directors.
The IR section of the Group’s website (www.lseg.com/investor-relations)
is a primary source of regularly updated information about the Group.
All financial reports and statements, regulatory news service
announcements and disclosures, presentations and other relevant
documents are available on the website, together with a list of analysts
producing research on the Company and a summary of analysts’
forecasts of performance. Recognising that joining our preliminary and
interim results conference calls is not always possible, recordings of
these calls are accessible to all shareholders via the Group website.
Corporate governance report continued
London Stock Exchange Group plc
Annual Report 2023
100
Workforce engagement
The Board believes that having a diverse workforce makes us more
dynamic, fosters innovation and boosts performance. The Board
continues to support the goals for senior leadership set by management
which include goals for ethnic diversity and gender diversity. The Board
regularly tracks progress against these through Equity, Diversity &
Inclusion. Further information on Equity, Diversity & Inclusion can
be found in our Sustainability section on page 61.
Information on workforce engagement can be found in the Stakeholder
Engagement section on pages 71 and 72. The Board believes that the
direct and indirect engagement it undertakes with the workforce, as well
as the range of engagement activities that it has undertaken during the
year, as described in the stakeholder engagement section, are effective
and have facilitated meaningful, two-way dialogue between the Board
and employees. The forms of engagement undertaken during the year
have enabled the Board to hear from a broad range of our workforce
across our regions and at different levels of seniority and role type,
given the size and global footprint of the Group.
Board independence
The Board has evaluated the independence of all the Non-Executive
Directors. In assessing each Director, the Board considers whether there
are relationships or circumstances which are likely to affect or could
appear to affect a Director’s judgement.
Martin Brand was appointed to the Board as a Non-Executive Director
in 2021. Martin represents Blackstone in accordance with the terms of
the Relationship Agreement, which is considered to be a significant
shareholder of LSEG.
Scott Guthrie was appointed to the Board as a Non-Executive Director
with effect from 1 February 2023. Scott represents Microsoft Corporation
and was appointed in connection with the strategic partnership
(for further information please see pages 18 and 19).
The Board agreed that Martin and Scott would not be considered
independent under the Code given their relationships with Blackstone
and Microsoft respectively. They are not members of the Audit,
Remuneration or Risk Committees.
The Board has evaluated the independence of the other Non-Executive
Directors and concluded that each are independent in character and
judgement. The Chair was independent on appointment.
In line with the Code, at least half the Board, excluding the Chair,
are independent Non-Executive Directors. All Directors are subject
to annual re-election at the Company’s AGM.
Matters considered by the Board
Each of the regular meetings includes a wide-ranging report from the
Chief Executive Officer, together with reports from the Chief Financial
Officer on the Group’s financial performance and the Chief Operating
Officer on the continued progress of the Refinitiv integration programme,
the Group’s transformation programme and Group operations. Reports
from the Committee Chairs and updates on major projects were also
provided at each Board meeting.
During the year, the key matters considered by the Board included
the following:
Customers
— Customer matters, including meetings with customers and key
account executives during the Board visit to Paris. This included
deep dives on key customer relationships; FX strategy; and the
development of product solutions to meet customer needs.
— Updates on customer metrics and key customer initiatives.
— Reviews of new products and services, including the non-deliverable
forward product, the Group’s first global FX trading venue launched
in Singapore in November 2023.
— Deep dive focusing on the relationship with banks as customers and
suppliers of finance to the Group.
— Review of brand transformation programme.
Strategy, execution and integration
— Regular updates on progress against the strategic objectives,
capital expenditure and investment projects and key projects
and programmes.
— Regular updates on the strategic partnership with Microsoft for
next-generation data and analytics and cloud infrastructure.
— Regular updates on the Refinitiv integration, including in relation
to achieving the stated targets and synergies, customer matters,
people and culture, transformation and technology.
— Approval of M&A transactions, including the acquisition of
Euronext’s 11.1% stake in LCH SA.
— Annual Board strategy day at which the Group’s strategy was
considered and approved.
Sustainability
— Review and approval of the sustainability strategy.
— Considered and challenged updates on sustainability matters and
the Group’s position on sustainability as well as progress achieved
against strategy.
— Agreed the key areas of focus for the sustainability programme
in 2024.
— Review and approval of the annual Sustainability Report,
Climate Report (including TCFD Report) and the Modern Slavery
and Human Trafficking Statement.
— The Audit Committee held a training session on climate reporting
which all Board members were invited to attend.
Corporate governance report continued
101 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
People and culture
— Review of the updated People strategy, culture at LSEG and deep
dives on talent and capabilities.
— Received updates on employee welfare, including benefits and
wellbeing offerings, compensation reviews targeting cost of living
challenges; and enhancements to the global diversity, equity and
inclusion strategy.
— Updates on employee wellbeing as a result of the geopolitical events
that took place in the year, including the ongoing conflicts in Ukraine
and Israel.
— Reports from Directors on their engagement with colleagues across
the Group. The Board reiterated that management should take
appropriate action in response to the feedback from colleagues.
Further information can be found in the stakeholder engagement
section on pages 71 and 72.
— Discussion of the results of the annual LSEG Engage survey.
The Board endorsed the actions proposed by management in
response to the feedback from the workforce.
— Challenged management on the new values and received updates
on the launch and reception of these. Further information can be
found on page 60.
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 a broad range of issues pertinent to the Group’s business.
— Proposal of the 2022 final dividend of 75.3 pence per share, which
was subsequently approved by shareholders on 27 April 2023.
The Board also approved the 2023 interim dividend of 35.7 pence
per share which was paid to shareholders on 20 September 2023.
— Approval and completion of a directed share buyback programme
to purchase £750 million of limited-voting ordinary shares from the
Blackstone-Thomson Reuters consortium.
— Approval of the new medium-term guidance, announced in November
2023, which included mid to high single-digit organic revenue growth
annually. The Board also approved a simplified dividend policy.
— Approval of the return of £1 billion to shareholders via share buybacks
in 2024.
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, including
cyber security.
— 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 2023, it participated in a number of sessions relating to the strategic
partnership with Microsoft, a number of the Group’s businesses and key
strategy-related briefings during the Board visit to Paris. This included
focused sessions on trading and banking in EMEA, Capital Markets
in Europe and technology operations in Europe. It also held training
sessions on UK Market Abuse Regulations and the Listing Rules.
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, regulatory matters, succession planning,
customers, technology and migration to the cloud and capital allocation.
Corporate governance report continued
London Stock Exchange Group plc
Annual Report 2023
102
Board effectiveness and leadership
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.
2022 Effectiveness Review
The 2022 Effectiveness Review was facilitated externally and identified areas where the Board considered further focus would be needed during
2023. These are summarised below, together with the resulting actions taken in 2023.
Area Description Summary of actions taken
Board
knowledge
Gain further understanding of certain areas,
including teach-ins on each Division of the
Group, moving to the cloud and acquisitions
The Board participated in a number of deep dive sessions which were focused
on enhancing their understanding in the key areas flagged in the previous review.
Board,
executives,
and deeper
relationships
Deepen the Board relationship with the
Executive Committee
The Board continued efforts to deepen its relationship with the Executive Committee
throughout the year both on a group and individual basis. This included attendance
by an Executive Committee member at each Board meeting and inviting members of
the Executive Committee to join the Board’s visit to the Paris office.
The Board also met with Erica Bourne, Satvinder Singh and Ron Lefferts following
their appointments to the Executive Committee, and notably, all presented at Board
meetings during 2023 and at the Board strategy day.
Board
composition
and
succession
planning
Board to consider the priorities for
future composition
As reported in its Report on pages 106 to 107, the Nomination Committee continued
to monitor succession planning to ensure an appropriate schedule is in place to
effectively manage future Board composition. During the year, the Committee
recommended, and the Board approved, the appointment of Michel-Alain Proch as
Group CFO and Executive Director. Michel-Alain joined LSEG on 26 February 2024
and becomes CFO and Executive Director on 1 March 2024. For more information,
please see the Nomination Committee report on pages 106 to 108.
Stakeholders Board to identify further opportunities to engage
with shareholders, including their views on LSEG
and growth; and customers, including a deeper
understanding of customer needs and the data
that is most valuable to them
The Board engaged with various stakeholders during 2023, including customers,
employees and regulators. Further information on this can be found in the Board
engagement with stakeholders section on pages 69 to 74.
2023 Effectiveness Review
In 2023, the Board undertook an internal evaluation of the performance
of the Board, its Committees, the Chair and the individual Directors.
The evaluation process was conducted by the Group Company
Secretary using a detailed questionnaire provided by an external
provider, Lintstock.
The 2023 effectiveness review sought the views of Directors on the
effectiveness of the organisation and dynamics of the Board and
its Committees, the papers and topics covered at the Board and
Committee meetings, the purpose and culture of the business,
stakeholder engagement, the relationship between the Non-Executive
Directors and management, the current and future composition of
the Board, the oversight of risk management and internal controls,
and the leadership of the Board.
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 2024 were agreed.
As part of the 2023 effectiveness review, the Senior Independent
Director led a review of the performance of the Chair, using a similar
form of questionnaire provided by Lintstock. The Chair meets with
Directors individually to discuss their performance.
The results of the effectiveness review will also be used to assist
in the future development of the Board, its Committees and its
individual Directors.
Results
The 2023 effectiveness review identified a number of positive
attributes including:
— Board composition and dynamics – current Board composition
and the relationships between the Non-Executive Directors and the
Executive Directors.
— Stakeholder oversight – the Board noted a significant improvement
in shareholder and investor oversight.
— Employee sentiment/culture – Board employee engagement
sessions were well received.
— Board support – quality of Board governance and Board support was
highly rated.
— Strategic and operational oversight – the Board noted the improved
oversight in these areas.
— Risk management and internal control – rated positively overall,
however future areas of focus were identified (see next steps for
further information).
Overall, the review found that the Board and its Committees are
performing well and are effective. The results indicated that the Board
considers that it has the appropriate balance of skills, experience,
independence and knowledge to enable it and its Committees to
discharge their duties and responsibilities effectively.
Corporate governance report continued
103 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Next steps
The Board agreed that areas of focus for 2024 should be:
— Board Composition and Dynamics – to build on relationships
between the Non-Executive Directors and the wider executive team
particularly in the light of changes to the executive team.
— Stakeholder Oversight – having benefited from the time spent during
the year focusing on customers, the Board will seek to further
increase this in 2024.
— Strategic Oversight – the Board identified the following areas in
which focused time should be spent on furthering its understanding
and oversight capability:
— Technology, particularly technological change and the
D&A strategy;
— Delivery of the Microsoft Partnership and product development;
— External insights, particularly competitive dynamics; and
— Organisational capacity to deliver the strategy and continued
focus on the development of internal talent and pool of future
succession candidates.
— Risk Management and Operational Resilience – Oversight of
operational resilience will remain a key priority for the Board in 2024
which is seen as important for delivery of the Group’s ambitions and
for our customers.
The results of the effectiveness reviews of the Committees were
positive about the management and composition of the Committees
as well as the quality of the information received.
Committee 2024 areas of focus
Audit Committee
— Additional support and education in relation to sustainability
and in the business areas and associated risks.
— Ensuring a smooth transition of the external auditor from EY
to Deloitte.
Nomination Committee
— Continued focus on Board and Executive Committee succession.
— Performance and development of the Executive Committee.
— Broader focus on talent management across the Group.
Remuneration Committee
— Effectively delivering the new remuneration policy.
Risk Committee
— Provide further support and education around technology matters.
— Continued focus on operational risk management and further
improving resiliency.
Conflicts of interest
The Company’s Articles of Association allow the Board to authorise
conflicts of interest that may arise and to impose such limits or
conditions as it thinks fit. The Group has established procedures
whereby actual and potential conflicts of interest are regularly reviewed,
appropriate authorisation is sought prior to the appointment of any
new Director, and new conflicts are addressed appropriately.
The decision to authorise a conflict of interest can only be made by
non-conflicted Directors and, in making such decisions, the Directors
must act in a way they consider, in good faith, would be most likely to
promote the Company’s success.
Indemnities
Directors have the benefit of indemnity arrangements from the
Company in respect of liabilities incurred as a result of their office and
execution of their powers, duties and responsibilities. The Company
maintained a Directors’ and Officers’ liability insurance policy throughout
the year. This policy covers the Directors for any such liabilities in
respect of which they are not indemnified by the Company and,
to the extent to which it has indemnified the Directors, also covers the
Company. Neither the Company’s indemnity nor insurance provides
cover for a Director in the event that the Director is proved to have
acted fraudulently or dishonestly.
Risk management and internal control
The Board is responsible for ensuring the Group’s risk management
framework and internal control system is maintained and remains
effective. This covers all material controls, including financial, operational
and compliance controls. The Risk Management Framework prescribes
the extent of the principal risks the Group is willing to take to achieve its
long-term strategy. The internal control system safeguards the quality
and integrity of internal and external financial reporting as well as
operational, legal and regulatory compliance.
The system of internal controls is designed to facilitate the management
of the Group’s activities within the Board’s risk appetite. Rather than
eliminate the risk of failure to achieve the Group’s objectives, the system
of internal controls can only provide reasonable, but not absolute,
assurance against material control failures. The Board is committed to
maintaining a robust internal control system, with a view to continuously
maturing, embedding and optimising enhanced risk management
practices throughout the Group.
The Board delegates some of its responsibilities to the Audit Committee
and Risk Committee.
The Audit Committee regularly works alongside the Risk Committee
to monitor the adequacy and effectiveness of the Company’s internal
control systems and risk management systems. The Audit Committee
also monitors the effectiveness and objectivity of internal and external
auditors. The Audit Committee reports regularly to the Board on its
activities. In 2023, the Audit Committee reviewed the Group’s continued
work to further enhance and mature the internal controls environment,
despite the withdrawal of some proposals under the Government’s
planned Audit and Corporate Governance reforms. Further details on
the activities of the Audit Committee can be found on pages 109 to 114.
The Risk Committee assists the Board in fulfilling its responsibilities
by advising on risk strategy and overseeing the development,
implementation and maintenance of the Group’s Enterprise Risk
Management Framework (ERMF) and the Group Risk Appetite statement.
The Risk Committee reports regularly to the Board on its activities.
Further details on the activities of the Risk Committee can be found
on pages 115 and 116.
A summary of some of the Group’s Risk Management Frameworks and
internal controls are listed below:
Enterprise Risk Management Framework
The Board annually approves the Group’s ERMF. The ERMF sets out
a standard approach for managing risk across the Group. It ensures that
all risks are adequately understood and managed within risk appetite
across all levels of the Group. During 2023, the Risk Committee
reviewed the ERMF to identify areas of optimisation to further enhance
the maturity of the Group’s enterprise risk management. Further details
on the ERMF can be found in the principal risks and uncertainties
section from page 79.
Corporate governance report continued
London Stock Exchange Group plc
Annual Report 2023
104
Risk Appetite Statement
The Board approves the Group Risk Appetite Statement which outlines
the key concepts of risk appetite and risk tolerance that the Group will
accept in pursuit of its strategic objectives. It is determined in line
with the Group’s strategy. The Group Risk Appetite Statement allows
management to understand the potential risks associated with strategic
and operational decisions; assess whether the risk return on capital is
acceptable; and put in place mitigating actions to reduce risk exposure
to acceptable levels. It maintains the correct balance between risks and
rewards, thus ensuring the Group remains more resilient by taking better
informed decisions.
Financial Control Framework
LSEG has established a Financial Control Framework (FCF) that sets out
to develop and maintain a robust financial control environment, that
mitigates the risk of material financial misstatement, and helps protect
the Group against financial fraud. The FCF aims to ensure clear links
between the Group’s financial reporting risks and the associated
processes and control environment, making sure these are tested
and appropriately documented. The FCF is also focused on ensuring
the right culture and training is in place to support a risk-first mindset.
The Audit Committee receives regular updates on the progress being
made to enhance the FCF.
Financial reporting controls
Ahead of each reporting period end, the Group’s financial reporting
process is facilitated using accounting policies and reporting formats
and is supported by guidance issued to all reporting entities within
the Group. Management is responsible for maintaining the control
environment for financial reporting and ensuring policies and
procedures exist around the maintenance of records. The submission
of financial reports from each reporting entity is subject to a rigorous
review. Management must provide assurance regarding the reliability
and accuracy of the Group’s financial reports. The Audit Committee
reviews the application of the Group’s accounting policies as well as
significant accounting judgements and estimates. It also reviews the
externally reported interim and full-year results and satisfies itself that
these are fair, balanced and understandable.
Internal Audit
The Board, together with the Audit Committee, is responsible for
ensuring the independence and effectiveness of the Internal Audit
function. Internal Audit’s primary function is to provide independent and
objective assurance to the: Board; Audit Committee; and executive
management on the adequacy and effectiveness of the Group’s system
of internal controls. The Internal Audit function provides opinion and
challenge on the control environment and provides assurance on the
Group’s ERMF. Internal Audit provides an opinion on the adequacy
and effectiveness of the Group’s framework of governance, risk
management and controls on an annual basis. This is achieved through
a programme of assurance over key risks applicable to the Group and
audits required by regulation. To ensure independence, the Internal
Audit function sits within the third line of defence in the Group’s risk
control structure and has no operational responsibilities for the legal
entities or processes which it reviews.
The independence of the Internal Audit function from executive
management is protected by the following measures:
— The Chief Internal Auditor reports directly to the Chair of the
Audit Committee and has direct access to the Chair of the Board.
For administrative matters she has a secondary reporting line to
the Chief Executive Officer (CEO).
— The Chair of the Audit Committee and CEO jointly assess the
performance of the Chief Internal Auditor.
— The Audit Committee approves the Internal Audit Charter and
annual budget.
Further details on the Internal Audit function can be found in
the internal audit charter which is available on the Group’s website
at https://www.lseg.com/en/about-us/corporate-governance
Policy Governance Framework
The Group is committed to operating within a robust 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 within Group policies are
addressed and ensures all Group policies comply with the PGF.
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
over material matters that 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 subcommittees: the Financial, Investment
& Capital Committee (FICC); and the Executive Risk Committee (ERC).
The remit of the FICC is wide ranging and includes: 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 2023 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
systems are sufficient given the Group’s risk profile, risk appetite 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 79 to 88.
Corporate governance report continued
105 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Throughout the financial year ended 31 December 2023 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 32. Provision 32 of the Code states that the Chair of the
Remuneration Committee should have served on a remuneration committee for at least 12 months before becoming chair. William Vereker was
appointed as Chair of the Remuneration Committee on 14 September 2023, having served on the Committee since 3 October 2022. William Vereker
is an experienced Board member with significant knowledge of financial services, regulatory matters and corporate governance. The Board agreed
that William was suitably qualified to take on the role of Remuneration Committee Chair and to oversee the review of the Remuneration Policy.
The decision to appoint William as Committee Chair shortly before 12 months of experience on a remuneration committee was taken to allow
William to lead the Committee on the proposed changes to the Remuneration Policy, including consultation with shareholders. He is supported
in his role by the other Committee members, including Cressida Hogg, the previous Chair of the Remuneration Committee.
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 98
B. Company purpose, values and strategy Our purpose and strategy 26-27, 60
C. Resources and prudent and effective controls Corporate governance report 98, 103
D. Effective engagement with stakeholders Board engagement with stakeholders 69-74, 99
E. Workforce policies and practices Sustainability 60-62
2. Division of responsibilities
F. Leadership of the Board Corporate governance report 98
G. Board composition and clear division of responsibilities Corporate governance report
94-98,
100
H. Role and time commitment of Non-Executive Directors Report of the Nomination Committee 107
I. Policies, processes, information, time and resources, and support of the Company Secretary Corporate governance report
98,
102-103
3. Composition, succession and evaluation
J. Board appointment process and effective succession planning Report of the Nomination Committee 106-108
K. Board and committee skills, experience and knowledge Board of Directors
94-97,
106-108
L. Annual board and individual director evaluation Corporate governance report 102-103
4. Audit, risk and internal control
M. Independence and effectiveness of internal and external audit function Report of the Audit Committee 112
N. Fair, balanced and understandable assessment of Company’s position and prospects Report of the Audit Committee 114
O. Procedures to manage risk, oversee internal control framework and determine nature
and extent of principal risks
Principal risks and uncertainties,
Corporate governance report
79-88,
103, 104
5. Remuneration
P. Remuneration policies and practices Report of the Remuneration Committee 126, 128
Q. Procedure for developing policy on executive, Director and senior management remuneration Report of the Remuneration Committee 127-128
R. Independent judgement and discretion in remuneration outcomes Report of the Remuneration Committee 121-122
Complying with the provisions
of the Code
London Stock Exchange Group plc
Annual Report 2023
106
Report of the
Nomination Committee
Key areas of focus for the
Committee in the year were
Board composition, succession
planning and the appointment
of Michel-Alain Proch as Chief
Financial Officer and Executive
Director. This report describes
the work of the Committee.
Don Robert
Chair of the Nomination Committee
Achievements for 2023
The priorities set by the Committee at the start of the year were:
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 a significant
number of changes in quick succession.
3. Continue to keep Executive Committee succession planning
under review.
Composition and meetings
The Committee’s membership is composed of all 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 both 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 94 to 97 of this report.
The Group Company Secretary is the Secretary to the Committee
and attends all meetings. The Group Chief Executive Officer (CEO),
Chief People Officer and external advisers attend where requested by
the Committee.
Committee purpose and responsibilities
The Nomination Committee is responsible for monitoring the balance of
skills, knowledge and experience as well as the diversity of the Board.
It is also responsible for making recommendations of new appointments
to the Board and overseeing Board and senior management succession
planning. Further details on the responsibilities of the Nomination
Committee can be found in the Committee’s terms of reference
which are reviewed annually and available on the Group’s website at:
https://www.lseg.com/en/about-us/corporate-governance.
The Committee met four times during the year and, in addition,
Committee members also met with Director and senior management
candidates. I am pleased to confirm that the Committee’s priorities
have been met, as described in this report.
Key activities in the year
Board succession planning and Board appointments
The Board recognises the need to regularly refresh the balance of skills,
tenure and diversity on the Board. 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. Appointments to the Board are subject to a formal,
rigorous and transparent procedure.
107 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Following the announcement on 25 May 2023 that Anna Manz
would step down from the Board as CFO and Executive Director, the
Nomination Committee approved the appointment of Russell Reynolds,
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 CFO and Executive Director. The Committee approved
an outline brief and role specification and Russell Reynolds was
instructed to produce a diverse list of candidates for consideration.
David Schwimmer provided regular updates to the Board and the
Committee on the progress of the search. Shortlisted candidates were
interviewed by the CEO, the Chair and members of the Executive
Committee. The final two preferred candidates met with Cressida Hogg,
Dominic Blakemore and William Vereker, the Senior Independent
Director, Chair of Audit Committee and Chair of Remuneration
Committee, respectively. Other members of the Nomination Committee
were also then invited to meet with the preferred candidate. Following
this interview process, the Nomination Committee recommended, and
the Board approved, the appointment of Michel-Alain Proch as CFO and
Executive Director. Michel-Alain joined the Group on 26 February 2024
and will become CFO and Executive Director with effect from 1 March
2024. Michel-Alain brings deep experience across global, financial
infrastructure and IT data solutions firms. He was previously CFO for
Publicis Groupe SA where he led the global finance team across 100
countries. Prior to this, he held several listed company CFO positions,
including at Ingenico and Atos, where he was also CEO, North America
and Group Chief Digital Officer. Michael-Alain serves as Vice-Chairman
of the Board, Maisons du Monde and Non-Executive Director of Pluxee.
As disclosed in last year’s Nomination Committee report, the Company
announced a 10-year strategic partnership with Microsoft and that
as part of the partnership Scott Guthrie, Microsoft’s Executive Vice
President, Cloud and AI Group, joined the Board on 1 February 2023.
Scott’s appointment was approved by shareholders at the AGM in April
2023. In accordance with the terms of the Relationship Agreement,
Erin Brown, representative of Thomson Reuters, stepped down from
the Board on 17 March 2023, and Doug Steenland, representative of
Blackstone, stepped down from the Board on 20 September 2023.
The Board thanks Erin and Doug for their contribution to the Board
since the acquisition of Refinitiv in 2021.
Senior management appointments
During the year, the Committee met with the CEO and Chief People
Officer to review succession plans and the pipeline for successions
for executive management including consideration of diversity.
As described on page 14 there were a number of changes to the
Executive Committee during the year and the Board Chair, Don Robert,
participated in the interview and selection process as well as other
Committee members as appropriate. The Committee continues to
support the CEO in executive succession planning, for emergency cover
and longer-term appointments and the Committee regularly challenges
the CEO on diversity and inclusion in regard to senior management
succession planning.
The Group Executive Committee is formed of individuals from a diverse
range of backgrounds. As at 31 December 2023, 38% of the Executive
Committee members were female and 15% were from an ethnic minority
background. The names and biographies for the Group Executive
Committee can be found on page 15 of this report.
The Group is committed to seeking broader diversity in our leadership
with the aim of having more representation from different ethnic and
other backgrounds at Executive and Group Leader level. With respect
to under-represented ethnic and racial groups, we did not achieve our
goal to reach 20% within the leadership community by the end of 2023,
closing the year at 14%. We remain focused on making progress through
leadership development programmes for underrepresented talent. For
more information on the actions we are taking, refer to page 26 of our
2023 Sustainability 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 Anna Manz and Ashok Vaswani. The
Committee and/or the Board agreed that the proposed appointments
at AstraZeneca PLC and Kotak Mahindra Bank, respectively, would
not create any material conflict of interest. Both Directors were
simultaneously giving up an existing Board position so their overall
number of directorships would remain the same. They were therefore
able to confirm that they would have sufficient time to undertake these
new roles in addition to existing commitments.
Board effectiveness
The results of the 2023 Board effectiveness review are described on
pages 102 and 103. Ensuring the skills and experience on the Board
were of the appropriate mix was a key area of focus for 2023, 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 102
and 103. 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 the expertise required and for enabling 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.
The Board reviewed and approved its Board Diversity Policy which
outlines the importance of diversity of gender, social and ethnic
backgrounds, and of cognitive and personal strengths to the Board.
The Policy is available on the Group website at https:// www.lseg.com/
en/about-us/corporate-governance.
As at 31 December 2023, the Board met all of the targets set out in the
Financial Conduct Authority’s Listing Rule 9.8.6R(9)(a). The table overleaf
sets out the diversity data of the Board and executive management as at
31 December 2023.
Report of the Nomination Committee continued
London Stock Exchange Group plc
Annual Report 2023
108
Reporting table on sex/gender representation as at 31 December 2023
Number of
Board members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO,
SID and Chair)
Number in
executive
management
1
Percentage of
executive
management
1
Men 7 58 2 8 62
Women 5 42 2 5 38
Not specified/prefer not to say 0 0 0 0 0
Reporting table on ethnicity representation as at 31 December 2023
Number of
Board members
Percentage
of the Board
2
Number of
senior positions
on the Board
(CEO, CFO,
SID and Chair)
Number in
executive
management
1
Percentage of
executive
management
1
White British or other White (including minority white groups) 10 83 4 10 77
Mixed/Multiple Ethnic Groups 0 0 0 0 0
Asian/Asian British 1 8 0 2 15
Black/African/Caribbean/Black British 1 8 0 0 0
Other ethnic group including Arab 0 0 0 0 0
Not specified/prefer not to say 0 0 0 1 8
Ethnicity data reflects countries where LSEG collects this information.
1 Defined as the Executive Committee and the Company Secretary in accordance with Listing Rule 9.8.6R(10).
2 Rounded percentages sum to 99%. To 1 decimal place, percentages would be 83.3%, 8.3% and 8.3%.
Board diversity data is collected directly from each Director using
a questionnaire and was provided on a self-identifying basis.
At the end of 2023, female representation on the Board was 42%.
The Board is also pleased to confirm that it has met the Parker Review
recommendations and included two Directors from minority ethnic
backgrounds. Throughout 2023, two of the four senior positions on the
Board were held by women. Following the resignation of Anna Manz
and the appointment of Michel-Alain Proch, female representation will
be below 40%. The Board will continue to seek to ensure that these
goals are met in the longer term.
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 met the stretch goal of reaching 40% female
representation in our senior leadership population by the end of 2022.
We have also made progress during the year on improving gender
diversity within the subsidiary companies of the Group, which has
increased to 32% (2022: 25%).
In 2023 we developed an enhanced methodology to help us review our
equity, diversity and inclusion goals to ensure they remain relevant and
appropriate, and have used this to set new goals for 2024 and beyond:
— Gender: maintain at least 40% of women in senior leadership
(ExCo and Group Leaders) going forward
— Ethnicity: 25% underrepresented ethnic groups in senior leadership
roles (ExCo and Group Leaders) by 2027.
LSEG is a member of the Valuable 500, 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 Sustainability section on page 61.
Priorities for 2024
The priorities set by the Committee for 2024 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 2023
Board and Committee effectiveness review, facilitated internally via
a questionnaire provided by Lintstock. Further details can be found in the
Governance section of this report on page 102. The result of the review
was that the Committee is performing well and operating effectively.
Don Robert
Chair
28 February 2024
Goal achieved for women in senior leadership roles 2023
40%
Report of the Nomination Committee continued
109 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Report of the
Audit Committee
A key focus for the Audit
Committee this year was the
changing regulatory and corporate
governance landscape. The
enhancements to the Group’s
financial control framework,
and the plans around sustainability
assurance, were therefore
important topics during the year.
Dominic Blakemore
Chair of the Audit Committee
Achievements for 2023
The main achievements of the Audit Committee in 2023 were:
— reviewing and recommending to the Board the full-year and half-year
2023 results and approving the associated key accounting
judgements and estimates;
— reviewing and approving our Annual Report and Accounts;
— oversight of the 2023 external audit;
— monitoring and reviewing several financial matters including
acquisitions and the progress of specific uncertain tax provisions;
— reviewing the progress against the plan to create a leading financial
control framework;
— reviewing the broader landscape for sustainability and climate risk
reporting as well as Audit and Corporate Governance Reform and the
Group’s plans for ensuring it remains compliant with future changes to
the reporting requirements;
— the completion of the audit tender process and decision to appoint
Deloitte LLP as the Group’s new external auditor; and
— oversight of the progress of the transition to the new external auditor.
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; and
— approving the external audit fees, monitoring non-audit fees paid to
the external auditor and ensuring that the external audit is put out to
tender on a periodic basis.
Further details on the functions and responsibilities of the Committee
can be found in the Committee’s Terms of Reference which are
reviewed annually and are available from the Group Company Secretary
or in the corporate governance section of the Group’s website at:
https://www.lseg.com/en/about-us/corporate-governance.
The Audit Committee Terms of Reference were updated and approved
by the Board during the year to align with the Financial Reporting
Council’s (FRC) new Audit Committee Minimum Standard and to include
responsibility over certain non-financial reporting requirements including
sustainability disclosure.
This report considers how the Committee has fulfilled its responsibilities
during the year.
London Stock Exchange Group plc
Annual Report 2023
110
Report of the Audit Committee continued
Committee membership and attendance
The Committee comprises four (2022: four) Independent Non-Executive
Directors. All Committee members have been in place for the full year.
The skills and experience of each Committee member are provided in
the Board of Directors section on pages 94 to 97. The UK Corporate
Governance Code (the “Code”) requires that at least one member of the
Committee should have recent and relevant financial experience and
that members shall have competence relevant to the sector in which the
Company operates. The Committee members have a wide range of
experience. The Chair of the Committee, Dominic Blakemore, is a
qualified chartered accountant with a career in a variety of senior
finance roles. The Chairs of the Audit and Risk Committees each sit
on both committees, which makes sure that issues relevant to both
committees are identified and managed.
The Committee’s effectiveness was assessed as part of the 2023 Board
effectiveness review. More details on the Committee’s effectiveness can
be found in the Governance section of this report on pages 102 to 103.
The Group Chair, Group Chief Executive Officer, Group Chief Financial
Officer, Group Financial Controller, Group Chief Risk Officer, Group Chief
Internal Auditor, and representatives of the external auditor, EY LLP (EY),
are all regular attendees at Committee meetings. Representatives of
Deloitte LLP (Deloitte) also started to attend Audit Committee meetings
ahead of their formal appointment as auditors to the Group in 2024.
Other members of management may also be invited to present
specific matters. The Group Company Secretary is the Secretary to
the Committee.
In addition to formal meetings, the Chair of the Committee and some
Committee members met with senior management during the year.
The Chair of the Committee also meets separately with the external
auditor, as required, ahead of each meeting.
Activities during the year
Below we set out the main work undertaken by the
Audit Committee covering:
1. Financial reporting;
2. Internal controls, internal audit and risk management;
3. Oversight of the external auditor; and
4. Other activities in the year.
1. Financial reporting
Significant accounting judgements, estimates and assumptions and
matters related to the financial statements
The Committee reviewed, discussed and approved the half-year
and full-year financial results, significant accounting judgements and
estimates and the adequacy of disclosures. The main topics considered
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 Acadia and Yieldbroker
During 2023, the Group completed two significant acquisitions.
This required the valuation of acquired tangible and intangible assets,
including customer relationships, technology and goodwill.
The fair value of acquired intangible assets and resulting goodwill
recognised on acquisition are subject to significant estimates. These
include the future performance of the acquired business and the rate
of return required to determine an appropriate discount rate (in order
to calculate the net present value of the assets acquired).
The Committee reviewed the acquisition accounting for each significant
acquisition, including:
— determination of the consideration paid;
— assessment of arrangements for any contingent payments;
— identification and valuation of acquired net assets with a particular focus
on intangible assets;
— resulting goodwill; and
— alignment with LSEG accounting policies.
The Committee satisfied itself that goodwill and purchased intangibles had
been recognised appropriately.
See note 9 to the financial statements on pages 195 to 199.
Measurement of acquired intangible assets, including goodwill
The Group carries significant amounts of goodwill and acquired intangible
assets on its balance sheet. In line with IAS 36 Impairment of Assets,
goodwill allocated to the Group’s cash-generating units is assessed
for impairment. An assessment of the useful life and amortisation method
was performed for certain acquired intangibles, for which there were
indicators that a change in amortisation method or amortisation period
may be required.
Impairment tests for the Group’s CGUs are based on value-in-use
calculations which require significant estimates over:
— future performance;
— growth rates; and
— discount rates.
The Committee considered the approach and methodology to performing
the detailed annual CGU impairment assessment. This included reviewing
key assumptions:
— cash flow expectations;
— short- and long-term growth rates; and
— discount rates used for the CGU’s cost of capital.
Given the significant changes in inflation and interest rates during the year,
the Committee was particularly focused on the growth rate assumptions and
the discount rates used.
The Committee considered and approved the change in amortisation
method of particular purchased software intangible assets as well as
changes in useful life for certain assets.
See note 9 to the financial statements on pages 195 to 199 for details of
the impairment review.
Capitalisation and subsequent impairment of internally
developed software
The Group continues to develop and capitalise significant levels of
software. The capitalisation of software development costs involves
management judgement against criteria set in IAS 38 Intangible Assets.
The Committee reviewed the methodology used to capitalise software
development costs and satisfied itself that it was adequate and in conformity
with IFRS.
The Committee also considered possible indicators of impairment for
significant internally developed software.
The Committee approved the recognition of £10 million of internally
developed software asset impairment in the year.
111 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Matter considered How the Committee addressed the matter
Revenue recognition
The Group generates revenue from a variety of sources that are material
in size and volume. Judgements are applied to the timing of revenue
recognition and year-end revenue accruals, particularly across
subscription revenues, primary markets admission fees, deferred listings
revenue and FTSE Russell revenue accruals.
The Committee was satisfied that sufficient analysis had been performed
in this area to conclude that revenue has been recognised appropriately
and that there is no evidence that any manipulation of revenues has
taken place.
The Committee also reviewed the significance of judgements applied and
discussed any necessary disclosure requirements. It was concluded that
no judgement on revenue recognition required individual disclosure in the
Annual Report.
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 items at each Committee meeting with
a particular focus on the in-year developments below:
— 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 following partial
settlement agreed in the year.
— Russian tax audit The Committee discussed the audit by the Russian
Tax Authorities for the period 2018-2020, which the Group expects to
be settled locally on a similar basis to the settlement for the audit of the
period 2021-2022.
— Diverted Profits Tax: The Committee noted that HMRC’s review of two
of the three years had been completed, allowing for a reduction in the
associated provision.
The Audit Committee determined that the provisions and disclosure for
these matters are appropriate.
See note 6.3 to the financial statements on page 193 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 2.3 to the financial statements
on page 181).
The Committee discussed and agreed on the classification of non-
underlying items in the financial statements for the year. In particular, the
Committee discussed the nature and amounts of:
— transaction costs;
— integration and separation costs;
— restructuring costs;
— remeasurement gains; and
— amortisation of purchased intangibles, mainly linked to the acquisition of
Refinitiv in 2021.
The Committee increased the financial threshold for items to be
considered as non-underlying, to ensure that only significant items,
and those not in the ordinary course of business, are treated as
non-underlying. The Committee discussed the quality of earnings in
relation to the Group’s adjusted operating profit.
See note 2.3 to the financial statements on page 181.
Pensions
The Group operates four defined benefit pension schemes and
recognises a net surplus in relation to these schemes on the Group
balance sheet. For the Group’s defined benefit schemes, judgement is
applied to the amount of the retirement benefit assets recognised on the
balance sheet. The defined benefit pension liabilities recognised are
determined based on the present value of future benefit obligations
using assumptions determined by the Group with advice from an
independent qualified actuary.
The Committee considered the approach for the value of the retirement
benefit assets and the assumptions applied in the calculation of the
retirement benefit obligations.
The Committee assessed the full buy-in policy for the LSEG Pension
scheme and the impact on the retirement benefit surplus.
The Committee was satisfied with the approach and assumptions applied
by management and that a defined benefit surplus can be recognised.
See note 12 to the financial statements on pages 203 to 207.
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);
— a report on the Group’s plan to comply with the UK Government’s
Audit and Corporate Governance reform;
— three progress updates on the programme to create a single and
leading 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; and
— the external audit management letter from EY. The letter highlighted
areas for improvement which were noted by the Committee for
follow-up.
During the year, the Committee received an update on the Internal Audit
function, which included:
— the development of a refreshed target operating model to reflect the
enlarged business and global footprint. The Committee endorsed the
approach for building out the global audit function;
Report of the Audit Committee continued
London Stock Exchange Group plc
Annual Report 2023
112
Report of the Audit Committee continued
— a review of Internal Audit’s balanced scorecard; and
— the Results of Quality Assurance activities undertaken during the year.
Impact of acquisitions and disposals on the risk landscape
As a result of the acquisitions throughout the year, the internal audit
universe was updated to reflect the changed organisation. As part of
annual planning, an inherent risk assessment was undertaken which,
alongside regulatory requirement for internal audit work, guided the
audit plan for 2023 and, similarly, the plan for 2024.
Management is undertaking significant work to ensure that the risk
landscape is fully understood and that appropriate controls are in
place to mitigate risk to within the firm’s stated risk appetite over
time. This work will be supported by the Risk function and by Internal
Audit, both of whom are building out resources to support the
necessary oversight and assurance.
Internal Audit provides independent assurance on the design and
effectiveness of controls that support first line business activities as well
as the Group’s risk management and governance frameworks. Internal
Audit adopts a risk-based audit approach that prioritises providing
assurance over the management of key risks that may impact the Group.
As regards the work of Internal Audit, the Committee:
— monitored Internal Audit’s progress against the 2023 Audit Plan,
including reviewing and approving any changes to the plan during
the course of the year;
— in December 2023, considered and approved the 2024 Internal Audit
plan and budget and is satisfied that the plan is appropriate;
— received the annual Internal Audit Opinion which sets out the
function’s view on the effectiveness of the Group’s control
environment and risk culture as well as themes and root cause
analysis arising from audit work performed;
— received updates on emerging audit issues and themes during
the course of the year;
— tracked management’s progress to address actions within
reasonable timeframes;
— approved the Internal Audit Charter which remained consistent
with the prior year;
— tracked the implementation of functional improvement actions which
followed from the 2022 External Quality Assurance review, which
confirmed that Internal Audit generally conforms with applicable
Internal Auditing standards; and
— received a report from the Head of Audit Practices and Operations
on the results of the function’s Quality Assurance activities.
The Committee obtained additional comfort by meeting with the Group
Chief Internal Auditor at each Committee meeting without executive
management present. In addition, the Group Chief Internal Auditor
meets regularly with the Chair of the Audit Committee. The Group
Chief Internal Auditor continues to report to the Audit Committee Chair
with a secondary reporting line to the Group Chief Executive Officer.
This is consistent with industry guidance.
The activities of the Committee relating to internal controls enabled it to
satisfy itself that the Internal Audit function is independent, objective
and adequately staffed to perform its duties. In addition, the Committee
assessed the effectiveness of the Internal Audit function throughout the
year using qualitative and quantitative indicators including:
— the Internal Audit balanced scorecard which is presented at each
Committee meeting and reflects key performance indicators relating
to internal audit plan delivery, quality assurance results, staff
engagement and resourcing, as well as the financial management
of the function;
— completeness of the audit plan against the agreed coverage model;
— quality of the audit reports and the issues raised;
— root cause insights on the issues raised and feedback from executive
management on specific audits; and
— other performance indicators such as the distribution of audit
ratings, percentage of past due actions and percentage of
self-identified issues.
The Committee concluded that the Internal Audit function is both
independent and effective, in line with principle M of the Code.
In addition, the Committee (in conjunction with the Risk Committee)
relied on this assurance process throughout the year to recommend to
the full Board that it could report to shareholders on the effectiveness
of the Group’s internal control and risk management systems. This
assurance satisfies principle O of the Code. The Board statement can
be found on page 104.
3. Oversight of the external auditor
The Committee has primary responsibility for overseeing the
relationship with the external auditor. This includes recommending
the auditor’s appointment at the AGM, continuous assessment of the
auditor’s independence, the effectiveness and quality of the audit,
approving the statutory audit fee and non-audit services, reviewing and
approving the annual audit plan and meeting with the external auditor
to review any issues and the findings of the audit.
The Committee reviewed and approved the 2023 audit plan presented
by EY. This included the scope of the audit, the assessment of the key
audit risks and areas of focus as well as the materiality threshold for the
Group and the threshold for reporting unadjusted differences. Reports
from EY on the status of their 2023 plan and the results of their work,
as well as EY’s own assessment of their independence, were received
throughout the year. The external auditor’s reports were discussed at
each Committee meeting and their views and opinions used to
challenge decisions by the Group.
The Committee assessed the effectiveness of the external audit
throughout the year in accordance with principle M of the Code.
The Committee relied on its own judgement supported by the
following evidence:
— a report from management on their own evaluation of the
effectiveness of the external auditor based on a questionnaire
prepared in accordance with the Financial Reporting Council’s (FRC’s)
guidance and completed by key stakeholders;
— a review of the FRC’s 2022/2023 Audit Quality Inspection and
Supervision Report, specifically the report related to EY. The Audit
Committee also reviewed the results of the FRC’s inspection of the
LSEG 2021 year end audit which highlighted limited improvements
required; and
— the separate meetings held with EY at each Committee meeting
without management being present.
Based on all evidence presented, the Committee satisfied itself that the
external audit has been conducted effectively, with appropriate rigour
and challenge, and that EY had applied appropriate professional
scepticism throughout the audit.
EY were appointed as the Group’s external auditor in 2014. The lead
audit partner and other key partners identified are required to rotate
every five years. Other partners are required to rotate every seven
years. Simon Michaelson was reappointed as lead audit partner
during the year and is in his second year.
The Committee is responsible for conducting the process to select the
external auditor and recommends their appointment, reappointment
and removal to the Board for approval by the Group’s shareholders at
each AGM.
113 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Getting ready for a change in auditor
As disclosed in last year’s report, following an audit tender
process in 2022, the Audit Committee recommended to the
Board that Deloitte be appointed as the Group’s external auditor
for the financial year ended 31 December 2024, subject to
shareholder approval at our AGM.
In early 2023, the Committee was made aware of non-audit tax
advisory services which were provided to certain entities
within the Group by Deloitte, which audited one of the Group’s
subsidiaries. It was concluded that these services were prohibited
under the FRC’s Ethical Standard. EY placed reliance on the work
performed by this component audit firm. As a result, a special
Audit Committee meeting was held to review the independence
of our external auditors and the services being provided and
relied upon. The decision to change auditor to Deloitte was
upheld but additional reviews of independence as a part of the
onboarding process were undertaken throughout the year.
As a part of the onboarding process, the Group have undertaken
the following:
— Worked with Deloitte to make sure that they are fully
independent ahead of 1 January 2024.
— The Group updated its policy for “Services supplied by
Audit firms”, which clarifies key deliverables and responsibilities
of audit firms as well as adding further internal controls to
monitor services provided by audit firms.
— Testing of Deloitte’s tools and technology to ensure they meet
the Group’s information security requirements.
Deloitte have started preliminary work to gain an understanding
of the Group and have shadowed EY during their audit of the
Group’s 2023 Annual Report and Accounts, including attending
some meetings alongside EY.
The Committee satisfied itself that the procedures of Deloitte
in their capacity as auditor of Tradeweb have been conducted
independently and have not impeded the effectiveness of the
existing external auditor.
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. This policy was updated during the year to reflect Deloitte’s role
as incoming auditor, and the policy has been applied to both EY and
Deloitte during the year.
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
and non-audit services. The policy allows approval for any audit and
non-audit services below £100k 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 there were any conflicts of interest; and
— 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 2023 is provided
below and in Note 4.2 to the financial statements on page 188.
Year ended 31 December
2023
£m
2022
£m
Services
Audit of parent and consolidated financial statements 7 6
Audit of subsidiary companies 7 7
Non-audit services 1 1
Total 15 14
EY provided non-audit services of £0.7 million; 5% of total fees
(2022: £0.6 million; 4% of total fees). This comprised of audit related
assurance services of £0.4 million (2022: £0.4 million) and other
non-audit services £0.3 million (2022: £0.2 million).
In each case, the Committee concluded that the appointment of EY
to perform certain non-audit services would not impair their
independence and represented the most effective, secure and efficient
way of obtaining the necessary advice and services. The Committee
was satisfied that the Group and EY have been compliant with IESBA
and FRC auditor independence rules.
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 2023.
4. Other matters
Going concern and long-term financial viability statement
The Directors are required to assess whether it is appropriate to
prepare the financial statements on a going concern basis and, in
accordance with the Code, provide a statement on the Group’s viability.
At its meeting in February 2024, the Committee reviewed the Group’s
forecasts and projections, taking into account reasonably possible
changes in trading performance. It confirmed that the going concern
basis in preparing the financial statements continues to be appropriate.
See page 159 of the Statement of Directors’ responsibilities for the
going concern statement. At the same meeting, the Committee also
considered the Group’s long-term viability with reference to the Group’s
current position and prospects, three-year business plan, risk appetite
and the expected impact of severe but plausible downside scenarios
on the business. See page 89 of the Strategic Report for the financial
viability statement.
FRC Corporate Reporting Review
As part of the FRC’s Corporate Reporting Review, the FRC conducted
a review of the Group’s 2022 Annual Report. The review was conducted
independently and the scope of the review was based on and limited
to the information provided in the 2022 Annual Report
1
. The Group
received correspondence from the FRC in October 2023 requesting
further information in relation to the alternative performance measures
included in the Group’s financial reporting and on climate-related
financial disclosures.
Report of the Audit Committee continued
1 The FRC review provides no assurance that the LSEG Annual Report 2022 was correct in all material respects. The FRC’s role was not to verify the information provided, but to consider
compliance with reporting requirements. Its letters are written on the basis that the FRC (which includes the FRC’s officers, employees and agents) accepts no liability for reliance on them by
LSEG or any third party, including but not limited to investors and shareholders.
London Stock Exchange Group plc
Annual Report 2023
114
The Group provided a response to the FRC in November 2023,
responding to the questions raised and how they have been addressed
in this Annual Report. The Audit Committee was informed on the
response submitted to the FRC. The FRC responded in December
2023, confirming that their enquiries are now closed.
Fair, balanced and understandable (FBU) reporting
In line with principle N of the Code, the Committee satisfied itself that
the Annual Report is fair, balanced and understandable and has
presented its conclusions to the Board. The Committee reviewed drafts
of the Annual Report and Accounts and considered the following:
— that statutory measures have been given equal prominence to the
alternative performance measures used;
— that information contained in the Strategic Report represents a fair
reflection of performance during the year;
— information within the Strategic Report and narrative reporting across
the Annual Report is consistent with that reported in the financial
statements; and
— key areas of estimate and judgement are consistently applied.
The Committee discussed with management the process undertaken
to ensure that the relevant requirements of FBU reporting were met.
This process included:
— independent reviews of the entire report by people not directly
involved in preparing the report;
— extensive review and verification processes by the appropriate
departments and senior managers to ensure the accuracy of the
content; and
— consideration of the balance of disclosure between positive and
negative points on the Group’s performance in the year.
See page 159 of the Statement of Directors’ responsibilities for the
FBU statement.
Audit and Corporate Governance Reform
The Committee received a number of updates on how the Group is
preparing for the UK Government’s Audit and Corporate Governance
Reform. While the UK Government has now withdrawn and delayed
some of the proposals, the Group remains committed to enhancing its
internal control environment and has continued to implement its main
programmes. The Committee monitored and assessed the progress of:
— the refresh of the Financial Control Framework;
— the Group’s Enterprise Risk Management Framework and Operational
Resilience programmes;
— the fraud risk assessment performed in the year; and
— steps being taken to improve control training and risk-awareness.
The Committee noted that the revised UK Corporate Governance Code
was issued in January 2024, effective from 2025, and that the ongoing
programmes around internal controls put the Group in a good position
to meet the requirements of the new Code.
Audit Committees and the External Audit: Minimum Standard
During the year, the FRC announced its Audit Committees and the
External Audit: Minimum Standard. The Committee discussed and
reviewed the Audit Committee responsibilities and the minimum
requirements set out for an Audit Committee to perform. The Committee
noted and were comfortable with the requirements set out and updated
its own Terms of Reference to align with the Standard.
Sustainability and climate risk reporting
The Committee reviewed the broader landscape for sustainability and
climate risk reporting and the Group’s plans for ensuring it remains
compliant with future changes to the reporting requirements.
During the year, the ISSB issued IFRS S1 and IFRS S2 (the “Standards”) to
improve disclosures about sustainability of a company. The Committee
noted the implications of the new Standards, that once endorsed by the
UK Endorsement Board LSEG is subject to the mandatory sustainability
reporting requirements to be reported on for the first time for the
financial year ended 31 December 2024, and the procedures being
undertaken in advance of the reporting requirement coming into force.
Incoming regulation, notably the EU Corporate Sustainability Reporting
Directive (CSRD), will introduce mandatory assurance of reported
sustainability data. The Committee discussed CSRD and the findings of
an independent pre-assurance readiness report commissioned by the
Group covering LSEG’s current processes, systems and controls over
the calculation and disclosure of greenhouse gas emissions, which was
used as a case study. The Committee also noted the Group’s plan to
address the findings of the report as a part of the broader sustainability
reporting agenda.
Whistleblowing investigations
The Group’s whistleblowing policy provides a method of addressing
concerns while at the same time offering whistleblowers protection from
victimisation, harassment or disciplinary proceedings. During the year,
the Committee continued to closely monitor the effectiveness and
independence of the Speak-Up and whistleblowing arrangements
of the Group.
Areas of focus in 2024
— Assessing the Group’s readiness to comply with climate-related
disclosure requirements, including the CSRD.
— Monitoring the progress of the Financial Control Framework.
— Receiving early and continuous understanding of the impact of the
Group’s acquisitions and disposals on financial and tax accounting,
and ensuring that the transactions are accurately represented in the
Group’s Annual Reports and Accounts.
— Monitoring the Group’s uncertain tax positions.
— Continuing to assess the impact of developments in
accounting standards.
— Monitoring the progress of the external audit transition from
EY to Deloitte and ensuring Deloitte’s readiness for the 2024
year-end audit.
— Receiving assurance that the internal control and risk management
environment remains robust.
— Monitoring the enhanced use of data in Internal Audit work to
provide broader insights and analysis.
— Monitoring the development and embedding of audit programmes
of work related to specialisms such as sustainability and behavioural
risks across the Internal Audit function.
— Supporting the build-out of the Internal Audit capabilities in the areas
of transformation and change assurance.
Dominic Blakemore
Chair of the Audit Committee
28 February 2024
Report of the Audit Committee continued
115 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Report of the
Risk Committee
The Group continues to support
its key markets and deliver stable
and resilient services that meet
our clients’ needs. The Group’s
risk culture, objectives, appetite,
governance and operations are
well established, underpinning
the whole organisation.
Kathleen DeRose
Chair of the Risk Committee
Achievements for 2023
During the year, the Risk Committee prioritised programmes and
activities identified at the end of the previous financial year with the
aim of enabling the safe growth of the Group by continuing to improve
the Group’s risk culture and ensuring that risks stayed within the set
appetite. These activities included:
— continued embedding of the Group’s operational resilience programme;
— continued review and monitoring of potential impacts from
macroeconomic and geopolitical events on the Group’s strategy
and business model;
— enhancing further the approach to sustainability-related risks and
associated risk processes;
— continued focus on technology remediation and enhancement of
the cyber security framework; and
— continued monitoring of the Group’s risk profile, against risk appetite,
across both financial and non-financial risks.
Composition and meetings
The Committee comprises five independent Non-Executive Directors.
The skills and experience of each Committee member are provided in
the Board of Directors section on pages 94 to 97. All Committee
members have been in place for more than a year.
The Group Chair, Group Chief Executive, Group Chief Financial Officer,
Group Chief Risk Officer (CRO) and Group Chief Internal Auditor, are all
standing attendees at Committee meetings. A member of the Company
Secretariat is the Secretary to the Committee. In addition to the standing
attendees, various other members of management are invited to
present specific matters relevant to the Committee’s remit.
The Board is satisfied that each member of the Committee has the skills
and experience necessary for the Committee to effectively discharge
its responsibilities. The Chairs of the Audit and Risk Committees each
sit on both committees, which ensures appropriate identification and
management of issues relevant to both committees.
During 2023, the Risk Committee held four regular meetings. In the
ordinary course of business, the Committee regularly reviews the
Group’s risk profile, risk appetite and emerging risks. The CRO also
provides regular updates to the Chair throughout the year.
For a full list of the principal risks
and uncertainties facing LSEG
and the steps we are taking to
mitigate these – refer to pages
79 to 88.
London Stock Exchange Group plc
Annual Report 2023
116
Purpose, responsibility and terms of reference
The Committee has non-executive responsibility for high-level risk
related matters and for risk governance. The Committee reviews the risk
profile of the Group, and its divisions, on a regular basis and comments
on the adequacy of the processes in place to identify, manage, mitigate
and report on key risks. It advises the Board on the Company’s overall
risk appetite, tolerance and strategy, and reviews the adequacy of
the Enterprise Risk Management Framework and its application to
decision-making.
The Committee sets the criteria for the accurate and timely reporting of
material risks including regular reports on compliance for each regulated
entity. As part of this mandate, the Committee also regularly reviews
best practices for enterprise risk management.
Further details on the functions and responsibilities of the Risk
Committee can be found in the Committee’s terms of reference which
are reviewed annually and available from the Group Company Secretary,
or in the corporate governance section of the Group’s website at:
www.lseg.com/en/about-us/corporate-governance.
Summary of the key areas of focus
During the year, the Risk Committee focused efforts on programmes
to further embed the Group Enterprise Risk Management Framework
(ERMF) and further strengthen risk culture across the organisation.
The Committee prioritised key activities which supported the vision of
the Group Risk function, enabling the achievement of the 2023 Group
strategic objectives. These included:
— enhancing the approach to sustainability-related risks and associated
risk processes. The Committee also approved the Group sustainability
risk framework;
— embedding the operational resilience framework; and
— creating a stronger risk culture through Group-wide risk awareness
events and training sessions e.g., 2023 Risk Culture Week at the
start of the year to raise risk awareness.
Activities of the Committee
The Committee established formal agendas covering all responsibilities
delineated in the Committee’s terms of reference. During the year, the
Committee discharged these responsibilities with the following activities:
— Provided robust reviews of principal risks and of emerging risks with
a focus on:
— reviewing and recommending to the Board the Group risk appetite,
including stress tests and challenging the scenario results;
— monitoring the Group’s risk profile against risk appetite as well
as progress of remediation activities over the past 12 months,
and monitored financial resources;
— challenging management’s assessment of the Group’s risk
profile, across both financial and non-financial risk, as well as
management’s mitigating actions;
— reviewing and challenging scenario analyses, identification,
management and mitigation of risks across the Group;
— reviewing plans to enhance cyber security and operational
resilience, and reviewing high level focus topics e.g., cyber security,
cloud risk, greenwashing, US debt ceiling; and
— reviewing risk events and emerging risk topics throughout the year;
assessing the potential impacts of the ongoing global geopolitical
tensions and the evolving financial landscape on the Group’s
strategy and business model, including:
— Russia/Ukraine, China/Taiwan, Middle East, Sri-Lanka;
— the banking crises – Credit Suisse, Silicon Valley Bank,
US debt ceiling
— Monitoring compliance in line with the Group risk management
procedures as described in the section on internal controls on
page 104 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; and
— reviewing and recommending to the Board the Group risk appetite,
including stress tests and challenging the scenario results.
Risk management function
The CRO leads and oversees all aspects of risk management for the
Group. He reports to the Chief Executive Officer, and also, to ensure
independence, to the Chair of the Risk Committee. The Committee
approves the CRO’s remit and ensures that the CRO has the
independence and resources necessary to perform their duty.
Group management consults with the Committee on the appointment
and dismissal of the CRO.
The Committee meets with the CRO without the presence of executive
management at each Committee meeting.
2024 priorities
In 2024, the Committee’s priorities include:
— continued monitoring of the Group’s risk profile against risk appetite
and oversight of risk mitigation and control enhancement activities;
— continued monitoring of potential impacts from macroeconomic and
geopolitical events; and
— continued oversight of the Group’s risk culture and embedding of the
Enterprise Risk Management Framework.
Committee effectiveness
The Committee’s effectiveness was assessed as part of the 2023
Board and Committee effectiveness review. Further details can be
found in the Governance section of this report on pages 102 to 103.
The result of the review was that the Committee is performing well
and operating effectively.
Kathleen DeRose
Chair of the Risk Committee
28 February 2024
Report of the Risk Committee continued
117 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Contents
Statement by the Chair pages 118 to 123
Remuneration at a glance pages 124 to 126
Remuneration Policy Report pages 127 to 136
Annual Report on Remuneration pages 137 to 153
Remuneration Committee members (as at 31 December 2023)
Meeting attendance
William Vereker
1
6/6
Cressida Hogg 6/6
Dr. Val Rahmani 6/6
Don Robert 6/6
1 Appointed as Chair of the Remuneration Committee on 14 September 2023, taking over from
Cressida Hogg.
Purpose, responsibility and terms of reference
The Remuneration Committee is appointed by the Board and comprises
the Remuneration Committee 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 remuneration 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 the corporate governance section of
our website at https://www.lseg.com/en/about-us/corporate-governance.
Areas of focus for FY2023/24
2023 remuneration outcomes and awards, including 2023 bonus,
vesting of 2021 LTIP awards and granting of 2023 LTIP awards
2024 Remuneration Policy review including shareholder consultation
Remuneration approach for 2024, including the design of 2024 bonus
and 2024 long-term incentive awards
Terms relating to Executive Committee changes, including a new CFO
and other new hires, appointments, role expansions and exits
Review of 2024 Reward Framework for wider workforce
Details of agenda items discussed at each Committee meeting are set
out on page 153
Directors’ Remuneration
Report
LSEG has transformed into
a highly successful, complex,
global organisation since our
Remuneration Policy was last
materially reviewed. In formulating
our revised Policy, we have
consulted with nearly 100
shareholders and are grateful for
the valuable input provided.
The proposed changes will
enable LSEG to secure the
calibre of talent and new skill
sets required for LSEG’s continued
transformation in a highly
competitive global market and
reinforce the strong performance
and significant shareholder value
we are delivering.
William Vereker
Chair of the Remuneration Committee
London Stock Exchange Group plc
Annual Report 2023
118
I am pleased to present the Directors’ Remuneration Report for the
year ended 31 December 2023. This is my first report since assuming
the role of Chair of the Remuneration Committee in September last year
and I would like to thank my predecessor, Cressida Hogg, for her
leadership of the Committee.
This year we will be asking shareholders to vote on three remuneration
resolutions at our 2024 AGM:
— our Remuneration Policy (the “Policy”), which outlines the
remuneration framework that will apply to our Executive Directors,
Non-Executive Directors and the Group Chair should it be approved
by shareholders (set out on pages 127 to 136);
— our Annual Report on Remuneration, which sets out remuneration
outcomes for 2023 and explains how we intend to apply the Policy
in 2024 (set out on pages 137 to 153); and
— our new long-term incentive plan rules (the Equity Incentive Plan or
EIP), which will replace the existing Long Term Incentive Plan 2014
which expires this year (further information is provided in the Notice
of AGM).
This statement on pages 118 to 123 provides context for the decisions
made by the Committee in the year, summarising in particular the
proposed changes to our Remuneration Policy and the background and
rationale for the adjustments. A “Remuneration at a glance” section is
included after this statement on pages 124 to 126 which summarises
broader employee reward at LSEG, 2023 remuneration outcomes
for Executive Directors, and the proposed operation of incentive
plans in 2024.
2024 Remuneration Policy review
As we signalled in our Directors’ Remuneration Report last year, the
Committee has conducted a comprehensive review of the existing
Policy to ensure that it remains fit for purpose so we retain and attract
the global talent that has delivered the business transformation and
shareholder value creation to date and who will continue to capture
significant opportunities in the future.
We are proposing to update the Policy for Executive Directors to
reflect that:
— LSEG has transformed and is now a leading global financial markets
infrastructure and data provider, which is larger, more diversified and
more complex than at the time of the last material Policy review;
— the market for our senior leadership team is now a set of global
companies in similar geographic and business segments as LSEG,
where pay levels are often significantly higher (further information
on our global sector peers and the selection approach is set out on
pages 118 to 119);
— significant pay compression is now observed within LSEG as a result
of our need to compete for talent with the largest global players in
the financial markets infrastructure and data provision sector; and
— we need to ensure that the LSEG pay structures, measures and
targets reinforce continuation of the strong performance delivered
by our exceptional management team in recent years.
As part of the review we consulted extensively with nearly 100
shareholders, representing approximately 80% of LSEG’s voting rights,
and proxy agencies. I would like to thank everyone we engaged with for
their valuable input during this process, which has informed the detail of
our revised Policy. Overall, the majority of shareholders were supportive
of our proposals and recognised the rationale of our thinking in light
of the transformation and high performance of the business, both in
absolute and relative terms, under our CEO’s leadership, and the need
for LSEG to compete in a global talent market.
A summary of the context against which the Committee has reviewed
the Policy, our rationale for adjusting it and detail of the proposed
changes is set out below.
Business transformation
Over the last five years, LSEG has transformed in terms of global
breadth, scope, scale and performance. The business has grown
from a European regional exchange group into a diversified, global
provider of financial markets infrastructure and data services. LSEG
is systemically important in the major geographies of the world, with
a trusted reputation and strong culture and is making significant
strategic moves which have most notably included the acquisition
of Refinitiv and our partnership with Microsoft.
At the heart of LSEG’s transformation has been our executive team, led
by our CEO, David Schwimmer. The ambitious strategy developed and
executed by our executive team has changed and strengthened the
Group, positioning it to grow and succeed, while creating significant
sustainable long-term shareholder value. Over the course of this
transformation and David’s tenure (since 1 August 2018), we have:
— generated total shareholder return of 124% and created £19 billion
in shareholder value (31 July 2018 – 31 December 2023);
— increased Adjusted EPS by 118% from 148.7 pence to 323.9 pence
(31 December 2017 – 31 December 2023);
— increased our Dividend Per Share 123% from 52 pence to 115 pence
(31 December 2017 – 31 December 2023);
— de-levered our Refinitiv acquisition debt; and
— more than doubled our share price from £43.57 to £92.74
(1 August 2018 – 31 December 2023).
LSEG is now a heavily tech-oriented organisation with over 25,000
employees operating across over 60 countries, competing for senior
leadership talent at a global level. We are also experiencing frequent
approaches for our talent from global companies, particularly from
technology and financial services organisations, where pay levels are
materially higher. This is evident even for our functional leadership roles
with the departure of our highly regarded CFO, Anna Manz, to join a
global Swiss-based company and COO, David Shalders, who will join a
private equity backed financial services company at the end of this year.
Our global sector peers
With LSEG’s continued transformation, there is a significant step-change
in our talent requirements and a need to increase the focus on
how LSEG’s business performance and remuneration compares
to appropriate sector peers. The Committee therefore undertook
a comprehensive selection process to identify those companies who
represent the most appropriate peer group for LSEG. Whilst LSEG’s
complex end-to-end trade lifecycle offering does not have an exact
comparator in the market, this selected peer set (shown in the chart on
page 119) reflects LSEG’s diverse operations, complexity, size and global
footprint. They represent a comparable group of companies against
whom we both measure our performance (and which will comprise
a TSR benchmark for long-term incentive awards going forward)
and compete for senior level talent and expertise.
LSEG’s global sector peer group (summarised in the table on page 119)
consists of organisations of comparable scale and complexity from
sectors in which LSEG operates, and includes:
— Financial Markets Infrastructure companies with whom we compete
and, together with LSEG, constitute the global regulated markets
that facilitate capital raising, trading and clearing/settlement across
a range of asset classes; plus
— global competitors in the provision of data and analytics solutions
across financial asset classes that support decision-making across
trading, compliance and risk management in financial markets; plus
— leading multinational B2B providers of comparable scale to LSEG,
that provide data and analytics solutions that identify opportunities
and manage the risks of doing business.
Following extensive analysis, an exclusive group of relevant peers was
selected from a longer list of firms initially considered.
Statement by the Chair of the Remuneration Committee
Directors’ Remuneration Report continued
119 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
Other companies that were initially considered but not ultimately selected due to a sector and/or scale mismatch include Coinbase, Equifax,
Fidelity National Information Services, IG Group, MarketAxess, State Street, Thomson Reuters, TMX Group, TP ICAP and Verisk.
£3,925
CEO target total remuneration £’000
Company Target
S&P Global
CME Group
Nasdaq
Intercontinental Exchange
MSCI
Moody’s Corporation
Cboe Global Markets
RELX
Experian
Morningstar
FactSet Research Systems
Wolters Kluwer
Deutsche Börse
LSEG (current)
Euronext
£0
£5k
£10k
£15k
£20k
Lower quartile
Median
Upper quartile
Source: WTW
50.2
1
7.7
25,000
>60
Global sector peers
Company Size and complexity Primary sector
No. countries
(major operations)
Financial markets
infrastructure
Data and
analytics
Market Cap
£bn
Revenue
£bn Employees
S&P Global
RELX
LSEG
Intercontinental Exchange
Experian
Nasdaq
Wolters Kluwer
Deutsche Börse
Moody’s Corporation
CME Group
Cboe Global Markets
MSCI
FactSet Research Systems
Morningstar
Euronext
Note: based on latest reported year. Bar length is relative to the largest value in each category.
1 As of 31 Dec 2023.
London Stock Exchange Group plc
Annual Report 2023
120
Directors’ Remuneration Report continued
Remuneration and performance context
Market pay and performance benchmarking demonstrates that our
CEO’s pay is significantly below the lower quartile of our sector peers
(shown above) despite LSEG achieving median to upper quartile
TSR and EPS performance. This pay-and-performance mismatch has
persisted over time: over the past four years, David’s cumulative
pay ranked at the 7th percentile of sector peers, against an EPS
performance in the 93rd percentile when compared with the same
peer set (see chart below).
Further, David was the architect of the transformational Refinitiv deal,
driving the acquisition and successful integration. In addition to the
strategic benefits with the increased and successful focus on data and
analytics, the management team has out-delivered on synergies. The
Group has also continued to grow both organically and through several
other acquisitions, as well as the strategic partnership with Microsoft,
which greatly accelerates our growth and transformation plans.
0
20
40
60
80
100
…and our relative
performance under
the CEO’s tenure has
similarly been around
the upper quartile.
However, CEO pay
– both on a “target”
and “realised” basis
– has lagged LSEG’s
relative size and
performance.
LSEG is around 80th
percentile in terms of
size relative to global
sector peers...
Notes
Company size dimensions: market cap based on spot values for all companies
on 31 December 2023; revenue and employees based on FY22 figures to allow
a like-for-like comparison.
Company performance: 4-year TSR and EPS performance cover the period ending
FY2022, aligning with David Schwimmer’s appointment as CEO on 1 August 2018.
CEO pay: 4-year actual pay based on FY2019-FY2022 data as disclosed in the
summary compensation table (for US peers) and single figure table (or equivalent,
for UK/European peers).
LSEG percentile rank vs global sector peers
Company size dimensions
Market Cap
Revenue
Employees
Company performance
4 year TSR
4 year EPS growth
CEO pay
At target
4 year actual
The disconnects between (a) our pay and performance, (b) our pay and
market position, and (c) our pay and calibre of talent, create a substantial
risk around talent attraction and retention at LSEG.
With David now entering his sixth year as CEO, the Committee believes
it is important to retain David who will continue to play a critical role
in leading LSEG through the next phase of transformational growth.
The increasingly competitive global landscape for senior leadership
talent, particularly those individuals with technology and data
backgrounds, has resulted in upwards pressure on pay. We are
experiencing pay compression between our CEO and other recent
senior hires over the last 12 months, both in absolute terms and
compared to typical market relativities, as shown below. In order to
attract the capabilities needed in new senior talent from leading global
companies, we have had to offer enhanced pay arrangements with
a significant uplift in quantum when compared to previous pay practices
and FTSE benchmarks. We have also observed pay disparities when
recruiting US-based talent with many candidates having existing pay
levels that are higher than our CEO’s. A particular example of our pay
disparities with market is that our CEO is paid less than the CEO of
our US subsidiary, Tradeweb, which has approximately one-third of
the market capitalisation of LSEG.
ExCo fixed pay relative to CEO
CFO
ExCo1
ExCo2
ExCo3
ExCo5
ExCo4
ExCo6
ExCo7
ExCo8
ExCo9
Blue line indicates
CEO salary.
The relativity gap is
being compressed.
Typical market relativity
LSEG relativity
With respect to meeting their shared obligations for succession
planning, the Board and the Committee believe that any credible
CEO candidate in the future would have to be sourced from the global
talent market, where the current Policy would be unable to compete in
terms of expected remuneration packages.
Remuneration Policy proposals
Against this backdrop, the Committee is proposing to update the
Policy to align it with our transformed business and address our talent
attraction and retention risks. We believe the Policy must be revised to
be globally competitive to attract and retain the calibre of talent required
to continue LSEG’s transformation and deliver our strategic ambition. For
that reason, the proposed Policy resets Executive Director remuneration
to align more closely with the median of our global sector peer pay
(but based on consideration of the remuneration components of salary,
annual bonus and long-term incentives, in line with the practice of
UK listed companies). The proposed changes to the Policy and its
implementation for Executive Directors for 2024 are presented in the
table opposite:
Statement by the Chair of the Remuneration Committee continued
121 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Policy element Proposal
Salary — Increase CEO salary from £1m to £1.375m as part of
aligning overall pay more closely with the global sector
peer median, while adhering to UK governance norms
around bonus deferral and maximum long-term
incentive opportunities.
— New CFO salary set at £850k to enable recruitment of
top calibre talent.
Annual bonus — Increase maximum opportunity from 225% to 300%
of salary for the CEO. CFO opportunity to remain
unchanged at 200% of salary.
— Reduce deferral from 50% to 40% to align with recent
change applicable below Board level and to align total
target in-year cash to circa the median of global sector
peers, who do not typically operate bonus deferral.
— Re-weight Executive Director bonuses to comprise i) 75%
financials (currently 60%) inclusive of the introduction of
an additional measure “Future Growth” (weighted 15%)
focussing on achievement of future revenue targets ii)
15% Group Strategic Objectives (GSOs), and iii) 10%
personal objectives.
Long-term
incentives
— Increase long-term incentive opportunity from 300% to
550% of salary for CEO, and to 400% of salary for CFO.
— Retain EPS and Relative TSR as vesting measures,
weighted 60% and 40% respectively (as per current).
— TSR metric to be split 50/50 on performance vs FTSE100
(as current) and vs global sector peers (a new, second
benchmark, based on the companies shown on
page 119).
— Introduce payment of dividend equivalents on future
share awards, aligning to market norms.
— Update “leaver” provisions: ensure sufficient discretion
for RemCo to apply “good leaver” status in the event
of retirement from professional career or to work
in a governmental capacity or for a non-profit
organisation, and with agreement from the
Company/Remuneration Committee.
Minimum
shareholding
requirements
— Increase minimum shareholding requirement from 400%
to 600% of salary for CEO, and from 300% to 400% of
salary for CFO, i.e. to be at least equal to the annual
long-term incentive opportunity.
The revised Policy will strengthen the link between pay, performance
and value creation for shareholders through the material increases to
long-term performance-based pay, combined with an increase to the
minimum shareholding requirements. It is important to highlight that
the full impacts of the Policy proposals will not be realised until 2029
when the 2024 long-term incentive award is released from the
post-vesting holding period. Reflecting shareholder feedback received,
we have made the performance targets for incentive awards even
more stretching.
The Committee is considering the CEO remuneration package in the
very specific circumstances of David Schwimmer, taking into account
his outstanding past performance and strategic direction.
We believe the proposals are necessary to ensure the remuneration of
David and the incoming CFO are strongly aligned with the delivery of
LSEG’s ambitious medium to long-term strategy, as well as giving the
Committee the ability to recruit the calibre of talent required to continue
LSEG’s transformation as needed.
Performance in the year
In 2023, LSEG delivered another year of strong financial performance,
with continued revenue growth across our business divisions despite an
uncertain macroeconomic environment. We continue to transform our
business and deliver on our strategy to be the leading global financial
markets infrastructure and data provider.
Highlights:
— Delivered 8.3% income growth on a constant currency basis.
Growth was 7.7% excluding the Acadia acquisition, towards the
upper end of the 6%-8% guidance range.
— Adjusted EBITDA grew 8.6%, slightly ahead of the growth in total
income. Excluding FX-related balance sheet items, EBITDA margin
of 47.7%.
— Exceeded our £400 million runrate cost synergy target 2 years ahead
of schedule and continued to deliver strongly on our revenue synergy
programme with £158m runrate synergies delivered to date.
— Delivered the successful integration and acceleration of Refinitiv:
2021-2023 total income (excl. recoveries) CAGR of 6.5% is at the
upper end of acquisition targets.
— Our medium-term guidance further raises growth aspirations:
targeting mid-to-high single digit medium term organic growth,
accelerating after 2024.
— Making targeted acquisitions: Acadia reinforces our leading position
in Post Trade Solutions; acquired full control of LCH SA; increased
ownership of LCH Group.
— Good progress on Microsoft partnership: first products expected
in H1 2024, many embedding AI technologies and revolutionising
industry workflows.
— Significant shareholder returns: final dividend +79.3%, taking full year
payout to 115 pence; £1.2 billion returned via buybacks in 2023.
2023 bonus outcomes for Executive Directors
Executive Directors were eligible to receive an annual bonus based on
meeting or exceeding bonus targets that were set at the beginning
of the year, looking at the Group’s financial performance, strategic
objectives and their personal contribution.
The Committee received input from the Risk Committee with regard
to performance related to risk culture (awareness, transparency and
accountability) when assessing remuneration decisions.
For FY2023, we exceeded our Group adjusted operating profit (AOP)
financial target and have outperformed against our strategic objectives.
In determining the overall outcome of the strategic objectives for the
FY2023 Group bonus pool, the Committee took into account certain
factors relating to risk, including compliance risk and resilience, which
meant that despite the otherwise strong strategic performance achieved
against the objectives, the Committee determined that, on balance,
the overall outcome of this component should be 28%. This outturn is
lower than the previous year’s outturn of 31%.
As a result of the Group’s strong performance and the personal
contribution of the Executive Directors, the Committee determined that
the CEO will be awarded a bonus of 70% of his maximum opportunity.
Anna Manz resigned as CFO on 25 May 2023 and is therefore not
eligible to receive a bonus for the 2023 performance year.
Further details on FY2023 performance can be found in the Financial
Review on pages 44 to 57.
Share plan rules and approvals
The LSEG Long Term Incentive Plan 2014 (or LTIP) approved by
shareholders in 2014 will expire this year. As a result, we will be seeking
shareholder approval for a new long-term incentive plan, the Equity
Incentive Plan (or EIP), at our forthcoming AGM. Further information
is provided in the Notice of AGM.
Directors’ Remuneration Report continued
London Stock Exchange Group plc
Annual Report 2023
122
Directors’ Remuneration Report continued
2021 LTIP award outcomes
The AEPS element of the LTIP awards made in 2021 will vest at 100%
and the Relative TSR element will vest at 0%. These vesting outcomes
reflect the delivery of AEPS growth of 18.3% CAGR and 8.1% TSR
performance over the three-year performance period, the latter
representing 43rd percentile performance relative to the FTSE 100 peer
group. The TSR position partly reflects the significant growth in the share
price in the years leading up to the start of the 2021 LTIP performance
period during which LSEG was consistently upper quartile.
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.
The Committee reviewed LSEG’s share price performance in
determining the extent to which the 2021 LTIP award should vest
and concluded that no windfall gains had occurred.
Operation of 2024 bonus
The FY2024 Group bonus pool will be determined based on
Group performance measures weighted 75% on financial measures
(60% AOP, 15% Future Growth) and 25% on strategic objectives.
The Executive Directors’ awards are funded from the Group bonus
pool. Bonus awards for the Executive Directors will be determined in
accordance with performance measures weighted: 60% against
Group AOP; 15% against Future Growth; 15% against Group Strategic
Objectives; and 10% against personal objectives.
Annual bonuses for FY2024 will be awarded in line with our revised
Policy, subject to shareholder approval. Under the revised Policy,
60% of any FY2024 bonus payment for Executive Directors would be
paid in March 2025. The remaining 40% would be deferred into shares
for a period of three years.
Long-term incentive awards to be made in 2024
Long-term incentive awards will be granted in 2024 in line with our
revised Policy and under the Equity Incentive Plan, in each case subject
to shareholder approval.
The Committee has given careful attention to the AEPS element of the
2024 grant (with a 60% weighting) and, considering internal and external
forecasts, has set the AEPS targets at 7% to 12.5% CAGR. This means
that both the threshold and maximum end of the ranges are higher
than the targets set for the 2023 grant. To achieve maximum vesting,
an incremental £1.1bn AOP would be required in 2026, equivalent to
incremental income in the region of £2.05bn, relative to 2023. We
expect that this AEPS range will be one of the highest, if not the highest,
in the FTSE 30 and continues to demonstrate LSEG’s commitment to
setting class-leading, stretching targets. Furthermore, the higher AEPS
baseline makes AEPS CAGR growth increasingly challenging to achieve
for LSEG.
For the Relative TSR element (40% weighting), performance will be
assessed against our global sector peer group (the same sector peers
we used to benchmark remuneration) and the FTSE 100, each weighted
50:50. The performance range will be median to upper quartile for both
peer groups.
The stretching nature of these performance targets set by the Committee
is noted also in the context of historical grant outcomes; specifically the
most recent 2020 and 2021 awards which have not vested at maximum
despite the Group’s strong performance in the period.
Actual award outcomes for CEO
Period ended
Annual bonus
payout against
maximum
opportunity %
Long-term
incentive vesting
rates against
maximum
opportunity %
31 December 2023 70% 60%
31 December 2022 64% 82%
31 December 2021 72% 100%
The above chart sets out the actual bonus and LTIP outcomes of the
CEO over the last three years. This signifies the stretching nature of
the targets set during a period of exceptional growth for LSEG and
significant returns to shareholders.
Executive Director changes
Departure terms for Anna Manz
Anna Manz resigned as CFO on 25 May 2023. Following publication of
the Group’s 2023 Full Year Annual Results on 29 February 2024, she
will step down from the Board and leave the Group. Her unvested
incentive awards will be treated in line with the Policy in effect at the
time of her resignation. Following her resignation, she was not eligible
to receive a bonus for 2023 or a long-term incentive award for 2024
and her outstanding LTIP awards lapsed. Anna continued to receive her
contractual salary, pension allowance and benefits until her termination
date. Full details are provided on page 146.
Appointment terms for Michel-Alain Proch
As announced on 20 November 2023, Michel-Alain Proch joined
LSEG on 26 February 2024 and will be appointed to the Board as
CFO on 1 March 2024. Prior to joining LSEG, Michel-Alain was the
Group Chief Financial Officer for Publicis Groupe SA and a member
of their Management Board.
Michel-Alain will receive a salary of £850,000 and a pension cash
allowance of 10% of salary (aligned with the wider workforce), along with
other benefits offered to the wider workforce in the UK. He will also be
eligible to participate in the Annual Bonus and Equity Incentive Plan
under the Policy in place for 2024 (subject to shareholder approval at
the AGM). If the proposed Policy is approved, this includes an annual
bonus opportunity with a maximum of 200% salary and a maximum
long-term incentive grant of 400% of salary. Michel-Alain forfeited
various incentive awards which were inflight at the time of his leaving
Publicis Groupe SA; LSEG has agreed to compensate for the forfeited
amounts partly through an enhancement to Michel-Alain’s FY2024
bonus opportunity. The combined regular FY2024 bonus (based on
a pro-rated opportunity for the time served over FY2024) plus the
compensatory amount will mean that his overall maximum FY2024
bonus opportunity will be equal to 200% of his full-time salary.
Michel-Alain will also be granted awards to compensate for other
remuneration forfeited at Publicis Groupe SA. Full details are provided
on pages 146.
Given Michel-Alain is relocating from Paris to London to take on the CFO
role, LSEG will be providing immigration, relocation and tax/filing support
in accordance with LSEG’s usual practices and approved Policy.
Statement by the Chair of the Remuneration Committee continued
123 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
Summary of key executive remuneration decisions for FY2023 and FY2024
Role Chief Executive
Officer
Chief Financial Officer
(to 29 February 2024)
1
Chief Financial Officer
(from 1 March 2024)
2
Name David Schwimmer Anna Manz Michel-Alain Proch
FY2023
Previous salary
(with effect from 1 January 2023)
£1,000,000 £750,000 N/A
Bonus for financial year ending 31 December 2023 % of salary 158% of salary 0% of salary
3
N/A
% of maximum 70% 0% N/A
£ total amount £1,581,975 £0 N/A
Of which 50% is deferred
4
£790,988 N/A N/A
Max. annual bonus opportunity (% of salary)
for financial year ending 31 December 2023
225% 200% N/A
2021 LTIP award outcomes (% of maximum) 60% N/A
5
N/A
FY2024
Annual salary (with effect from 1 January 2024)
2
£1,375,000 £750,000 £850,000
Max. annual bonus opportunity (% of salary) for
financial year ending 31 December 2024
300% N/A 200%
2024 long-term incentive award grants
(subject to performance)
550% of salary 0% of salary
3
400% of salary
1 Anna Manz stepped down from the Board and left the Group on 29 February 2024.
2 Michel-Alain Proch joined LSEG on 26 February 2024 and was appointed to the Board as CFO on 1 March 2024. His annual salary was effective from his start date of 26 February 2024.
3 No FY2023 bonus or 2024 long-term incentive award will be awarded to Anna Manz, who has left the Group.
4 Executive Directors must compulsorily defer 50% of bonus into shares for a period of three years under the existing Policy.
5 Anna Manz’s outstanding 2021, 2022 and 2023 LTIP awards lapsed following her resignation.
Committee effectiveness
The Committee’s effectiveness was assessed as part of the 2023
Board and Committee effectiveness review. The result of the review
was that the Committee is performing well and operating effectively.
Further details can be found in the Governance section of this report
on pages 102 to 103.
Concluding remarks
The intent of this statement and the wider Directors’ Remuneration
Report is to explain the Group’s approach to remuneration, which takes
into account best practice and market trends while continuing to support
the commercial needs of the Group, the interests of shareholders
and of all other stakeholders. The Committee continues to place great
importance on ensuring that there is a clear link between pay and
performance, including a focus on culture, adherence to the Group’s
risk framework, and that our remuneration outcomes are reflective of
this wider context.
Finally, I would like to reiterate my thanks to Cressida Hogg for the
significant contribution she has made during her tenure as Chair of the
Remuneration Committee and for supporting me with the transition
process. I would also like to thank my fellow Committee members and
all internal and external stakeholders for their valuable input over the
course of the year. We look forward to your support of our proposals
at the forthcoming AGM.
William Vereker
Chair of the Remuneration Committee
28 February 2024
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.
London Stock Exchange Group plc
Annual Report 2023
124
Directors’ Remuneration Report continued
Broader employee reward at LSEG
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 create a transparent,
performance-driven approach for our Group. This framework helps to unify and drive our organisation forward and is based on the
following principles: (i) Performance-led; (ii) Competitive; (iii) Transparent and Equitable; and (iv) Inclusive and Consistent.
Salary
How we reward our colleagues
Salaries are normally reviewed annually by taking into account a range of factors and are reflective of individual
roles, job-related knowledge, skills, commensurate experience, and the wider market.
In 2024, 91% of employees will receive a salary increase. As inflation and cost of living pressures remain high
in some of LSEG’s key locations, we continue with the principle of allocating proportionately more of our 2024
salary budget to those most impacted, specifically prioritising those in early career stages in the UK, US and
countries with the highest inflation.
For senior career stages, the approach for our 2024 annual salary review is consistent with that taken in the
2023 review cycle. For the UK and US, increases are focused on those with expanded roles and those whose
pay is low versus internal peers and/or the external market.
Benefits
How we reward our colleagues
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).
Colleagues receive an annual pension allowance, invested in the Company’s defined contribution plan or
provided as a cash allowance.
Share incentive plans
How we reward our colleagues
Performance share awards (subject to stretching performance targets over three years) are granted to
senior leaders who have the ability to significantly influence the long-term performance of the Group.
Group Directors are eligible for restricted share awards aligned with long-term Group performance and
shareholder interests; vesting in equal tranches over three years.
Bonus
How we reward our colleagues
80% of colleagues participate in LSEG’s annual performance-related bonus based on Group, divisional
(where applicable) and personal performance against goals. Remaining colleagues participate in other
performance-based plans such as sales incentives.
Annual bonuses for Group leaders are subject to 40% deferral into shares, vesting in equal tranches over
three years.
LSEG employee share plans
How we reward our colleagues
Our all-employee share plans offer employees around the globe the opportunity to invest and share in the
Group’s future success. All permanent UK and Sri Lanka employees are eligible to participate in the Sharesave
Plan (or, in the case of Sri Lankan employees, an equivalent international plan). There is also a SharePurchase
Plan, which is designed to provide share options to people who are not based in the UK or Sri Lanka.
In 2023, we have reinforced the benefits of share ownership throughout the organisation by enhancing the
value of our all-employee plans (doubling the SharePurchase benefit and increasing the contribution cap on
the Sharesave plan), ensuring an opportunity increase for all.
Following rollout of the upgraded plans, participation has increased by 19.6% with over 7,600 employees across
31 countries enrolled in our all-employee plans. LSEG now has more employees participating in all-employee
share plans than total employee numbers prior to the transaction with Refinitiv.
Executive Director alignment
The review of Executive Director
salaries takes into account the
same factors considered for the
wider workforce.
Executive Director alignment
Executive Directors are eligible for
a range of market-aligned benefits
and receive a pension allowance
in line with the wider workforce.
Executive Director alignment
Executive Directors are eligible for
long-term incentive awards (subject
to stretching performance targets
over three years). An additional
two-year post-vesting holding period
applies to Executive Directors.
Executive Director alignment
The annual bonus plan for the
broader employee population
considers the same performance
conditions as the Executive
Directors’ bonus plan and is linked
to both Group performance and
individual performance.
Annual bonuses for Executive
Directors are subject to 40% deferral
into shares for a period of three years.
Executive Director alignment
Executive Directors are eligible to
participate in LSEG’s all-employee
share plans on the same terms as
all other eligible employees.
Remuneration at a glance
125 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
2023 remuneration outcomes
FY2023 Bonus Outcomes
David Schwimmer, Chief Executive Officer
Performance measure Threshold Target Maximum Weighting Outcome achieved
Group AOP £2,740m £2,880m £3,210m 60% 38%
Actual: £2,934m
1
Strategic Objectives 5% 10% 20% 20% 14%
Personal Objectives 20% 18%
Details of performance are set out on page 141.
Total 100% 70%
1 AOP excludes amortisation of purchased intangibles and non-underlying items, and is measured using budget foreign exchange rates and is on a pro-forma basis.
Anna Manz resigned as CFO on 25 May 2023 and is therefore not eligible to receive a bonus for the 2023 performance year.
2021 LTIP Award Outcomes
Performance measure Threshold Maximum Weighting Outcome achieved
Average adjusted
EPS growth
8% 18% 60% 60%
Actual: 18.3%
Relative
TSR growth
Median ranking Upper quartile ranking 40% 0%
Actual: 43rd percentile
Total 100% 60%
Anna Manz’s outstanding 2021 LTIP award lapsed following her resignation.
Directors’ Remuneration Report continued
Elements of remuneration
Fixed vs performance pay based under the 2024 Policy*
The proposed revisions to the Policy address our desire to reinforce a pay-for-performance philosophy as the majority of the quantum reset is
performance-based. Variable pay will make up 83% of the overall pay mix for the CEO, and 77% for the CFO; and will be earned only for delivering
against stretching targets.
* Pay mix based on target bonus and Fair Market Value of maximum long-term incentive opportunity (60% of maximum).
Fixed 17%
Salary
Performance-based 83%
Annual Bonus 26%
LTIP 57%
Chief Executive Officer
Fixed 23%
Salary
Performance-based 77%
Annual Bonus 23%
LTIP 54%
Chief Financial Officer
Actual: 14%
Actual: 18%
London Stock Exchange Group plc
Annual Report 2023
126
Directors’ Remuneration Report continued
Remuneration at a glance continued
FY2024 Group Bonus Pool
Reflecting shareholder feedback received during the Policy review, the 2024 design includes increasing the weighting of financial measures
within the bonus pool from 60% to 75%, incorporating both AOP and Future Growth measures. AOP is a key profitability measure for the
Group and continues to be the main financial measure for annual bonus plan purposes. The additional measure “Future Growth” focuses on
achievement of future revenue targets. The Group Strategic Objectives focus on the delivery of key strategic objectives, measured through
achievement of stretching targets against externally reported KPIs.
Operation of 2024 incentive plans and alignment to strategy
The performance measures used in our incentives are directly aligned to the Group’s KPIs and strategic priorities.
Adjusted operating profit
60%
Future growth
15%
Group strategic objectives
25%
Executive Director individual bonus allocation
Executive Director bonuses will be funded from the above Group Bonus pool, assessed according to the following measures.
2024 long-term incentive awards
The AEPS and TSR measures used for the long-term incentive awards are well aligned to our strategy of driving growth and delivering
shareholder value over the longer term and ensure a balance of absolute and relative measures. We propose to incorporate a second
relative TSR metric assessed against a global sector peer set (shown on page 119) that is directly relevant to LSEG’s business.
Financial
60% AOP performance
Financial
15% future growth
GSOs
15%
Personal
10%
Relative TSR vs
global sector peers
20%
Relative TSR vs
FTSE 100
20%
Average adjusted
EPS growth
60%
5 strategic categories:
— Resilience
— Culture
— Customer
— Efficiency
— Sustainability
The Committee to retain flexibility
to determine weightings.
GSOs drive our multi-year growth
and transformation journey to
deliver on our ambitions and
execute our strategy.
KPIs – illustrative
— ASV Growth and
Net Sales plus
— Board approved
multi-year
strategic
business case
delivery and
contribution
to future
business growth
Financial
75%
127 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
Our Remuneration Policy was last subject to a binding shareholder vote
at the 2023 AGM and was passed with 97.5% support. This section sets
out our revised Policy which will be subject to shareholder approval at
the AGM in April 2024, and if approved, will apply for a period of up to
three years.
Remuneration Policy table
The revised Policy is set out in the table on pages 129 to 131 and
includes the following changes to our existing Policy. The rationale
for the proposed changes is provided in the Statement by the Chair
of the Remuneration Committee, set out on pages 118 to 123.
Policy element Revision
Annual bonus — Increase maximum opportunity from 225% to 300% of
salary for the CEO. CFO opportunity to remain
unchanged at 200% of salary.
— Reduce deferral from 50% to 40% to align with recent
change applicable below Board level and to align total
target in-year cash to around the median of global sector
peers, who do not typically operate bonus deferral.
— Re-weight Executive Director bonuses to comprise at
least 70% financials (currently at least 50% under
existing Policy and 60% in practice for FY2023).
Long-term
incentives
— Increase long-term incentive opportunity (granted under
the EIP) from 300% to 550% of salary for CEO, and to
400% for CFO.
— Leaver provisions updated to provide sufficient
discretion for RemCo to apply ‘good leaver’ status in
the event of retirement from professional career or to
work in a governmental capacity or for a non-profit
organisation, and with agreement from the Company/
Remuneration Committee.
Shareholding
requirements
— Increase shareholding requirement from 400% to 600%
of salary for CEO, and from 300% to 400% of salary for
CFO, i.e. to be at least equal to the annual long-term
incentive opportunity.
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 performance against
stretching targets is 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 our global sector peer set for Executive Directors
and Executive Committee members where available; and with FTSE 30
practices guiding the structure of pay. When this data is not readily
available, other reference points such as the FTSE 100 and the broader
Financial Services/international exchange groups and financial markets
infrastructure sectors are considered.
The Committee takes the following areas into account when reviewing
the policy:
— a focus on shareholder value;
— the size, scope and complexity of the Group;
— the performance of the Group and market positioning against
appropriate comparators, including sector peers and companies in
the FTSE 30;
— the need to attract and retain senior management from the global
market in which we compete for talent;
— 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; and
— the unique position of the Group at the centre of global
financial markets.
Remuneration Policy Report
London Stock Exchange Group plc
Annual Report 2023
128
Directors’ Remuneration Report continued
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 is fully understood and
provide the opportunity for feedback to inform our decision-making process.
Simplicity — The operation of the Annual Bonus and the design of plans like the EIP is well understood by stakeholders and aligned to Group strategy
and the UK market best practice approach.
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
— Ensuring stretching yet achievable targets are set for incentive plans
— 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 Group
— Ensuring the Committee has overriding discretion to depart from formulaic outcomes and the ability to apply malus and clawback to
incentives where appropriate
— The Remuneration 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 136. Defined limits on the maximum awards which can be
earned are also disclosed on pages 130 and 131. Vesting levels are driven by performance outcomes against stretching targets that are
set for incentive plans.
Proportionality — In line with our pay for performance model, the majority of Executive Director pay is performance-based. The performance metrics used
in our incentive plans support the delivery of the Group’s strategy, as well as short-term and long-term financial targets.
— Relevant market peers are used to assess business performance and inform reward.
— A robust target-setting process is carried out each year, taking into account internal and external forecasts and reference points, 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 Group’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. Personal performance is assessed against contribution to the strategic objectives, including cultural objectives, and against
role-related goals and expected behaviours, taking into account both what has been achieved and 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 payout.
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.
Remuneration Policy Report continued
129 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
Policy table for Executive Directors
Salary Benefits
Purpose and link to strategy
Provides a core element of remuneration which reflects the responsibilities
of the role.
Enables the recruitment and retention of individuals of the calibre required
to execute the Group’s strategy.
Purpose and link to strategy
Provides local market-competitive benefits and support the wellbeing
of employees.
Operation
Base salaries are normally reviewed annually by taking into account
a range of factors, including:
— size and scope of the role;
— size, complexity and global breadth of the organisation;
— skills and experience of the individual;
— market competitiveness/relative positioning;
— performance of the Group and of the individual;
— wider market and economic conditions; and
— level of increases being made across the Group.
Operation
A market-aligned benefits plan is offered in each key country in which we
operate. For the UK, a flexible benefits plan is offered, in which individuals
have certain core benefits (such as private medical, life assurance and
income protection) together with a taxable cash allowance which can be
spent on elective benefits (such as additional medical, life or dental cover).
Car transportation may also be provided for Executive Directors
where appropriate.
Due to the high profile of the Group, the Committee reserves the right to
provide our executives with the appropriate level of security arrangements
to allow them to perform their duties in the safest possible conditions.
Benefits are reviewed periodically to ensure they remain affordable and
competitive. The Committee retains the discretion to provide 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 return 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
Sharesave Plan (or international equivalent) on the same basis as
other employees.
Executive Directors are covered by the Directors’ and Officers’ insurance
and indemnification.
Maximum Opportunity
There is no defined maximum salary but the maximum salary for a given
executive is set by the Committee.
Increases are determined based on the factors described above.
Maximum Opportunity
There is no defined maximum.
Benefits plans are set at (what are in the Committee’s opinion) reasonable
levels in order to be market competitive for their local jurisdiction and are
dependent on individual circumstances.
Participation in the Save As You Earn Option Scheme (or international
equivalent) is capped at the same level as all other participants, which is
determined by the Company within the parameters of applicable legislation.
Performance Measures
n/a
Performance Measures
n/a
London Stock Exchange Group plc
Annual Report 2023
130
Directors’ Remuneration Report continued
Retirement Benefits Annual Bonus
Purpose and link to strategy
Provides executives with retirement benefits.
Supports recruitment and retention of high-calibre people.
Purpose and link to strategy
Rewards annual performance against challenging financial, strategic
and individual targets linked to Group strategy.
Deferral into shares reinforces retention and enhances alignment with
shareholders by encouraging longer-term focus and sustainable performance.
Operation
Provision of annual pension allowance, invested in the Company’s defined
contribution plan or taken or provided as a cash allowance.
In certain jurisdictions, more bespoke pension arrangements may be
provided. In such circumstances, the Committee will give appropriate
consideration to local employment legislation, local market practices
and the cost of the arrangement.
Operation
The Group operates a Group-wide bonus pool which is funded based on
the achievement of financial and strategic goals of the Group. Allocations
to individual Executive Directors are made from this pool based on the
Committee’s assessment of their personal performance, taking into account
the Group’s financial and strategic performance and the achievement of
any personal objectives related to their role.
Performance targets are reviewed and set by the Committee at the
beginning of each performance year.
Awards are determined by the Committee after the year-end based upon
the actual performance against these targets.
The Committee applies judgement where necessary to ensure approved
pay-out levels are reflective of actual, overall performance and has the
ability to exercise discretion in adjusting the formulaic outcome of incentives
to ensure the outcome is reflective of the performance of the Company and
the individual over the period.
— 40% 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.
— Unvested deferred awards are subject to malus provisions as described
below. Paid bonuses and vested deferred awards are subject to clawback
as described below.
Maximum Opportunity
The maximum annual pension contribution/cash allowance for Executive
Directors is 10% of salary (except where required by local market practice
where levels could be set at a higher or lower amount). This is a rate
aligned with the wider workforce in the UK.
Maximum Opportunity
Maximum annual bonus opportunity of 300% of salary for CEO and 200%
of salary for other Executive Directors.
Performance Measures
n/a
Performance Measures
Based on a combination of financial (e.g. adjusted operating profit and future
growth), strategic and personal performance targets. Strategic objectives
include key targets and areas of focus, which are set annually, and
measured through achievement of stretching targets against externally
reported KPIs. Whilst not an exclusive list, examples of strategic objectives
can include culture, resilience, customer, efficiency, and sustainability. These
strategic objectives also impact on 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 70% of the annual bonus pool and Executive Directors’ bonuses
will be based on performance against financial measures.
No bonuses are paid for below threshold performance. The Committee
may award any amount between zero and 100% of the maximum opportunity.
Remuneration Policy Report continued
131 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
Long-term incentives (under Long Term Incentive Plan
2014 and Equity Incentive Plan) Share ownership
Purpose and link to strategy
Incentivises performance over the longer term through the award of
performance-related shares.
Aligns reward with long-term, sustainable Group performance and
a focus on shareholder value.
Purpose and link to strategy
Ensures alignment with shareholders’ interests.
Operation
— Awards of shares (or equivalent) are granted annually (to be granted
under the EIP from 2024 onwards).
— Awards vest subject to performance targets assessed over a
performance period, normally of at least three financial years with an
additional holding period of two years. The Committee has discretion
to set different performance periods and holding periods if it considers
them to be appropriate.
— The Committee shall determine the extent to which the performance
measures have been met. The Committee may make adjustments to
performance targets if an event occurs which makes, at the Committee’s
determination, an adjustment appropriate. The performance targets will
be at least as challenging as the ones originally set.
— The Committee has the ability to exercise discretion in adjusting the
formulaic outcome of incentives to ensure the outcome is reflective of
the performance of the Company and the individual over the period.
— Dividends (or equivalents) may be awarded on vesting. Unvested awards
are subject to a malus provision and vested awards are subject to
clawback, as described below.
Operation
Executive Directors are expected to build up share ownership over a period
of five years from appointment. The minimum shareholding requirement is
600 per cent of base salary for the CEO and 400 per cent of base salary for
other Executive Directors.
Executive Directors are expected to hold 100% of their minimum
shareholding requirement for two years post-departure.
In cases where the individual has not had sufficient time to build up
share ownership to meet the minimum shareholding requirement,
the post-employment shareholding requirement will be based on their
actual level of shareholding on departure.
The Committee has discretion to vary or waive part or all of the post-
employment shareholding requirement in exceptional circumstances.
Maximum Opportunity
Maximum awards of up to 550% of salary for the Chief Executive Officer
and 400% of salary for other Executive Directors.
Maximum Opportunity
N/a
Performance Measures
The Committee determines performance targets each year to ensure that
the targets are stretching and support value creation for shareholders while
remaining motivational for management.
Vesting of awards is subject to achievement of total shareholder return
and other financial performance targets. Any one measure will not exceed
two-thirds of the award.
For each performance element, achievement of the threshold performance
level will result in no more than 25 per cent of the maximum award paying
out. For achievement of the maximum performance level, 100% of the
maximum pays out. Normally, there is straight-line vesting between
these points.
Performance Measures
N/a
Notes to the Policy Table
Selection of performance measures
Performance targets are set by the Committee to be both stretching and
achievable, taking into account the Group’s strategic priorities and the
economic landscape.
The performance measures that are used for our annual bonus
and long-term incentive awards have been chosen to support the
Group’s strategy. For the annual bonus plan, the Committee continues
to believe that it is appropriate to use a balance between financial
targets, strategic objectives and personal performance objectives.
The Committee considers that the measures to be used for long-term
incentive awards going forwards, i.e. relative TSR against sector peers
and the FTSE 100 index, and adjusted EPS, are currently the most
appropriate measures of long-term performance for the Group. The
Committee reviews the measures, weightings and targets for long-term
incentive awards on an annual basis, to ensure their continued suitability
and to ensure they are sufficiently stretching for LSEG.
London Stock Exchange Group plc
Annual Report 2023
132
Directors’ Remuneration Report continued
Malus and clawback provisions
Malus and clawback provisions apply to all share incentive awards
granted to Executive Directors. Clawback provisions apply to annual
bonuses paid to Executive Directors.
In respect of future awards under the EIP, the malus provisions allow
the Committee in its absolute discretion to determine, at any time prior
to the payment or vesting of an award, to reduce, cancel or impose
further conditions in certain circumstances, including;
(a) material misstatement or restatement in the Company’s or any
member of the Group’s audited financial accounts (other than
as a result of a change in accounting practice);
(b) the negligence, fraud or serious misconduct of an individual,
or fraud or serious misconduct with the knowledge of a participant;
(c) conduct by an individual which results in, or is or was reasonably
likely to result in (whether or not such result has transpired
e.g., if undiscovered and/or if no mitigating steps had been taken):
(i) significant reputational damage to the Company, any member
of the Group or to a relevant business unit (as appropriate);
(ii) a material adverse effect on the financial position of the
Company, any member of the Group or to a relevant business
unit (as appropriate);
(iii) a material downturn in the financial performance of the
Company, any member of the Group or to a relevant business
unit (as appropriate);
(iv) a material corporate failure of the Company, any member of
the Group or to a relevant business unit (as appropriate);
(v) a material adverse effect on the business opportunities and
prospects for sustained performance or profitability of the
Company, any member of the Group or relevant business unit
(as appropriate); or
(vi) a material failure of risk management in the Company,
any member of the Group or to a relevant business unit
(as appropriate),
or an individual being (or having been): a member of; an employee
of; or responsible for, a business unit, the Company or a member of
the Group that suffers (or may or could reasonably have suffered)
any of the same;
(d) where the grant, vesting, exercise, payment or release of an award
would not be sustainable according to the financial situation of the
Group as a whole nor justified on the basis of the performance of
the Group, the relevant business unit and the relevant individual;
(e) conduct or behaviour by an individual that, following an investigation,
is reasonably considered by the Committee to constitute a breach of
the Company’s values and/or standards as stipulated by the Group’s
Code of Conduct or any of the Company’s policies, procedures or
any provision of any staff handbook in force from time to time;
(f) unreasonable failure by an individual to protect the interests of the
Group’s stakeholders;
(g) where a participant ceases to be an employee by reason of their
retirement (as determined by the Committee) at any time prior to
payment or vesting, but becomes employed in an executive role by
any entity other than a role for which they receive no remuneration;
(h) an error in assessing any performance conditions applicable to an
award or in the information or assumptions on which the award was
granted, vests or is exercised, paid or released; or
(i) any other circumstances that the Committee, in exercising
appropriate discretion and acting fairly and reasonably, considers to
be similar in nature or effect to those above.
Clawback provisions allow the Committee in its absolute discretion to
claw back from individuals some or all of the vested EIP awards or
paid bonus in the same circumstances outlined for malus above.
Clawback will normally apply for a period of three years following
vesting of share awards and/or payment of cash bonus unless the
Committee determines otherwise.
Similar but not identical malus and/or clawback triggers apply to existing
awards under other LSEG discretionary share incentive plans, and to
annual bonuses.
Freezing provisions
Under the EIP, the Committee may also exercise its discretion to “freeze”
an award (e.g. suspend grant, vesting, exercise or delivery of an award):
(a) where an individual is subject to any investigation, disciplinary
process or disciplinary sanction;
(b) any circumstances in which the Committee may apply its discretion
to apply malus/clawback (as explained above); or
(c) in any other circumstances that the Committee, in exercising its
discretion and acting fairly and reasonably, considers appropriate.
Recruitment policy
When determining the remuneration package for a newly appointed
Executive Director, the Committee would seek to apply the following
principles:
— The package should be market competitive to facilitate the
recruitment of individuals of sufficient calibre required by the Group.
Consistent with the UK Corporate Governance Code, the Committee
would intend to pay no more than it believes is necessary to secure
the required talent.
— The ongoing remuneration package would normally include the key
elements on the same terms as those set out in the policy table for
Executive Directors.
— The maximum level of variable remuneration which may be awarded
on recruitment (excluding any buy-outs referred to below) is 850% of
salary. Incentive awards made in the first year of appointment may be
subject to different performance measures and targets appropriate
to the newly recruited Executive Director.
— Recognising that the Group competes for talent in the international
financial services sector, on an exceptional basis, the Committee
has the ability to include other elements of pay which it feels
are appropriate taking into account the specific commercial
circumstances (e.g., for an interim appointment). However, this
would remain subject to the limit on variable remuneration set
out above. The rationale for any such component would be
appropriately disclosed.
— In addition, where an individual forfeits arrangements as a result of
appointment, the Committee may offer a buy-out, in such form as the
Committee considers appropriate taking into account all relevant
factors which may include the vehicle, expected value and timing
of forfeited opportunities. Any such buy-out will be limited to the
commercial value of payments and awards forfeited by the individual.
Remuneration Policy Report continued
133 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
— Where an Executive Director is required to relocate from their home
location to take up their role, the Committee may provide reasonable
relocation assistance and other allowances including expatriate
assistance. Global relocation support (normally for up to five years)
and any associated costs or benefits (including but not limited to
housing, school fees, tax preparation and filing assistance and flights
back to the home country) may also be provided if business needs
require it. Should the executive’s employment be terminated without
cause by the Group, repatriation costs will be met by the Group.
— In the event that an internal candidate is promoted to the Board,
legacy terms and conditions would normally be honoured, including
pension entitlements and any outstanding incentive awards.
— The remuneration package for a newly appointed Non-Executive
Director would normally be in line with the structure set out in the
policy table for Non-Executive Directors (see page 135).
Service contracts and payments for departing Directors
The Group’s current policy is that Executive Directors’ service
agreements should have notice periods that are no longer than
12 months. The Group may terminate an Executive Director’s service
agreement by making a payment in lieu of notice of a sum equal to
salary, pension, flexible benefits allowance, and life and medical
insurance (but excluding bonus and share incentives) in respect of
any unexpired period of notice, plus any accrued unused holiday
entitlement. Consideration will be given to appropriate mitigation terms
(including payments in instalments) to reduce payments in lieu of notice
made on termination in the event of the Executive Director commencing
alternative employment, being appointed as a Non-Executive Director
or providing services pursuant to a consultancy agreement in the
period that would have been served as notice following the Executive
Director’s departure.
The Group may pay an Executive Director’s reasonable legal fees for
receiving advice in connection with their employment or its termination.
The lawful termination mechanisms described above are without
prejudice to the Group’s ability in appropriate circumstances to
terminate in breach of the notice period referred to above, and thereby
to be liable for damages to the Executive Director. Liquidated damages
clauses are not used.
In the event of termination by the Group, an Executive Director may
be paid an amount in respect of any statutory and/or contractual
claims they may have in connection with their employment and/or
its termination. Directors’ and Officers’ liability insurance and an
indemnity to the fullest extent permitted by the law and the Group’s
Articles of Association are provided to the Executive Directors for
the duration of their employment and for a minimum of seven years
following termination.
The Committee considers that this is consistent with current best
practice and this approach will generally be adopted for new
appointments. Where appropriate and when recruiting non-UK based
Directors, the Committee may agree different terms based on local
legal requirements or market practice.
Treatment of variable incentives
Annual bonus
Individuals may be considered for an annual bonus in respect of the
period prior to cessation. Any award would be at the discretion of the
Committee, subject to the Executive Director’s performance and period
of employment and subject to performance targets in the usual way.
Deferred Bonus Plan
For good leavers, awards will usually vest at the normal vesting date,
although the Committee may determine that awards vest on cessation
of employment. Awards will normally vest in full for a good leaver,
but the Committee has discretion to pro-rate the award if appropriate
to do so. If the vesting of a good leaver’s award(s) is required to be
accelerated due to local law requirements (including tax law), the
Committee would ordinarily impose a post-vesting holding period on
the resulting net-of-tax shares for the balance of the original vesting
period, during which the leaver would not be permitted to sell or transfer
those shares. Good leavers are those who cease to be an employee of
a member of the Group by reason of death, injury, disability, ill-health,
redundancy, the sale of the individual’s employing business or the
transfer of the Company out of the Group, or any other reason which
the Committee decides in its discretion (having regard to a range of
relevant factors including the Executive Director’s performance, length
of service and circumstances of their departure), and retirement from
a professional career or to work in a governmental capacity or for
a non-profit organisation and with agreement from the Company/
Committee will also be an express good leaver reason.
Where an individual is not considered to be a good leaver, unvested
awards will lapse. Where an individual is summarily dismissed, all awards
will lapse.
Deferred unvested awards are subject to malus and vested awards are
subject to clawback.
Long Term Incentive Plan 2014/Equity Incentive Plan
For good leavers, awards will normally vest at the normal vesting date
and following the end of the performance period, unless the Committee
determines that awards should vest following cessation of employment.
The two-year post-vesting holding period following the end of the
performance period will normally continue to apply unless the
Committee determines otherwise. If the vesting of a good leaver’s
award(s) is required to be accelerated due to local law requirements
(including tax law), the Committee would ordinarily impose a post-
vesting holding period on the resulting net-of-tax shares for the balance
of the original vesting period, during which the leaver would not be
permitted to sell or transfer those shares. Vesting will be subject to
performance and unless the Committee determines otherwise (or that
another basis of reduction is appropriate) pro-rated for time in
employment. Good leavers are those who cease to be an employee of
a member of the Group by reason of death, injury, disability, ill-health,
redundancy, and the sale of the individual’s employing business or
transfer of the Company out of the Group, any other reason which the
Committee decides in its discretion, having regard to a range of relevant
factors including the Executive Director’s performance, length of service
and circumstances of their departure, and (in the case of the Equity
Incentive Plan) retirement from professional career or to work in
a governmental capacity or for a non-profit organisation and with
agreement from the Company/Committee is also now included as
an express good leaver reason.
Where an individual is not considered to be a good leaver, unvested
awards will lapse.
Unvested awards are subject to malus and vested awards are subject to
clawback as detailed above.
London Stock Exchange Group plc
Annual Report 2023
134
Directors’ Remuneration Report continued
Buy-out awards
If a departing Executive Director holds a buy-out award granted to
them in connection with their appointment, that award will be treated
in accordance with its terms.
Detailed share plan provisions
Share awards are subject to the terms of the relevant plan rules under
which the award has been granted. The Committee may adjust or
amend awards only in accordance with the provisions of the plan rules.
This includes making adjustments to awards to reflect certain corporate
events, including a variation in the Company’s share capital, a demerger
or a special dividend. In change of control circumstances, all LTIP and
EIP awards will normally vest on an accelerated basis to the extent that
the performance conditions are satisfied, and, unless the Committee
determines otherwise, subject to time pro-rating. Deferred Bonus
awards will normally vest in full. The Committee may also allow or
require some or all of an award to be exchanged if not yet vested.
Individual terms
David Schwimmer entered into a service agreement with the Group on
12 April 2018 and was appointed with effect from 1 August 2018. David
Schwimmer’s service agreement may be terminated by either party
giving at least 12 months’ notice. Alternatively, the Group may terminate
the contract by payment in lieu of notice of a sum equal to 12 months’
salary, pension, flexible benefits allowance, and life and private medical
insurance (but excluding bonus, share incentives and car transportation).
Any payment in lieu of notice will be paid in equal monthly instalments
from the date of termination of the employment. Should Mr Schwimmer
commence alternative employment, be appointed as a Non-Executive
Director or provide services pursuant to a consultancy agreement in the
relevant period (of 12 months) following his departure from the Group,
each remaining instalment will be reduced by one-twelfth of the annual
remuneration earned from the alternative employment, directorship or
consultancy arrangement. Payments of the instalments may be required
to be deferred until six months after termination by US tax rules applying
to Mr Schwimmer. To the extent that any payment or benefits payable
to Mr Schwimmer under his service agreement or under any bonus or
share incentive plan would be subject to US excise tax, the payments
and benefits may be reduced if this would result in Mr Schwimmer
receiving a greater after-tax amount than if the benefits were not
reduced. On termination (other than by reason of summary dismissal)
Mr Schwimmer will be eligible to receive a pro-rata bonus for the
year in which his employment is terminated subject to Group and
personal performance.
Michel-Alain Proch entered into a service agreement with the
Group dated 1 November 2023 and was appointed with effect from
26 February 2024. Michel-Alain Proch’s service agreement may be
terminated by either party giving at least 12 months’ notice. Alternatively,
the Group may terminate the contract by payment in lieu of notice of a
sum equal to 12 months’ salary, pension, wellbeing and flexible benefits
allowance, and life and private medical insurance (but excluding bonus
and share incentives). Any payment in lieu of notice will be paid in equal
monthly instalments from the date of termination of the employment.
Should Mr Proch commence alternative employment, be appointed as
a Non-Executive Director or provide services pursuant to a consultancy
agreement in the relevant period (of 12 months) following his departure
from the Group, each remaining instalment will be reduced by one-
twelfth of the annual remuneration earned from the alternative
employment, directorship or consultancy arrangement. On termination
(other than by reason of summary dismissal) Mr Proch will be eligible
to receive a pro-rata bonus for the year in which his employment is
terminated subject to Group and personal performance.
Remuneration policy for other employees and consideration
of wider employee remuneration
The Committee has responsibility for overseeing arrangements for all
employees and reviews broader workforce policies and practices in
order to support decisions on executive pay.
Paying our employees fairly relative to their role, skills, experience and
performance is central to our approach to remuneration, and our reward
framework and policies support us in doing this. Our Group-wide reward
framework establishes a transparent and robust compensation structure,
elements and leverage for each career stage in the organisation,
providing the Committee with oversight of workforce remuneration.
The Committee places great importance on ensuring our pay policies
and incentives support the desired culture and behaviours of the Group.
As detailed in the “Annual bonus operation” section on page 143, bonus
awards for our Group Executive team as well as our Executive Directors
are determined in accordance with performance against Group financial
performance, Group strategic objectives and personal objectives. This
provides the Committee with greater structure in determining the bonus
of senior management as well as allowing for a greater focus on culture
and behaviours.
The Remuneration Policy for senior executives and other employees
is determined based on similar principles to Executive Directors.
For roles below the main Board, the exact structure and balance
are tailored based on various factors including the scale, scope or
responsibility of the role, development within a role and/or significant
market movement. The Committee reviews and comments on the salary,
bonus and long-term incentive awards of the senior executives
immediately below Board level and approves the overall design and
distribution of incentive awards available to all employees, including
share-based plans.
The approach in respect of base salary and benefits is generally
consistent across the organisation. Executive Directors’ and other
senior managers’ remuneration includes a greater proportion of
performance-related pay when compared to other employees.
The Committee considers this is essential to differentiate levels of
responsibility and align pay to sustainable long-term performance
and shareholders’ interests.
The majority of employees are eligible to participate in the annual
bonus plan which is subject to similar metrics to those used for the
Executive Directors. Opportunities vary by career stage. Employees
not participating in the annual bonus typically participate in another
incentive plan. For example, some sales employees participate in sales
compensation plans rather than the annual bonus plan.
Deferral of a portion of the annual bonus is operated for our Executive
Director, Group Executive and Group Leader populations. 40% of the
annual bonus for our Executive Directors is deferred into shares for a
period of three years. Below Board, our Group Executives and Group
Leaders defer 40% of their annual bonus, normally vesting in equal
tranches over three years; for participants in the Co-invest Plan, their
deferred bonus vests after three years. Participants in the Co-invest
Plan invest their deferred bonus into shares and receive a 2:1 company
match; performance measures and vesting on the match mirror those of
long-term incentive awards. The operation of bonus deferral reinforces
the alignment of the pay of our senior employees with shareholder
interests and the Group’s long-term performance.
Malus and clawback provisions apply to all awards granted under
discretionary share incentive plans.
Remuneration Policy Report continued
135 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
In setting remuneration for Executive Directors, the Committee
considers the overall approach to rewarding employees across
the Group taking into account performance, the complexity, scale,
scope or responsibility of the role, development within a role and/or
significant market movement.
We have held briefings with People Leaders and Executive Committee
members to explain changes to the Reward Framework and alignment
with the Executive Director Remuneration Policy. While employees are
not directly consulted on the development of the Remuneration Policy
for Executive Directors, employee forums held in key regional locations
give employees the opportunity to provide feedback and express their
views on any topic including executive remuneration.
The Committee receives ongoing regulatory updates and information
on external market practices from its independent external advisers who
provide additional context for decisions.
Consideration of shareholders’ views
The Committee is mindful of shareholder views when setting
and evaluating ongoing remuneration principles and commits to
consulting with shareholders prior to any significant changes to the
Remuneration Policy.
In formulating the revised 2024 Policy, we consulted extensively with
nearly 100 shareholders, representing approximately 80% of LSEG’s
voting rights, and proxy agencies. We are grateful for the valuable input
provided by everyone we engaged with during this process, which
informed the detail of our revised Policy. Overall, the majority of
shareholders were supportive of our proposals and recognised
the rationale of our thinking in light of the transformation and high
performance of the business, both in absolute and relative terms,
under our CEO’s leadership, and the need for LSEG to compete
in a global talent market.
Policy for Non-Executive Directors
Approach to setting fees Basis of fees Other items
The fees for Non-Executive Directors are set at a level which is considered
appropriate to attract individuals with the necessary experience and ability
to make an important contribution to the Group’s affairs.
The Chair’s fee is determined by the Remuneration Committee, and the
Board is responsible for determining all other Non-Executive Director fees.
Fees are reviewed periodically to ensure they remain appropriate in the
context of: the role scope; company size, complexity and global breadth;
and wider market conditions. The Committee retains the flexibility to
increase, adjust and make one-off payments to Non-Executive Directors
based on their remit.
Fees are set taking into account the level of responsibility of each
Non-Executive Director and fees at other companies of a similar size
and complexity.
The aggregate basic fees payable to all Non-Executives combined
(excluding fees as Chair and excluding fees paid for any appointments
on subsidiary boards) are capped as set out in the Group’s Articles of
Association as they may be amended by a resolution of shareholders
from time to time. The current limit on the aggregate basic fees that are
payable is £1,500,000 per financial year.
Non-Executive Directors receive
a basic annual fee with additional
fees payable for services such as
committee chairmanship.
Non-Executive Directors are also
entitled to receive fees from
subsidiary companies if appointed
to such boards.
The Non-Executive Chair of the
Group receives an all-inclusive fee
for the role.
Fees are neither performance-related
nor pensionable.
Non-Executive Directors are not
eligible to participate in the annual
bonus or long-term incentive plans
and are not entitled to any payments
on termination.
Non-Executive Directors receive an
allowance for any Board meeting
involving intercontinental travel.
Travel and other appropriate
expenses with associated taxes
(including fees incurred in obtaining
professional advice in the
furtherance of their duties) incurred
in the course of performing
their duties are reimbursed to
Non-Executive Directors.
Non-Executive Directors are
covered by the Directors’
and Officers’ insurance and
indemnification.
Non-Executive Directors are
required to build up share
ownership of at least 1x basic
annual fees within three years
of appointment.
Non-Executive Directors have letters of appointment with no notice
period except for the Group Chair who has a notice period of six
months unless he is not re-elected by shareholders in which case his
appointment will terminate immediately. The Non-Executive Directors’
appointments are for an initial period of three years from the date of
appointment and are also subject to re-election by shareholders.
Amendments to the Remuneration Policy Report
The Committee remains mindful that regulation of companies in the
financial services sector continues to evolve. The Committee recognises
that remuneration arrangements may need to be amended in order
to comply with any new regulations which become applicable to the
Group. The Committee reserves the right to make changes to the
Policy described above in order to comply with any such regulatory
requirements which apply to the Group including any changes required
under the UK Corporate Governance Code or for regulatory, exchange
control, tax or administrative purposes, to take account of a change in
legislation, or to make minor amendments without obtaining shareholder
approval for that amendment. Where this results in a major structural
change, the Committee would expect to present a revised policy to
shareholders for approval at the following AGM.
London Stock Exchange Group plc
Annual Report 2023
136
Illustration of the application of the Remuneration Policy for
Executive Directors
The chart on the right illustrates how much the current Executive
Directors could receive under four different hypothetical performance
scenarios for the first year of this policy taking effect i.e. 2024: minimum,
mid-range, maximum and maximum assuming a 50% increase in share
price for long-term incentive awards during the vesting period. It is
important to highlight that the full impacts of the policy proposals will
not be realised until 2029 when the 2024 long-term incentive award is
released from the holding period, should stretching performance
targets be met.
Element of
remuneration Detail of assumptions
Fixed
remuneration
This comprises:
— Base salary with effect from 1 January 2024
— For David Schwimmer, benefits as they applied
on 31 December 2023 and set out in the single
figure table in the Annual Remuneration Report but
excluding the CEO’s fixed-term flight allowance
which ceased on 31 December 2023. Estimated
value of benefits for Michel-Alain who joined as
CFO on 1 March 2024
1
— Pension
Annual Bonus Assumes maximum opportunity of 300% of salary for
CEO and 200% of salary for the CFO
For mid-range scenario: assumes payment of 50% of
the maximum opportunity
For maximum: assumes payment of 100% of the
maximum opportunity
Long-term
incentives
Assumes maximum opportunity of 550% of salary
for the CEO and 400% of salary for the CFO in
conditional shares
For mid-range scenario: assumes 50% of the
maximum opportunity
For maximum: assumes vesting of 100% of the
maximum opportunity plus a second scenario
assuming a 50% increase in share price during
the performance period
David Schwimmer
Chief Executive Officer
Maximum + share price growth £17,158k
10%
13%
22%
100%
27%
50%
31%
57%
24% 44%
22%
£13,377k
£7,533k
Maximum
Mid-range
Fixed £1,689k
Fixed remuneration
Annual bonus
Long-term incentive plan
Share price growth
Michel-Alain Proch
Chief Financial Officer
Maximum + share price growth £7,775k
13%
16%
28%
100%
24%
48%
28%
56%
22% 44%
22%
£6,075k
£3,525k
Maximum
Mid-range
Fixed £975k
Fixed remuneration
Annual bonus
Long-term incentive plan
Share price growth
Legacy arrangements
The Committee may make any remuneration payments and payments
for loss of office (including exercising any discretions available to it in
connection with such payments) where the terms of the payment were
agreed/granted (i) before the policy came into effect or (ii) at a time
when the relevant individual was not a Director of the Group and,
in the opinion of the Committee, the payment was not in consideration
for the individual becoming a Director of the Group.
Remuneration Policy Report continued
Directors’ Remuneration Report continued
1 Fixed remuneration for Michel-Alain Proch includes estimated value of benefits based on
FY2023 expenses for prior CFO plus wellness allowance.
137 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
This section sets out how remuneration arrangements have operated during the past financial year (FY2023), and also provides details on how we
intend to operate our Policy during the coming year (FY2024). This report will be put to an advisory vote at the 2024 AGM. The information from this
page 137 to page 153 has been audited where required under the regulations and is indicated as audited where applicable.
Single total figure of remuneration for Executive Directors
Single total figure of remuneration
David Schwimmer Anna Manz
FY2023
£000 % of total
FY2022
£000 % of total
FY2023
£000 % of total
FY2022
£000 % of total
Fixed remuneration
Salary 1,000 1,000 750 650
Flexible benefits allowance 15 15 15 15
Benefits 229
3
135 40
4
39
Pension 100 100 75 65
Pay for performance
Annual bonus 1,582 1,433 – 802
Long term incentive – performance
1
1,800 1,974 – –
Long term incentive – share price growth
1
401 197
2
– –
Total remuneration of which 5,127 4,854 880 1,571
Fixed remuneration 1,344 26% 1,250 26% 880 100% 769 49%
Variable remuneration 3,783 74% 3,604 74% – 0% 802 51%
Notes to the table:
1 The value delivered through performance is calculated as the number of shares forecast to vest in 2024 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 three months of the financial year, being £86.34, and the share
price on the date of grant, being £70.62. 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 82% on 22 April 2023 at £80.84 per share.
David Schwimmer
3 Benefits include the cash value of private medical, income protection and life assurance plus expatriate allowances (including flight allowance which ceased on 31 December 2023) and
commuting expenses (including car transportation where appropriate) with associated taxes. David Schwimmer contributed £500 per month to the 2020 SAYE plan until it matured on 1 June 2023
and contributes £500 per month into the 2023 SAYE scheme which will mature in November 2026 with a six-month exercise window; these benefits have 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.
Further notes
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
No payments were made for loss of office during the year.
Payments to past Directors
No payments were made to past Directors during the year.
Annual Report on Remuneration
London Stock Exchange Group plc
Annual Report 2023
138
Directors’ Remuneration Report continued
Additional notes to the Single total figure of remuneration
Fixed pay
Base salary
When reviewing Executive Director salaries, and in line with our Policy,
the Committee considers multiple reference points including our sector
peers and companies in the FTSE 30.
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 and all arrangements below have
previously been disclosed.
David Schwimmer and Anna Manz receive a flexible benefits allowance
of £15,000 per annum, which is unchanged from last year. In addition,
the Executive Directors receive benefits in kind which include private
health care, permanent health insurance and life assurance
arrangements. Car transportation is also provided where appropriate.
As an expatriate from the US to UK, David Schwimmer received/receives
the following:
Expired:
— 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; this allowance ceased on
31 December 2023.
Current:
— 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 the Group terminates his employment
other than in circumstances such as serious misconduct which
would justify termination.
Save As You Earn (SAYE)
David Schwimmer contributed £500 per month into the 2020 SAYE
scheme which matured in June 2023, and he exercised on 1 June 2023.
David contributes £500 per month into the 2023 SAYE scheme which
will mature in November 2026 with a six-month exercise window.
Anna Manz contributed £500 per month into the 2021 SAYE scheme.
Anna’s 2021 SAYE scheme lapsed upon her leaving date as per the
plan rules.
Insurance and indemnification
Executive Directors are covered by the Directors’ and Officers’
insurance and indemnification.
Malus and clawback
There are no contractual malus or clawback provisions in place in
relation to benefits.
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 received 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 FY2023
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 and strategic
objectives as well as personal performance.
The Remuneration 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 FY2023 annual bonus is as per last year. The
Group bonus pool was 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. The
maximum bonus opportunity for FY23 was 225% of salary for the CEO
and 200% of salary for the CFO.
The Executive Directors’ awards are funded from the Group bonus
pool. For FY2023 bonus awards for the Executive Directors and
Group Executive team continue to be determined in accordance with
performance assessed: 60% against Group AOP; 20% against Group
strategic objectives; and 20% against personal objectives (including
divisional objectives where applicable).
Personal performance is assessed against contribution to the strategic
objectives, including cultural objectives, and against role-related goals
and expected behaviours, taking into account both what has been
achieved and how the individuals achieved their targets.
139 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
Determination of bonus for FY2023
The Committee determined the overall Group bonus pool with reference to the 12-month performance period ending 31 December 2023. The
performance measures and targets for the FY2023 Group bonus pool are set out below:
Summary assessment of strategic objectives
In determining the overall outcome of the strategic objectives for the FY2023 Group bonus pool, the Committee took into account certain factors
relating to risk, including compliance risk and resilience, which meant that despite the otherwise strong strategic performance achieved against
the objectives, the Committee determined that, on balance, the overall outcome of this component should be 28%. This outturn is lower than the
previous year’s outturn of 31%. Further details of performance against strategic objectives is set out below.
Measure Objective
ESG
alignment KPIs Performance against objectives
Outcome
achieved
Growth
Accelerate growth
within and across
Divisions; realise
transformational
growth
opportunities
Total income growth
(excl. recoveries)
Exceeded
expectations
Annualised
Subscription Value
Growth (Organic)
— Generated 8.3% income growth (excl. recoveries)
from net sales, synergy, pricing, market share,
retention; margin 47.7% (+7bps vs 2022).
— Achieved +370bps acceleration in ASV growth since
Refinitiv acquisition (vs 3.0% 1Q21), including strong
yield from elevated D&A price increase.
Progress towards
FY2024 Price yield
— Full year outcome outperformed plan; developed
2024 Pricing Strategy to outperform yield stretch
target that has been successfully executed
with customers.
Microsoft Partnership
Delivery
— Delivery of commercial releases dependent on
a series of complex development environment
enhancements – on course to deliver product in
H1 2024, ahead of schedule.
— Established Operating Model including key hires
and product roadmaps and engaging customers in
design phase.
Run rate revenue
synergies
— Delivered cumulative run-rate revenue synergies
of £158m at year end.
Delivery of M&A
business cases
— Executing Group M&A Strategy driving growth
and efficiencies, 2023 activity included the
Acadia acquisition, step-up in ownership for
LCH SA, divestment of Nest and the integration
of 2022 acquisitions.
Culture
Foster diversity,
inclusion and a
sense of belonging;
develop leadership
capability to deliver
our goals
S Engagement score — Ignited Group’s purpose through launch of new
global LSEG Values; Engagement Survey score 75%;
flat vs. previous year at a time of lower engagement
benchmarks externally.
Exceeded
expectations
Gender and Ethnic
diversity in Leadership
— EDI strategy refreshed, updating training, policies
& leaves focused on equity and inclusion.
— 42% women in Senior Leadership as of 31 Dec 23.
— 14% ethnic or racial minority at senior leadership as
of 31 Dec 23.
Performance measure Threshold Target Maximum Weighting Outcome achieved
Group AOP £2,740m £2,880m £3,210m 60% 38%
Actual £2,934m
1
Strategic Objectives 10% 20% 40% 40% 28%
Details of performance are set out below
Total 100% 66%
1 AOP excludes amortisation of purchased intangibles and non-underlying items, and is measured using budget foreign exchange rates and is on a pro-forma basis.
Actual: 28%
London Stock Exchange Group plc
Annual Report 2023
140
Directors’ Remuneration Report continued
Summary assessment of strategic objectives continued
Measure Objective
ESG
alignment KPIs Performance against objectives Outcome
Resilience
Drive risk
awareness and
management;
improve
infrastructure
and delivery
for long-term
resilience,
compliance,
sustainable growth
G Critical (P1) & significant
(P2) risk events
— Enhanced and embedding Enterprise Risk
Management Framework & Policy Governance
Framework and reducing P1/P2 incidents.
Exceeded
expectations
Top Risk Remediation — Delivering major tech infrastructural and application
transformation and supporting volatility and linked
demand surges; improved speed to market and cost
transparency.
— Investing to prepare for upcoming regulations
(e.g. DORA, PS21/3) and standards (e.g. BoE TPRM);
enhancing Operational Resilience and
Business Continuity.
Business Risk Maturity
Assessment
— Continuing to improve resilience and Increasing
business risk maturity.
Compliance policy
adherence on
a timely basis
— Mandatory training and individual policy attestation
completed per target.
Customer
Deliver an
exceptional
customer and
engagement
through our
commitment to
an open approach,
partnerships and
transparent
markets.
Demonstrate
thought leadership
and innovation in
our core customer
and partner value
propositions
S Customer Experience
(CX) Score
— Simplifying customer experience through migration,
reduced data errors, reduced outages, quicker
turnaround of Quote & Order requests; co-solutioning
and innovating with customers for their needs.
CX Score at year end above target.
Significantly
exceeded
expectations
Brand awareness — LSEG Brand campaign launched in 15 markets
globally with all related metrics demonstrating uptick
in customer engagement and sense of pride
amongst employees.
— Demonstrating thought leadership in ecosystem;
focussed campaigns on priority advocacy topics;
created partnership with Reuters Breakingviews
on policy issues.
Efficiency
Simplify our
governance,
technology,
operations,
processes and
products to enable
scalable growth
S,G Run rate cost synergies — Delivered cumulative cost synergies of £442m at
year end.
Significantly
exceeded
expectations
Delivery of Group
Strategic Programmes
— Transforming Finance systems, processes, data,
and insights to drive efficiencies, improve insights
and drive commercial outcomes.
— Reinvested capacity gained through process
automation into 19 growth business cases,
expanding coverage, depth, breadth of data.
Tech Portfolio
outcomes
— 195/195 Business Outcomes delivered for
Tech portfolio.
— Driving productivity with upgraded Corporate
systems (Intranet, Employee self-service,
automation) and IT Simplification (Cloud,
standard databases & OS).
Annual Report on Remuneration continued
141 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
Summary assessment of strategic objectives continued
Measure Objective
ESG
alignment KPIs Performance against objectives Outcome
Sustainability
Establish LSEG as
strategic enabler
and leader of
sustainable
economic growth
in ecosystem
E,S,G Sustainability Ranking
across European
Exchanges
— Ranked Top 1 or 2 in Sustainability Ranking across
European Exchanges. Brand Monitor shows 66%
of stakeholders (vs 60% in 2022) perceive LSEG as
a leader in sustainable finance.
Significantly
exceeded
expectations
Performance in 3rd
party sustainability
ratings
— Ratings maintained or improved vs 2022.
Sustainable Issuers — Growing the proportion of total issuers with
Voluntary Carbon Mark, Green Economy Mark,
or on Sustainable Bond Market; 60% increase
in ESG data usage.
Emissions — Climate Transition programme on track with 2026
and 2030 targets.
Assessment of personal performance
Executive Director Commentary
David Schwimmer,
Chief Executive Officer
— David Schwimmer has led the Group’s strong performance in an uncertain macroeconomic environment and continues to
transform our business and deliver on our strategy. He continues to grow the business at a faster rate than it had been, with
growth for the full year towards the upper end of the +6-8% guidance range. We have established a consistent track-record of
growth in our Data & Analytics business, with the ongoing improvements to our offering and strengthened customer relationships
increasingly reflected in financial performance.
— Under David’s leadership, the company is in a strong position financially; adjusted operating profit was £2.9 billion, up 7.9%
on a constant currency basis; LSEG remains highly cash-generative and we continue to actively manage our capital allocation.
The overhang on LSEG shares which was a significant drag at the beginning of the year has been seamlessly reduced with the
Blackstone Consortium placements during 2023 oversubscribed due to strong demand from investors. The Blackstone holding
has reduced from over 34% to around 11% over the year. LSEG’s share price closed 2023 at £92.74, +30% on the year, making it
one of the best performing shares in its global sector peer group.
— David continues to foster an inclusive culture, setting the tone from the top and introducing a new set of global values across the
Group. The results of the employee engagement survey were strong at 75% (flat on 2022 and against a global benchmark of
decline externally) and the participation rate of 88% was the highest it has ever been.
— David has acted boldly to bring in high-calibre senior talent, making four new ExCo appointments (CIO, CPO, Group Head of D&A
and Group Head of SAM), with three of these being external recruits. He has also secured a top calibre CFO and hired an Indices
expert to run B&I.
— David continues to drive the business forward. The reaction to LSEG’s Capital Markets Day has been positive with clear
communication of the company’s medium and long-term strategy, including raising of growth-targets, acceleration of delivery
of Microsoft products and announcement of further returns to shareholders.
— David has demonstrated a strong track record with LSEG achieving EPS and TSR performance around the upper quartile
relative to the company’s global sector peer group under his tenure. The feedback received during the Remuneration Policy
review from LSEG’s top 40 shareholders consistently recognised the importance of his role and transformational leadership
as a strength for LSEG.
Anna Manz’s personal performance was not subject to assessment for the purposes of the 2023 bonus given her resignation and forfeiture of the award.
London Stock Exchange Group plc
Annual Report 2023
142
Directors’ Remuneration Report continued
Annual Report on Remuneration continued
Based on the above context and an assessment of personal
performance, the Remuneration Committee awarded bonuses to
each of the Executive Directors as follows:
Role Chief
Executive
Officer
Chief Financial
Officer
(to 29
February
2024)
Name David
Schwimmer
Anna Manz
Bonus for
FY2023
% of salary 158% of salary 0% of salary
1
% of max 70% 0%
£ total amount £1,581,975 £0
Of which 50% is deferred £790,988 N/A
Bonus
Component
Financial Performance (60%) 64% of
maximum
N/A
Group Strategic Objectives (20%) 70% of
maximum
N/A
Personal Objectives (20%) 90% of
maximum
N/A
Compulsory deferral under existing Remuneration Policy
Executive Directors must compulsorily defer 50% of their bonus into
shares for a period of three years under the existing Policy. Dividend
equivalents will be paid in respect of deferred shares on vesting.
LTIP Awards granted in April 2020 (vesting in 2023)
The awards granted in 2020 were based on relative TSR performance
versus the FTSE 100 Index peer group and adjusted EPS performance in
the 36-month performance period to December 2022. The relative TSR
element vested at 56% and the AEPS element vested at 100%. 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 13.4% TSR performance over the three-year
period (4.3% annualised) representing 6th decile performance relative
to the FTSE 100 peer group. The vesting price at 22 April 2023 was
£80.84. These values are shown in the single figure table for the
financial year ending December 2022.
LTIP Awards granted in March 2021 (to vest in 2024)
The AEPS element of the LTIP awards made in 2021 will vest at 100%
and the Relative TSR element will vest at 0%. These vesting outcomes
reflect the delivery of AEPS growth of 18.3% CAGR over the three-year
performance period; and 8.1% TSR performance over the three-year
performance period (2.6%% annualised), representing 43rd percentile
performance relative to the FTSE 100 peer group. The TSR position
partly reflects the significant growth in the share price in the years
leading up to the start of the 2021 LTIP performance period during
which LSEG was consistently upper quartile.
The value shown in the single figure table on page 137 for the financial
year ending December 2023 represents the estimated value of the
2021 awards which will vest in March 2024. The estimated value
(including the estimated value of the award that reflects share price
growth) is based on the average share price in the final three months
of the financial year (£86.34). 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. The awards are subject to a two-year post-vesting
holding period.
The final vesting outcome (including the actual share price at vesting)
will be disclosed in the next Annual Report on Remuneration covering
FY2024.
The performance conditions applying to awards granted in March 2021
were 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 8% p.a. Less than median 0%
8% p.a. Median ranking 25%
18% p.a. or more Upper quartile ranking 100%
Straight-line pro-rating applies between these points
LTIP Awards granted in FY2023
Awards during FY2023 were granted in March under the LTIP and were
made with a value of 300% of salary for the Executive Directors.
Chief
Executive
Officer
Chief Financial
Officer
(to 29
February
2024)
Name David
Schwimmer
Anna
Manz
1
LTIP
(conditional
award)
% of salary 300% of salary 300% of salary
Face value £3,000,000 £2,250,000
Share price
2
£73.26 £73.26
Number of LTIP shares granted 40,950 30,712
1 Anna Manz resigned as CFO on 25 May 2023. Following her resignation, her 2023 LTIP
award lapsed.
2 The share price of £73.26 was determined using the closing price (MMQ) on 16 March 2023 as
approved by the Share Scheme Committee (a subcommittee of the Remuneration Committee).
The performance conditions applying to awards granted in March 2023
are as follows:
EPS element (60%) –
average adjusted
EPS growth
TSR
3
element (40%)
– relative TSR
3
growth
vs. UK FTSE 100 Index
Proportion of relevant
element which vests
Less than 6% p.a. Less than median 0%
6% p.a. Median ranking 25%
11.5% p.a. or more Upper quartile ranking 100%
Straight-line pro-rating applies between these points
3 TSR is measured over a two-month trailing average at the start and end of the performance
period and compared to the FTSE 100 Index peer group. EPS is measured over the same
performance period, three financial years ending 31 December 2025, and compared to
the FY2022 baseline.
1 No FY2023 bonus will be awarded to Anna Manz, who resigned as CFO on 25 May 2023
and left the Group on 29 February 2024.
143 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
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. Employees in Sri Lanka, including Executive Directors, are
eligible to participate in an equivalent international SAYE plan.
There is also a SharePurchase Plan, which is designed to provide share
incentives to all people in our Group, including Executive Directors,
who are not based in the UK or Sri Lanka. SharePurchase allows eligible
employees in 29 countries to purchase up to an equivalent of £500
of LSEG ordinary shares per month, who 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 2023 we
launched SharePurchase into nine new countries, meaning that this year
more than 91% 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 2023, David Schwimmer commenced saving at the maximum of
£500 per month under the SAYE, and was granted an option on exactly
the same terms as all other eligible employees. David had previously
saved into the 2020 SAYE plan at the maximum £500 per month
and exercised his 2020 SAYE option when it matured in June 2023.
Anna Manz’s 2021 SAYE option lapsed on her leaving date as per
the plan rules.
These all-employee share plans are a core component of our people
proposition and benefits offering, acting as a modest retention tool
with over 33% of eligible employees globally being enrolled in plans
during 2023.
Implementation of the Remuneration Policy during 2024 (1 January
2024 to 31 December 2024) (subject to shareholder approval)
Base salary operation:
As part of the Policy review, the Committee also considered base
salary levels for our Executive Directors, in the context of the overall
Policy changes.
As discussed in the Statement by the Chair of the Remuneration
Committee (set out on pages 118 to 123), we are proposing a total
remuneration package which appropriately reflects the CEO’s proven
ability, exceptional performance and the true market for his role and
talent, whilst remaining respectful of UK norms (both in terms of the
balance of different elements of pay and the link to short and longer-
term performance). The CEO’s salary will be £1,375,000 in FY24, at the
level required to achieve a competitive overall market positioning
broadly in line with the median of sector peers, without the need to
increase the other elements of pay to levels that would be inconsistent
with UK practice.
No changes are proposed to the salary of the exiting CFO.
A salary of £850,000 was agreed for the new CFO with a start
date of 26 February 2024.
Pension operation:
The CEO and the CFO receive a pension contribution of 10% of salary
which is in line with the wider workforce, ensuring compliance with
the UK Corporate Governance Code.
Annual bonus operation:
— For FY2024 the weighting of financial measures within the bonus
pool will be increased from 60% to 75%, incorporating both AOP and
Future Growth measures. The Group bonus pool will be determined
based on performance measures weighted 60% Group AOP, 15%
Future Growth and 25% Group Strategic Objectives to be assessed
over a 12-month performance period.
— For FY2024, 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. Bonus awards for the Executive Directors will be determined in
accordance with performance assessed: 60% against Group AOP;
15% Future Growth, 15% against Group Strategic Objectives;
and 10% against personal objectives (including divisional objectives
where applicable).
— Personal performance is assessed against contribution to the
strategic objectives, including cultural objectives, and against
role-related goals and expected behaviours, taking into account
both what has been achieved and how the individuals achieved
their targets.
— The Remuneration Committee receives input from the Risk
Committee with regard to performance related to risk culture
(awareness, transparency and accountability) when assessing
remuneration decisions.
— 60% of any bonus payment for Executive Directors will be paid
in March 2025. Under our new Policy, the remaining 40% 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, deferred 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.
Long-term incentives (granted under the Equity Incentive Plan):
Long-term incentive awards are intended to be granted under the new
EIP in 2024 in line with our revised Policy and subject to shareholder
approval. The 2024 long-term incentive awards will be subject to
a two-year holding period in addition to the three-year vesting period,
resulting in a total five-year period from the date of grant.
The Committee has given careful consideration to the target ranges
applicable to the 2024 grant, in particular to ensure that AEPS growth
targets are appropriately stretching taking into account both internal
and external forecasts. For the AEPS element (60% weighting), the
performance targets will range from 7% to 12.5% growth per annum.
This means that both the threshold and maximum end of the ranges
are higher than the targets set for the 2023 LTIP grant. To achieve
maximum vesting, an incremental £1.1bn AOP would be required in 2026,
equivalent to incremental income in the region of £2.05bn, relative
to 2023. We expect that this AEPS range will be one of the highest, if
not the highest, in the FTSE 30 and continues to demonstrate LSEG’s
commitment to setting class-leading, stretching targets. Furthermore,
the higher AEPS baseline makes AEPS CAGR growth increasingly
challenging to achieve for LSEG.
London Stock Exchange Group plc
Annual Report 2023
144
Directors’ Remuneration Report continued
Annual Report on Remuneration continued
For the TSR element (40% weighting), the relative performance targets
will be assessed against our global sector peer group and the FTSE 100,
each weighted 50:50. Performance targets will range from median to
upper quartile for both peer groups.
Malus and clawback provisions will apply to these awards, allowing
the Committee to reduce subsisting awards or request the re-transfer
of value in respect of already paid or vested awards in certain
circumstances (see page 132 above). The 2024 awards will vest three
years after the grant date subject to relative TSR and adjusted EPS
performance measures as follows:
EPS element
(60%) – average
adjusted
EPS growth
TSR element (20%)
– relative TSR
growth vs global
sector peer set
1
TSR element
(20%) – relative
TSR growth vs. UK
FTSE 100 Index
Proportion
of relevant
element
which vests
Less than 7% p.a. Less than median Less than median 0%
7% p.a. Median ranking Median ranking 25%
12.5% p.a.
or more
Upper quartile
ranking
Upper quartile
ranking 100%
Straight-line pro-rating applies between these points
1 The sector peer set includes S&P Global, Intercontinental Exchange, MSCI, Nasdaq,
CME, Moody’s, FactSet, Cboe, Experian, Morningstar, Deustche Börse, Euronext, RELX and
Wolters Kluwer.
Awards to be made during 2024
Based on the context and an assessment of personal performance,
the Remuneration Committee intends to make grants to the Executive
Directors as set out below.
Role Chief Executive
Officer
Chief Financial
Officer
Name David Schwimmer Michel-Alain Proch
Long-term incentive
award (subject to
performance)
% of
salary
550% of salary 400% of salary
Amount £7,562,500 £3,400,000
Shareholding requirements
The minimum shareholding requirement is 600 per cent of base salary
for the CEO, 400 per cent of base salary for the CFO and 200-300 per
cent of base salary for the Group Executive team. Executive Directors
will also be required to hold the lower of their actual shareholding and
100% of their MSR for two years post-departure.
Non-Executive Directors’ fees for 2024
There are no changes to Non-Executive Directors’ fees and therefore
the fee schedule for 2024 is as follows:
Fees
With effect
from 1 Jan
2023
With effect
from 1 Jan
2024
Group Chair £625,000 £625,000
Senior Independent Director £150,000 £150,000
Non-Executive Director base fee
(inclusive of Committee memberships) £95,000 £95,000
Audit/Remuneration/Risk Committee Chair £40,000 £40,000
Non-Executive Directors are also required to build up a shareholding
requirement of 1x basic annual fees, to be built up within three years
of appointment.
Non-Executive Directors’ remuneration
Non-Executive Directors’ remuneration is determined by the Board
and is neither performance-related nor pensionable. The Chair’s
fee is determined by the Remuneration Committee. The fees for
Non-Executive Directors are set at a level which is intended to
recognise the significant responsibilities of Directors and to attract
individuals with the necessary experience and ability to make an
important contribution to the Company’s affairs. Comparisons are
made with fees paid at FTSE 30 companies.
A travel allowance of £4,000 per intercontinental trip for Non-Executive
Directors reflects the global nature of the Group’s business and the
additional time commitment required for travel. The Group Chair is not
eligible for this allowance as he receives an all-inclusive fee for his role.
Travel and other appropriate expenses with associated taxes
(including fees incurred in obtaining professional advice) incurred
in the course of performing their duties are reimbursed to the Chair
and to the Non-Executive Directors.
The Chair and the Non-Executive Directors do not participate in any of
the Company’s annual bonus or long-term incentive plans and are not
entitled to any payments on termination.
145 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
The original date of appointment as Directors of the Company is as follows:
Name
Date
appointed
Date of letter
of appointment Time to expiry Notice period
Date of
resignation
LSEG Committee
membership/
chairmanship
Other subsidiaries/
committees
Don Robert 01/01/2019 01/01/2022 31/12/2024 6 months Group Chair,
Nomination Chair,
Remuneration
Dr. Val Rahmani 20/12/2017 20/12/2023 19/12/2026 None Risk, Nomination,
Remuneration
Professor
Kathleen DeRose
28/12/2018 28/12/2021 27/12/2024 None Risk Chair, Audit,
Nomination
Cressida Hogg CBE 08/03/2019 08/03/2022 07/03/2025 None SID, Remuneration,
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 Remuneration Chair,
Risk, Nomination
Shareholder directors
Martin Brand
1
29/01/2021 29/01/2021 Nomination
Scott Guthrie
2
01/02/2023 01/02/2023 Nomination
Directors who stood down from the Board during the year:
Erin Brown
1
29/01/2021 29/01/2021 17/03/2023 Nomination
Douglas Steenland
1
29/01/2021 29/01/2021 20/09/2023 Nomination
1 Shareholder directors representing Blackstone.
2 Shareholder director representing Microsoft.
Non-Executive Directors’ remuneration table
FY2023
LSEG Fees
£000
FY2023
Taxable
Benefits
1
£000
FY2023
Total
£000
FY2022
LSEG Fees
£000
FY2022
Taxable
Benefits
1
£000
FY2022
Total
£000
Don Robert 625 14 639 625 34 659
Dr. Val Rahmani 95 66 161 80 50 130
Professor Kathleen DeRose 135 35 170 110 41 151
Cressida Hogg CBE 150 – 150 150 23 173
Dominic Blakemore 135 – 135 110 16 126
Tsega Gebreyes 95 2 97 80 24 104
Ashok Vaswani 95 72 167 80 44 124
William Vereker
2
107 – 107 20 – 20
Martin Brand
3
– – – – – –
Scott Guthrie
3
– 16 16 – – –
Erin Brown
3
– 16 16 – 43 43
Douglas Steenland
3
– 7 7 – 23 23
Total Non-Executive Directors’ fees 1,437 227 1,664 1,255 298 1,553
1 Taxable benefits relate to any travel allowance payments and travelling expenses, including grossed up taxes where applicable.
2 William Vereker was appointed to the Board on 3 October 2022. He was appointed as Chair of the Remuneration Committee on 14 September 2023, taking over from Cressida Hogg.
3 Shareholder directors appointed to the Board on 29 January 2021 in the case of Martin Brand, Doug Steenland and Erin Brown and on 1 February in the case of Scott Guthrie, who do not receive
a fee for their roles.
London Stock Exchange Group plc
Annual Report 2023
146
Directors’ Remuneration Report continued
Annual Report on Remuneration continued
Outside appointments
Executive Directors are allowed to accept appointments as Non-
Executive Directors of other companies with the prior approval of the
Chair or Nomination Committee as appropriate. Approval will only be
given where the appointment does not represent a conflict of interest
with the Company’s activities, the Director has sufficient time to
undertake the additional role and where the wider exposure gained will
be beneficial to the development of the individual. Executive Directors
may retain fees to encourage them to seek out the development
opportunities and valuable experience afforded by these appointments
and in recognition of the personal responsibility Executives assume in
such roles.
Anna Manz was a Non-Executive Director of ITV plc and a member of
their Remuneration and Audit and Risk Committees until 31 August 2023.
For FY2023 Anna received fees of £52,265 (plus £509 of expenses
allowances (taxable benefits)) in connection with this appointment.
She was appointed as a Non-Executive Director of AstraZeneca from
1 September 2023. For FY2023 she received fees of £40,000 in
connection with this appointment.
Director changes during the year
Departure terms for Anna Manz
Anna Manz resigned as CFO on 25 May 2023. Following publication
of the Group’s 2023 Full Year Annual Results on 29 February 2024,
she stepped down from the Board and left the Group. In line with the
Policy in effect at the time of her resignation, her unvested awards will
be treated as outlined below:
Unvested Award Type
Grant
Date
Vest
Date
No.
Shares
Granted
No.
Shares
Forfeited
Johnson Matthey 2020 bonus
forfeiture (LSEG RSU Buy-out)
10 Aug
2021
10 Aug
2024
2,900 None
Johnson Matthey
foregone 2020 LTI grant
(LSEG PSU Buy-out)
24 Nov
2020
26 Mar
2024
11,719 11,719
Deferred
Bonus (RSUs)
FY2020
Bonus
26 Mar
2021
07 Mar
2024
715 715
FY2021
Bonus
06 Apr
2022
13 Mar
2025
5,616 5,616
FY2022
Bonus
17 Mar
2023
18 Mar
2026
5,474 5,474
LSEG LTIP
(PSUs)
2021-23
LTIP
26 Mar
2021
26 Mar
2024
27,612 27,612
2022-24
LTIP
06 Apr
2022
07 Apr
2025
23,325 23,325
2023-25
LTIP
17 Mar
2023
17 Mar
2026
30,712 30,712
2021 UK SAYE Option 01 Oct
2021
01 Nov
2024
277 277
Total 108,350 105,450
Notes:
– Under the Policy in effect at time of resignation, minimum shareholding requirements were
300% of salary to be held for two years post-employment. No awards vested prior to her
termination date and Anna does not own any shares outright. However, the Johnson Matthey
2020 bonus forfeiture award (LSEG RSU Buy-out) will vest in full on 10 August 2024 and must
be held for two years post Anna’s termination date.
– All forfeited awards lapsed on Anna’s resignation date.
Anna continued to receive her contractual salary, pension allowance and benefits until her
termination date and was and is not eligible to receive any of the following:
– 2024 salary increase
– 2023 Performance Year Annual Bonus
– 2024 Performance Year Annual Bonus
– 2024 long-term incentive award grant
Appointment terms for Michel-Alain Proch
Michel-Alain Proch joined LSEG on 26 February 2024 and was
appointed to the Board as CFO on 1 March 2024. Prior to joining LSEG,
Michel-Alain was the Group Chief Financial Officer for Publicis Groupe
SA and a member of their Management Board.
Michel-Alain will receive a salary of £850,000 and a pension cash
allowance of 10% of salary, along with other benefits offered to the wider
workforce in the UK. He will also be eligible to participate in the Annual
Bonus and Equity Incentive Plan under the Policy in place for 2024.
If the proposed Policy is approved, this includes an annual bonus
opportunity with a maximum of 200% salary and a maximum long-term
incentive grant of 400% of salary. Michel-Alain forfeited various incentive
awards which were inflight at the time of his leaving Publicis Groupe SA;
LSEG has agreed to compensate for the forfeited amounts partly
through an enhancement to Michel-Alain’s FY24 bonus opportunity. The
combined regular FY24 bonus (based on a pro-rated opportunity for the
time served over FY24) plus the compensatory amount will mean that
his overall FY24 bonus opportunity will be equal to 200% of his salary.
Michel-Alain will also be granted awards to compensate for
remuneration forfeited at Publicis Groupe SA as follows:
— Publicis Groupe’s FY2023 Annual Bonus: LSEG will pay a cash
amount equivalent to the evidenced forfeited amount, up to
a maximum of £657,000. This will be paid at the earliest practical
pay date.
— Publicis Groupe 2021 LTIP (vesting date of March 2024): Given the
proximity of the vesting date with Michel-Alain’s start date at LSEG,
the Group will replace this with a cash buy-out award reflecting the
actual outcome of the Publicis Groupe 2021 LTIP award. The cash
amount is subject to evidence of forfeiture and will be payable in
the first applicable payroll following publication of the award outcome
for the forfeited award (expected to be late April 2024).
— Publicis Groupe 2022 LTIP (vesting date of March 2025): Subject to
evidence of forfeiture, LSEG will grant a replacement PSU award with
a grant value equal to the face value of the forfeited award. The PSU
award will vest as soon as practicable following Publicis Groupe’s
formal confirmation of, and the number of shares that vest will reflect,
the performance outcome of the forfeited award.
— Publicis Groupe 2023 LTIP (vesting date of March 2026): Subject to
evidence of forfeiture, LSEG will grant a replacement time-based RSU
award vesting on the original timeline, with a grant value of 60% of
the face value of the forfeited award; vesting will not be subject to
performance conditions.
Given Michel-Alain will be relocating from Paris to London to take on
the CFO role, LSEG will provide immigration, relocation and tax/filing
support in accordance with LSEG’s usual practices and approved Policy.
147 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
Alignment between pay and performance
Total Shareholder Return (TSR) performance
The following graph shows, for the financial period ended 31 December
2023 and for each of the previous 10 financial periods, the TSR on a
holding of the Company’s ordinary shares of the same kind and number
as those by reference to which the FTSE 100 is calculated. The TSR
graph represents the value, at 31 December 2023, of £100 invested in
LSEG plc on 31 March 2014, compared with the value of £100 invested
in the FTSE 100 Index over the same period. The FTSE 100 Index has
been chosen for the purposes of this graph as it is widely used and
understood, and LSEG plc is a constituent of the index.
0
100
200
300
400
500
600
Total shareholder return
Mar 14
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 23
Dec 22
LSEG
FTSE 100
Historic levels of CEO pay
Period ended:
(12 months unless otherwise stated) CEO
CEO Single total figure
of remuneration
(£000)
Annual bonus payout
against maximum
opportunity %
Long-term incentive
vesting rates against
maximum opportunity %
31 December 2023 David Schwimmer 5,127 70% 60%
31 December 2022 David Schwimmer 4,854 64% 82%
31 December 2021 David Schwimmer 6,847 72% 100%
31 December 2020 David Schwimmer 6,479 76% 100%
31 December 2019 David Schwimmer 2,456 75% –
3
31 December 2018 David Schwimmer
1
2,153 76% –
3
29 November 2017 Xavier Rolet
2
5,799 79% 100%
31 December 2016 Xavier Rolet 6,880 91% 91%
31 December 2015 Xavier Rolet 6,526 95% 94%
9 months ended 31 December 2014 Xavier Rolet 4,587 89% 50%
31 March 2014 Xavier Rolet 6,383 93% 100%
1 Appointed as CEO on 1 August 2018.
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.
London Stock Exchange Group plc
Annual Report 2023
148
Directors’ Remuneration Report continued
Annual Report on Remuneration continued
CEO to employee pay ratio
Paying our people fairly relative to their role, skills, experience and
performance is central to our approach to remuneration, and our reward
framework and policies support us in doing this. The Committee
consider pay ratios as a useful reference point to inform pay decisions,
but also take into account a number of other internal and external
factors when determining executive pay outcomes, including:
— our reward framework which establishes the compensation structure,
elements and leverage for each career stage in the organisation,
providing the Committee with oversight of workforce remuneration;
— the Group’s financial and strategic performance, including
consideration of risk;
— each individual’s performance, including conduct and behaviour,
against personal objectives;
— external market surveys; and
— wider context and the views of shareholders and investor bodies.
The table below shows the ratios of the CEO single total figure of
remuneration (as disclosed on page 137) to the total pay and benefits
of UK people at the 25th, 50th and 75th percentile.
Year Method
25th
percentile
pay ratio
50th
percentile
pay ratio
75th
percentile
pay ratio
2023 C 61 46 34
2022 C 61 40 31
2021 C 97 63 49
2020 C 93 67 49
2019 C 31 21 19
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 Group’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 2023 total pay and benefits of the identified people was
determined based on data as at 31 December 2023.
— The 2023 total pay and benefits for the 25th, 50th and 75th
percentile people are as follows: £84,375, £111,358, £152,769.
— The 2023 base salary for the 25th, 50th and 75th percentile people
are as follows: £65,410, £90,000, £109,819.
149 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
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 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. The 2023 year-on-year increase in benefits cost for the CEO was largely due to tax filing and
immigration expenses incurred during the year.
2023 2022 2021 2020
Salary/
fees Benefits
Annual
Bonus
Salary/
fees Benefits
Annual
Bonus
Salary/
fees Benefits
Annual
Bonus
Salary/
fees Benefits
Annual
Bonus
Executive Directors
1
David Schwimmer 0% 63% 10% 2% -14% -12% 24% -23% 19% 2% -11% 5%
Anna Manz 15% 3% – 0% 27% -15% – – – – – –
Non-Executive Directors
2
Don Robert 0% -58% – 19% 584% – 0% -85% – 0% -30% –
Dr. Val Rahmani 19% 31% – 0% 1093% – 0% -73% – 7% -67% –
Professor Kathleen DeRose
3
23% -16% – 0% 640% – 38% -44% – 7% -74% –
Cressida Hogg MBE
4, 11
0% – – 39% – – 35% – – 7% 0% –
Dominic Blakemore 23% – – 0% – – 9% – – – – –
Tsega Gebreyes
5
19% -94% – 0% – – – – – – – –
Ashok Vaswani
5
19% 65% – 0% – – – – – – – –
William Vereker
6, 11
34% – – – – – – – – – – –
Martin Brand
7
– – – – – – – – – – – –
Scott Guthrie
8
– – – – – – – – – – – –
Directors who stood down from
the Board during the year:
Erin Brown
9
– -64% – – 770% – – – – – – –
Douglas Steenland
10
– -71% – – 352% – – – – – – –
Average pay of our employees 5% 4% 16% 14% 17% -15% -29% -37% -47% 3% 10% 4%
1 Calculated using data from the single total figure of remuneration table on page 137.
2 Calculated using data from the Non-Executive Directors’ remuneration table on page 145.
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 Appointed to the Board on 1 February 2023 in connection with the strategic partnership with Microsoft and does not receive a fee for their role.
9 Erin Brown stepped down from the Board on 17 March 2023.
10 Douglas Steenland stepped down from the Board on 20 September 2023.
11 William Vereker was appointed as Chair of the Remuneration Committee on 14 September 2023, taking over from Cressida Hogg.
London Stock Exchange Group plc
Annual Report 2023
150
Directors’ Remuneration Report continued
Annual Report on Remuneration continued
Relative importance of spend on pay
The table below shows the relative FY2023 versus FY2022 expenditure
of the Group on Dividends versus Total Employee Costs. These figures
are underpinned by amounts from the Notes to the Financial Statements
at the back of this report.
Year-on-year increases (%) FY2023 FY2022
Annual
Increase
Dividends Paid In Financial Period £611m £567m +8%
Total Employee Costs £2,242m £2,054m* +9%
* including underlying and non-underlying from continuing operations only.
£m
500
1,000
1,500
2,000
2,500
Relative importance of spend on pay
Total employee costs
2023
2022
2023
2022
Dividends paid in financial period
+9%
+8%
Statement of Directors’ shareholdings and share interests as at 31 December 2023
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 a MSR for two years post-employment. Current shareholdings are summarised in the following table:
Shares held Options/Awards held
Requirement
(% salary/fee)
Shareholding
as at
31 December
2023
(% salary/
fee)
2,4
Requirement
met
3
Owned
outright
Unvested and
subject to
performance
conditions
Unvested and
subject to
continued
employment
1
Vested but
not exercised
Executive Directors
David Schwimmer 81,396 119,315 29,475 – 400 898% Ye s
Anna Manz – – 3,177 – 300 –
Non-Executive Directors
Don Robert 10,000 – – – 100 148% Ye s
Val Rahmani 1,429 – – – 100 140% Yes
Kathleen DeRose 1,500 – – – 100 146% Ye s
Cressida Hogg CBE
5
1,150 – – – 100 71%
Dominic Blakemore 1,611 – – – 100 157% Ye s
Martin Brand
6
– – – – – N/A N/A
Tsega Gebreyes 1,200 – – – 100 117% Ye s
Ashok Vaswani
7
581 – – – 100 57%
William Vereker
8
– – – – 100 –
Scott Guthrie
6
– – – – – N/A N/A
Directors who stood down from
the Board during the year:
Erin Brown
6
– – – – – N/A N/A
Douglas Steenland
6
– – – – – N/A N/A
1 Refers to Deferred Bonus Plan and SAYE.
2 Includes shares held outright plus, on a “net of expected taxes” basis, conditional share awards granted 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 £92.74 (being the closing share price – MMQ – on 29 December 2023).
5 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.
6 MSR does not apply as are not paid a fee for their service.
7 Has three years from date of appointment on 1 June 2021 to achieve MSR.
8 Has three years from date of appointment on 3 October 2022 to achieve MSR.
Note: There have been no further changes in these interests between 31 December 2023 and 28 February 2024.
151 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Remuneration Report continued
Directors’ interests in ordinary shares – beneficial, family and any connected persons
Ordinary shares held
1
Options/Awards with
performance conditions
2
Options/Awards without
performance conditions
3,4
Total Interests
31 Dec 2023 31 Dec 2022 31 Dec 2023 31 Dec 2022 31 Dec 2023 31 Dec 2022 31 Dec 2023 31 Dec 2022
Executive Directors
David Schwimmer 81,396 61,762 119,315 111,018 29,475 29,374 230,186 202,154
Anna Manz
4
– – – 62,656 3,177 9,508 3,177 72,164
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 1,500 – – – – 1,500 1,500
Cressida Hogg CBE 1,150 1,150 – – – – 1,150 1,150
Dominic Blakemore 1,611 928 – – – – 1,611 928
Martin Brand – – – – – – – –
Tsega Gebreyes 1,200 1,200 – – – – 1,200 1,200
Ashok Vaswani 581 – – – – – 581 –
William Vereker – – – – – – – –
Scott Guthrie 623 – – – – – 623 –
Directors who stood
down from the Board
during the year:
Erin Brown – – – – – – – –
Douglas Steenland – – – – – – – –
1 Ordinary shares include both ordinary shares listed on the London Stock Exchange and American Depositary Receipts (ADRs) representing ordinary shares (at a ratio of 1 ordinary share
(LSEG) : 4 ADR (LNSTY)).
2 LTIP performance shares are structured as nil-cost options prior to 2021, since 2021 awards were granted as conditional awards.
3 Unvested awards in the Deferred Bonus Plan and share options granted under SAYE.
4 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.
Note: There have been no further changes in these interests between 31 December 2023 and 28 February 2024.
London Stock Exchange Group plc
Annual Report 2023
152
Directors’ Remuneration Report continued
Annual Report on Remuneration continued
Long Term Incentive Plan table
The Long Term Incentive Plan 2014 has one element applicable only to Executive Directors, which is a two-year holding period post vesting.
Awards of Performance shares are granted in the form of conditional awards since 2021, prior awards were granted as nil-cost options.
Awards granted from 2020 under the existing Policy are dependent on an adjusted EPS growth target for 60% of the award, with the other 40%
dependent on Relative TSR performance. Details of performance conditions are set out on page 142.
The table below sets out the Executive Directors’ Long Term Incentive Plan awards (including the release (exercise) of vested shares in FY2023),
as at 31 December 2023:
Date of
award
Price
at
award
date £
Number of shares
Price at
vesting
date £
Value at
vesting date
£
Exercise
date
Price at
exercise
date £
Value at
exercise
date £ Comment
At start
of year
Award
during
the
year
Vested
during
year
Lapsed
during
year
At end
of year
Vesting
date
David
Schwimmer
22/04/2020 73.50 32,653 – 26,854 5,799 – 22/04/2023 80.84 2,170,877 – – – FY2023
Actual
26/03/2021 70.62 42,480 – – – 42,480 26/03/2024 86.34 2,200,634 – – – FY2024
Estimate
1
06/04/2022 83.60 35,885 – – – 35,885 07/04/2025 – – – – –
17/03/2023 73.26 – 40,950 – – 40,950 17/03/2026 – – – – –
111,018 40,950 26,854 5,799 119,315 2,170,877 FY2023
Actual
2,200,634 FY2024
Estimate
1
Anna Manz 24/11/2020 78.84 11,719 – – 11,719 – 26/03/2024 – – – – – FY2023
Actual
26/03/2021 70.62 27,612 – – 27,612 – 26/03/2024 – – – – – FY2023
Actual
06/04/2022 83.60 23,325 – – 23,325 – 07/04/2025 – – – – – FY2023
Actual
17/03/2023 73.26 – 30,712 – 30,712 – 17/03/2026 – – – – – FY2023
Actual
62,656 30,712 – 93,368 – FY2023
Actual
1 FY2024 Estimate: Average share price over the period from 1 October 2023 to 31 December 2023 with vesting forecast at 60%.
All estimates are shown separately in bold. They will be fully disclosed in next year’s Annual Report on Remuneration.
153 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Remuneration Committee – meetings
During the financial period ending 31 December 2023, the Committee held four scheduled meetings. Here is a summary of the items they
discussed:
Routine Non-Routine
February 2023 — FY2022 Performance and Bonus approval
— FY2023 Bonus Design
— FY2023 LTIP grants and anticipated vesting of previous
LTIP awards
— CEO and Group Executive performance and pay review
— FY2022 Directors’ Remuneration Report
— Shareholder consultation feedback
— 2023 Remuneration Policy review
June 2023 — FY2023 Performance and Bonus update
— Governance update, including shareholder feedback
on FY2022 Directors’ Remuneration Report
— 2024 Remuneration Policy & Reward Framework review
— Malus & clawback
September 2023 — 2024 Remuneration Policy & Reward Framework review
— Executive Committee member update
December 2023 — FY2024 Bonus Design
— Share plans vesting update
— Executive Committee performance and pay review
— 2024 Remuneration Policy –
Shareholder consultation update
— CFO appointment
February 2024
Meetings which took place
during FY2024 will be repeated
in next year’s report
— FY2023 Performance and Bonus approval
— FY2024 Bonus Design
— Performance and determination of CEO and Group
Executives’ remuneration
— FY2024 LTIP grants and anticipated vesting of previous
LTIP awards
— FY2023 Directors’ Remuneration Report
— 2024 Remuneration Policy –
Shareholder consultation feedback
— Approval of EIP rules
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 and the binding vote on the Remuneration Policy
Report at the 2023 AGM.
Votes for Votes against
Votes cast
Votes
withheldNumber % Number %
Remuneration Policy Report (2023 AGM) 422,134,892 97.49 10,868,858 2.51 433,003,750 2,462,484
Annual Report on Remuneration (2023 AGM) 426,935,909 98.60 6,068,811 1.40 433,004,720 2,461,514
Advisers
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 £202,420
(excluding VAT) based on actual time spent for their services to the Committee.
Ellason were appointed as an additional independent adviser by the Committee in 2023 to support with the review of LSEG’s Remuneration Policy.
During the year, Ellason received £91,160 (excluding VAT) based on actual time spent for their services to the Committee.
Willis Towers Watson and Ellason are both 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
William Vereker
Chair of the Remuneration Committee
28 February 2024
Directors’ Remuneration Report continued
London Stock Exchange Group plc
Annual Report 2023
154
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 2023 with comparatives for the year ended
31 December 2022.
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. For further
information on matters of strategic importance, please refer to the
Strategic Report.
Index to Directors’ Report and other disclosures
AGM 259
Articles of Association 155
Board of Directors 94
Branches 158
Business model 04
Conflicts of interest 103
Directors’ indemnity 103
Directors’ loss of office 137
Dividends 154
Employee engagement 71
Employment information 156
Engagement with suppliers 74
Engagement with stakeholders and Section 172 statement 69
Essential contracts and change of control 157
Financial instruments 215
Going concern 159
Greenhouse gas emission reporting 68
Listing Rule 9.8.4 R cross-reference table 154
Modern slavery 62
Political donations 157
Purchase of own shares 155
Related party transactions 239
Share capital 155
Substantial shareholders 259
Viability statement 89
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 157
Provision of services by a controlling shareholder N/A
Shareholder waivers of dividends 154
Shareholder waivers of future dividends 154
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 02 to 89, 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 2024 and is incorporated into this Directors’ Report
by reference.
Results
The Group made a profit before taxation from continuing operations,
before non-underlying items for the year, of £2,692 million (2022:
£2,568 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 £1,195 million
(2022: £1,241 million). Profit after taxation from continuing operations for
the year was £948 million (2022: £979 million).
Dividends
The Directors are recommending a final dividend for the year of 79.3
pence (2022: 75.3 pence) per share which is expected to be paid on
22 May 2024 to shareholders on the register on 19 April 2024. Together
with the interim dividend of 35.7 pence (2022: 31.7 pence) per share
paid on 20 September 2023, this produces a total dividend for the
period of 115.0 pence (2022: 107.0 pence) per share estimated to
amount to £611 million (2022: £594 million). For 2023, the interim
dividend was calculated as one-third of the prior full-year dividend.
Please note that as announced as part of LSEG’s Capital Markets Day
on 16 and 17 November 2023, LSEG introduced a simplified dividend
policy which takes effect from 2024. More information on this can be
found on page 76 and via the Investor Relations segment of our
corporate website: https://www.lseg.com/en/investor-relations.
A standard dividend waiver agreement is in place for the employee
benefit trust (EBT). Further information on the EBT can be found in
the share capital notes on page 230.
Directors’ Report
155 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Report continued
Share capital
As at 31 December 2023, the Company had 548,841,716 ordinary shares
made up of: (i) 520,585,072 voting ordinary shares of 6
79/86
pence
each (excluding treasury shares) (94.85%), which carry one vote each;
(ii) 20,623,911 limited-voting ordinary shares of 6
79/86
pence each (3.76%),
which carry one-tenth of a vote each; and (iii) 7,632,733 ordinary shares
held in treasury (1.39%). The total number of voting rights in LSEG on
31 December 2023 was 522,647,463. More information on the
Company’s share capital can be found in note 18 on page 230.
During the year to 31 December 2023, the Company returned capital
to shareholders via its on-market share buyback programme and a
directed buyback. As a result of the 2023 share buyback purchases,
earnings per share increased by 1.8 pence.
The £750 million on-market share buyback programme launched
in 2022 and was completed in 2023. This saw LSEG purchase
£750 million of its voting ordinary shares at an average price of £78.64.
These purchases were phased over three tranches over a period of
12 months, with the first tranche having commenced on 5 August 2022
and the third and final tranche concluding on 10 July 2023. Please see
the below section on Authority to Purchase Shares for a summary of
the Company’s share buyback programme.
The September 2023 directed buyback programme was completed
after LSEG agreed to a limited variation of the lock-up arrangements
contained in the Relationship Agreement. This enabled LSEG to
make an off-market purchase of £750 million worth of limited-voting
ordinary shares from the Consortium as part of a share placing by the
Consortium. Please see page 76 for a more in-depth explanation of the
scheme and the below section on Authority to Purchase Shares for
a summary of the programme.
On 12 October 2023, 21 million limited-voting ordinary shares of 6
79/86
pence each held by the Consortium were converted into voting ordinary
shares of 6
79/86
pence each on a one-for-one basis. These converted
ordinary shares were admitted to trading on 12 October 2023.
The Company issued 98,158 new ordinary shares during the year.
As at 28 February 2024, the total number of voting rights in the
Company was 522,647,463. The figure 522,647,463 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.
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.
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).
Further information on compliance with the Code can be found on
page 105.
The Corporate Governance Statement sets out how the Company
complies with the Code and includes a description of the main features
of our internal control and risk management arrangements in relation
to the financial reporting process, this is set out on pages 103 and 104.
The information required by DTR 7.2 can be found in the Directors’
Report on page 154. Further information regarding the composition
and operation of the Board and its Committees, including the Board
Diversity Policy, can be found on pages 94 to 98.
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 106 to 108.
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
55,364,719 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.
London Stock Exchange Group plc
Annual Report 2023
156
The Company utilised the authority it obtained at its 2022 AGM to
complete its on-market share buyback programme during 2023.
The programme was announced on 5 August 2022 and the Company
purchased £750 million worth of voting ordinary shares. The buyback
was phased over a period of 12 months in three tranches with the first
tranche commencing on 5 August 2022 and completing on 5 October
2022, the second tranche commencing on 1 December 2022 and
completing on 14 March 2023 and the third tranche commencing on
27 March 2023 and completing on 10 July 2023. The arrangements
entered into with the Consortium Shareholders to enable them to
participate in the buyback, as described in further detail in the
announcements made on 5 August 2022, 7 October 2022 and
20 March 2023 constituted small related party transactions under
the Listing Rules.
Shareholders will be asked to give a similar authority to purchase shares
at the forthcoming AGM.
Upon completion of the above on-market share buyback programme on
10 July 2023, 9,536,985 voting ordinary shares (nominal value of 6
79/86
pence) had been purchased by the Company at an average purchase
price of £78.64 per voting ordinary share for the total consideration of
£750 million. As at 31 December 2023, 7,632,733 of these ordinary
shares were held in treasury, representing 1.39% of the Company’s
issued ordinary share capital (comprising ordinary shares and limited-
voting ordinary shares). 1,904,252 ordinary shares purchased as part
of the programme were initially held as treasury shares but were
subsequently transferred to the Employee Benefit Trust on 2 March
2023 to satisfy awards under the LSEG share plans due to vest
between 1 March 2023 and 31 March 2024.
In addition, the Company participated in a directed buyback programme
during 2023 following the passing of a special resolution at the previous
AGM to give the Company authority to make off-market purchases of
shares from the Consortium.
To facilitate the programme, on 6 September 2023, LSEG agreed
to a limited variation of the lock-up arrangements contained in the
Relationship Agreement which was entered into on completion of the
Refinitiv acquisition. The Consortium was therefore permitted to dispose
of up to a further 38 million shares on a one-off basis by means of
a placing, sale of call options and directed buyback. On 11 September
2023, LSEG completed an off-market purchase of 9,500,466 limited-
voting ordinary shares at a purchase price of £78.94 per limited-voting
ordinary share from the Consortium. The total consideration of the
off-market purchase was £750 million, in line with the Company’s
expectations in its notice of AGM on 24 March 2023. For more
information on the directed buyback, please see page 76 which
falls within the Section 172(1) Statement.
The authority given by shareholders at the 2023 AGM for LSEG to make
off-market purchases of its own shares pursuant to the directed buyback
contract entered into between LSEG and the Consortium shareholders
on 11 May 2023 will expire at the 2024 AGM. As such, shareholders will
be asked to replace the authority at the forthcoming AGM. For further
details on the terms of the directed buyback contract, please see
LSEG’s notice of annual general meeting circulated on 24 March 2023
and available on LSEG’s website.
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
£12,768,220 (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 £25,536,440
(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
2023, according to the register maintained under the Companies Act
2006, are set out in the Directors’ Remuneration Report on page 151. 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 3 of the Companies Act 2006) in force during the course of
the year ended 31 December 2023 can be found on page 103. Such
qualifying third-party indemnity provisions remain in force as at the
date of approving this Directors’ Report.
Employees
Information on the Group’s employees including the Group’s approach
to human rights and diversity, the outcomes relating to the Group’s
employee engagement survey and further examples of employee
engagement can be found in the Sustainability section starting on
page 58. Information on the Group’s share schemes is provided in the
Directors’ Remuneration Report on page 124.
The Group welcomes and gives full and fair consideration to
applications from diverse candidates, including persons with visible
and non-visible disabilities. As with all areas of inclusion, our focus is
on providing the right tools to support people 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 to 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.
We’re committed to providing a safe and inclusive environment for
everyone. The LSEG Accessibility Network works in partnership with
the Group to make sure commitments are implemented. We recognise
key observances such as International Day of Persons with Disabilities
and World Mental Health Day to raise awareness, reduce stigma and
celebrate the contribution of people with disabilities.
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.
Directors’ Report continued
157 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Directors’ Report continued
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.
Further details of our approach to climate, our targets and progress
on environmental matters, as well as methodology and verification
can be found in the Sustainability section on pages 58 to 68.
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. The large variety of analytics and data
available at LSEG enables research and development to apply current
techniques and technologies. Technical expertise features prominently
in LSEG research functions, including AI and large language models,
quantitative and data driven modelling, machine learning and natural
language processing. Research also includes significant expertise in
customer experience design and user experience.
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 direct political donations
or to incur direct 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; and
— 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 employees can establish nonpartisan
political action committees known as a ‘“PAC” that support voluntary
employee participation in the political process. Corporate 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 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.
All PAC receipts and disbursements are publicly disclosed on the
FEC’s website: https://www.fec.gov/data/committee.
Significant agreements
The following are significant agreements as at 31 December 2023 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,
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 these 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
On 22 November 2023, the amended and restated £1.425 billion
syndicated, committed, revolving credit facility agreement was further
amended and extended (the “Amended 2017 RCF”). The facility limit
was increased to £1.925 billion and the maturity date was extended
to 16 December 2027. The facility provides flexible financing capacity
for the general corporate purposes of the Group and includes
£1.925 billion euro and US dollar swingline facilities as backstop
support for commercial paper issuance.
London Stock Exchange Group plc
Annual Report 2023
158
— 2020 Credit Facility
The Company has a syndicated, committed $2 billion 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. Both the euro and US dollar
term loans have been repaid. The revolving facility offers the
Group additional flexible financing and is available for the general
corporate purposes of the Group. The revolving facility contained
two one-year extension options, both of which have been exercised.
Consequently, the final maturity date of the revolving credit facility is
now 16 December 2027.
— Terms of Amended 2017 RCF and 2020 Facility
The terms of the Amended 2017 RCF 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.
Notes
— Euro Medium-Term Notes
The Company, together with its subsidiary LSEG Netherlands B.V., has
issued to the wholesale fixed income market under its Euro Medium
Term Note Programme (the value of which is £4 billion), three €500
million tranches of euro notes due in 2024, 2027 and 2029 and two
€700 million tranches of euro notes due in 2026 and 2030. 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 sterling notes due in 2030, three
€500 million tranches of euro notes due in 2025, 2028 and 2033,
$500 million of US dollar notes due in 2024, two $1 billion tranches
of US dollar notes due in 2026 and 2028, $1.25 billion of US dollar
notes due in 2031 and $750 million of US dollar 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.
Commercial Paper
— The Company issues commercial paper to the debt capital markets
from time to time under its £1.5 billion Euro Commercial Paper
(ECP) Programme and $2.5 billion US Commercial Paper (USCP)
Programme. The programmes provide flexible financing capacity for
the general corporate purposes of the Group and are backstopped
by the £1.925 billion euro and US dollar swingline facilities available
under the Amended 2017 RCF. At 31 December 2023, there were
balances outstanding of $937 million under the USCP programme,
and €353 million and £165 million under the ECP programme.
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). More information on Employee Share Plans can be found in
the Directors’ Remuneration Report on page 124.
Events since the financial year-end
For further information on events since the reporting date, please see
note 25 on page 239.
Employee Benefit Trust
As at 31 December 2023, the trustee of the London Stock Exchange
Employee Benefit Trust, which is an independent trustee, held 1,178,957
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 79 to 88 of this Annual Report and in the notes to the financial
statements, on pages 176 to 254 of this Annual 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 94 to 97, 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 08
to 09). 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
As disclosed in last year’s Annual Report following an audit tender
process in 2022, Deloitte LLP will be appointed as the Group’s external
auditor for the financial year ended 31 December 2024 subject to
shareholder approval at the AGM.
By Order of the Board
Lisa Condron
Group Company Secretary
28 February 2024
Directors’ Report continued
159 London Stock Exchange Group plc
Annual Report 2023
GOVERNANCE
Statement of
Directors’ responsibilities
The Directors are responsible for preparing the Annual Report,
the Directors’ Remuneration Report and the financial statements in
accordance with applicable United Kingdom law and regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have elected to
prepare the Group financial statements in accordance with UK-adopted
international accounting standards (IFRSs), and the parent company
financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards
and applicable law), including Financial Reporting Standard 101 Reduced
Disclosure Framework (FRS 101).
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 accounting estimates that are reasonable
and prudent;
— provide additional disclosures when compliance with the specific
requirements in IFRSs and in respect of the parent company
financial statements, FRS 101, 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
applicable UK Accounting Standards, including FRS 101, have been
followed, subject to any material departures disclosed and explained
in the financial statements; and
— 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 02 to 89.
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 79 to 88.
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 215 to 229. 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 2023 was £12,108 million (2022: £10,699 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 02 to 89.
Each of the Directors, whose names and functions are set out on
pages 94 to 97 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; and
— 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
28 February 2024
Financial Statements
London Stock Exchange Group plc
Annual Report 2023
160
FINANCIAL STATEMENTS
161 London Stock Exchange Group plc
Annual Report 2023
Independent Auditor’s Report 162
Consolidated financial statements
Consolidated income statement 171
Consolidated statement of comprehensive income 172
Consolidated balance sheet 173
Consolidated statement of changes in equity 174
Consolidated cash flow statement 175
Notes to the consolidated financial statements
1 Accounting policies 176
2 Segment information 180
3 Total income and contract liabilities 182
4 Operating expenses before depreciation,
amortisation and impairment 187
5 Net finance costs 189
6 Taxation 190
7 Earnings per share 194
8 Dividends 195
9 Intangible assets 195
10 Property, plant and equipment 200
11 Investments in financial assets 202
12 Pension and other retirement benefit schemes 203
13 Trade and other receivables 207
14 Cash and cash equivalents 208
15 Trade and other payables 209
16 Borrowings, lease liabilities and net debt 210
17 Financial assets and financial liabilities 215
18 Share capital, share premium and other reserves 230
19 Non-controlling interests 231
20 Share-based payments 233
21 Business combinations 236
22 Disposal of businesses and discontinued operations 238
23 Transactions with related parties 239
24 Commitments and contingencies 239
25 Events after the reporting period 239
Company financial statements
Company balance sheet 241
Company statement of changes in equity 242
Notes to the Company financial statements
1 Accounting policies 243
2 Income statement 243
3 Investments in subsidiaries 244
4 Trade and other receivables 244
5 Cash and cash equivalents 245
6 Trade and other payables 245
7 Borrowings 245
8 Share-based payments 246
9 Financial guarantees 247
10 Group companies 247
Key to symbols used in this section
Accounting policy
Significant accounting estimates, assumptions and judgements
In this section
London Stock Exchange Group plc
Annual Report 2023
162
Independent Auditor’s Report to the members
of London Stock Exchange Group plc
Opinion
In our opinion:
— the financial statements of London Stock Exchange Group plc
(the ‘parent Company’) and its subsidiaries (the ‘Group’) give a true
and fair view of the state of the group’s and of the parent company’s
affairs as at 31st December 2023 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 United Kingdom Generally Accepted
Accounting Practice; and
— The financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.We have audited the
financial statements (see table below) of the parent Company and
the Group for the year ended 31 December 2023.
Group Parent company
Consolidated balance sheet
as at 31 December 2023
Balance sheet as at 31 December
2023
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
Related notes 1 to 10 to the
financial statements including
a summary of material accounting
policy information.
Consolidated statement of changes
in equity for the year then ended
Consolidated statement of cash
flows for the year then ended
Related notes 1 to 25 to the
financial statements, including
a summary of material accounting
policy information.
Tables within the Directors’
Remuneration Report identified
as ‘audited’
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and
UK adopted international accounting standards. The financial reporting
framework that has been applied in the preparation of the parent
Company financial statements is applicable law and United Kingdom
Accounting Standards, including FRS 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).
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 for the
31 December 2022 year-end audit, it was identified that one non-audit
service prohibited under the FRC’s Ethical Standard was provided by
Deloitte USA
1
during 2023, having been subcontracted from Deloitte
LLP in the UK. These services are prohibited as Deloitte USA are also
the auditor of the Tradeweb Markets Inc. component.
The service provided to the Group related to tax advice to certain
employees. Total fees for this service were £1,641. This service is
no longer being provided. As a result of the breach, we performed
a further review of Deloitte USA’s audit working papers for key
judgements and estimates. We also discussed with Deloitte USA
their approach to identifying this breach and assessed the service
provided to conclude on the extent of the breach.
We considered that the provision of the service did not create a
self-review threat as the prohibited service was 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.
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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation
of the Directors’ assessment of the Group and parent Company’s
ability to continue to adopt the going concern basis of accounting
for a period of twelve months from the date of signing the financial
statements included:
— Obtaining an understanding of the Directors’ use of the going
concern basis of preparation. This included reviewing their going
concern assessment and associated underlying forecasts and
assumptions and performing inquiries of management and those
charged with governance;
— Assessing the appropriateness of key assumptions made in the
Group’s and parent Company’s business plan, by comparing them to
historical performance and challenging the achievability of budgeted
growth. In assessing the reasonableness of these key assumptions,
we considered planned cost and revenue synergies, the trading
environment, and the current uncertain geopolitical and economic
outlook including the impact of high inflation and increased interest
rates, principal risks and appropriate mitigating factors. We performed
back-testing by comparing the budget of prior periods to actual
results to assess the historical accuracy of the forecasting process;
— Testing the clerical accuracy of the going concern assessment
including the data used in stress testing;
— Evaluating the reasonableness of adverse forecasts by benchmarking
the stress testing scenario assumptions against external data;
— Evaluating the plausibility of management actions available to mitigate
the impact of the reverse stress test by comparing them to our
understanding of the Group and parent Company including the
ability to refinance debt;
1 Non-audit services were provided by Deloitte Tax LLP. The component auditor is
Deloitte & Touche LLP.
163 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
— Evaluating the level of liquidity of the Group and parent Company to
support ongoing requirements for a period of 12 months from the
date of signing the financial statements; and
— Assessing the appropriateness of the going concern disclosures by
evaluating the consistency with the going concern assessment and
for compliance with the relevant reporting requirements.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group and parent
Company’s ability to continue as a going concern for a period of twelve
months from when the financial statements are authorised for issue.
In relation to the Group and parent Company’s reporting on how they
have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement
in the financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect
to going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted,
this statement is not a guarantee as to the Group’s ability to continue
as a going concern.
Overview of our audit approach
Audit scope — We performed an audit of the complete financial
information of 8 components and audit procedures
on specific balances for a further 15 components and
other procedures on the remaining 107 components.
— The components where we performed full or specific
audit procedures accounted for 92% of absolute
pre-tax profit, 95% of Revenue and 99.9% of
Total assets.
— A component is defined as an entity for which
management prepares component financial information
that is included in the Group financial statements.
Key audit
matters
— Revenue recognition.
— Measurement of acquired intangible assets,
including goodwill.
— Capitalisation and subsequent impairment of
internally developed software.
— Accounting for acquisitions.
Materiality — Overall Group materiality is £59 million which
represents 5% of pre-tax profit from continuing
operations, calculated by adjusting for certain
non-underlying items we considered to be non-
recurring items, relating to: investment remeasurement
gain of (£69 million); write-off of assets of £34 million;
one-off impairment of intangible and other assets of
£32 million; separation and integration costs of
(£9 million); and retention costs of £8 million.
An overview of the scope of the parent Company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our
allocation of performance materiality determine our audit scope for each
company 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, the potential
impact of climate change 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 130 reporting
components of the Group (2022: 126 reporting components),
we selected 23 components.
Full scope components – Of the 23 components selected
(2022: 19 components), we performed an audit of the complete
financial information of 8 components (2022: 8 components)
which were selected based on their size or risk characteristics.
Specific scope components – For the remaining 15 components
(2022: 11 components), we performed audit procedures on specific
accounts within that component that 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 and parent Company
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.
London Stock Exchange Group plc
Annual Report 2023
164
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
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
2023 2022 2023 2022 2023 2022 2023 2022
Group’s
absolute
pre-tax profit 69% 79% 23% 14% 8% 7% 100% 100%
Group’s
revenue 92% 93% 3% 3% 5% 4% 100% 100%
Group’s
total assets 99.7% 99.8% 0.2% 0.1% 0.1% 0.1% 100% 100%
Of the remaining 107 components that together represent 8% of the
Group’s absolute pre-tax profit, none are individually greater than 3%
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, 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 an increase 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 newly acquired entities being
included and changes in balances reported in components in the
normal course of business. Audit procedures have been designed
and updated to reflect this change in scoping approach.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined
the type of work that needed to be undertaken at each of the
components by us, as the primary audit engagement team, or by
component auditors from other EY global network firms and Deloitte
USA operating under our instruction. For the 3 full scope components,
where the work was performed by component auditors, we determined
the appropriate level of involvement to enable us to determine that
sufficient audit evidence had been obtained as a basis for our opinion
on the Group as a whole.
The Group audit team interacted regularly with the component teams
during various stages of the audit and were responsible for the scope
and direction of the audit process. Physical site visits were undertaken
by the Senior Statutory Auditor and other senior members of the primary
audit team during the current year’s audit cycle to the component teams
in United States of America and India. These physical site visits and
regular virtual meetings involved discussing and challenging the audit
approach with the component team and any findings arising from their
work, meeting with local management, attending planning and closing
meetings and reviewing relevant audit working papers on risk areas,
through direct access or through the use of shared screen functionality.
This, together with the additional procedures performed by the primary
team, gave us appropriate evidence for our opinion on the Group and
parent Company financial statements and ensured that the Senior
Statutory Auditor exercised appropriate oversight of the principal
locations of the Group.
Climate change
Stakeholders are increasingly interested in how climate change will
impact the Group. The Group has determined that climate-related risks
and opportunities arise from regulatory, technology and market changes
in the transition to a low carbon economy as well as acute and chronic
physical risks from climate change. These are explained in the required
Task Force for Climate related Financial Disclosures and in Principal
risks and uncertainties. They have also explained their climate
commitments in the Sustainability section. All of these disclosures
form part of the “Other information,” rather than the audited financial
statements. Our procedures on these unaudited disclosures therefore
consisted solely of considering whether they are materially inconsistent
with the financial statements or our knowledge obtained in the course
of the audit or otherwise appear to be materially misstated, in line with
our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts
of climate change on the Group’s business and any consequential
material impact on its financial statements.
The Group has explained in note 1.7 how they have reflected the impact
of climate change in their financial statements including how this aligns
with their commitment to the aspirations of the Paris Agreement to
achieve net zero emissions by 2040. The areas considered most
relevant relating to climate change are included in note 1.7.
Our audit effort in considering the impact of climate change on the
financial statements was focused on evaluating management’s
assessment of the impact of climate risk, both physical and transition
and on ensuring that the effects of emerging climate risks disclosed
have been appropriately reflected by management in reaching their
judgements in relation to the valuation of assets and liabilities. We also
challenged the Directors’ considerations of climate change risks in their
assessment of going concern and viability and associated disclosures.
Based on our work we have not identified the impact of climate change
on the financial statements to be a key audit matter or to impact
a key audit matter.
165 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit, and directing the efforts of
the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon,
and we do not provide a separate opinion on these matters.
Risk Our response to the risk
Revenue recognition
The Group reported £8,061 million (2022: £7,454
million) of revenue from external customers, which
consisted of £5,637 million (2022: £5,259 million) in
Data & Analytics, £1,546 million (2022: £1,459 million)
in Capital Markets and £878 million (2022: £736 million)
in Post Trade.
The Group generates revenue from a variety of
sources that are material in size and volume.
The complexity in auditing revenue relates to the
judgements applied in:
— the amount and timing of subscription revenue
recognition based on non-standard terms in
customer agreements; and
— the year end revenue accruals for FTSE Russell
asset-based revenues.
Refer to the Report of the Audit Committee; Accounting
policies; Notes 2 and 3 of the Financial Statements.
The risk has remained consistent with the prior year.
— Control assessment: We confirmed our understanding of the processes and controls relevant
to the material revenue streams of the Group. We also evaluated the design effectiveness and
tested operating effectiveness of key controls including IT systems and related IT controls for
certain revenue streams.
— Overall procedures: We evaluated the appropriateness of the revenue recognition policy
in accordance with IFRS 15 ‘Revenue from Contracts with Customers’. Additionally, we
benchmarked the accounting policies with industry peers to ensure they are in line with
industry standards. We performed cut-off testing to verify that revenue was recognised in
the correct period. We performed analytical procedures and journal entry testing in order
to identify and test the risk of misstatement arising from management override of controls.
We performed trend analysis over these revenue streams. This includes analysing the trend
between subscription revenue and cancellations.
— Subscription revenue in Data & Analytics: For a sample of significant contracts, we obtained
the executed contract and performed a review of the contract terms against the requirements
of IFRS 15 ‘Revenue from Contracts with Customers’, tested the invoices raised and cash
collected as applicable. To test the authenticity of the contracts and mitigate the risk of falsified
contracts, we used digital tools to detect any discrepancies and anomalies in contracts.
— FTSE Russell revenue accruals: We selected a sample of revenue accruals and obtained
appropriate supporting evidence such as vouching the basis for the accrued amounts to third
party sources or prior period billings. We also agreed to invoices raised post year end and
cash collected where applicable. We also performed substantive analytical procedures over
revenue accruals recognised across the period, in comparison to total revenue recognised
by month and counterparty to identify outliers on which to perform further procedures. For
revenue based on assets under management (‘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.
— Disclosure We assessed the adequacy of the relevant disclosures made in the
financial statements.
Key observations communicated to the Audit Committee
We are satisfied that revenue related to subscription revenue and FTSE Russell revenue accruals within the Data & Analytics business are not materially
misstated and are recorded in accordance with IFRS 15 ‘Revenue from Contracts with Customers’.
London Stock Exchange Group plc
Annual Report 2023
166
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Risk Our response to the risk
Measurement of acquired intangible assets,
including goodwill
The Group reporting goodwill of £19,246 million
(2022: £19,829 million) and net purchased intangible
assets of £11,158 million (2022: £12,584 million)
Refer to the Report of the Audit Committee; Accounting
policies and Note 9 of the Financial Statements.
The complexity in auditing goodwill relates to the use
of judgement in the impairment assessment. Goodwill
is sensitive to a number of judgements and estimates;
in particular cash flow forecasts, long-term growth rates
(LTGR), discount rates, customer retention rates and
royalty rates.
The complexity in auditing purchased intangible assets
relates to the use of judgement in assessing if an
impairment assessment should be performed and
re-evaluating the amortisation method and useful life
for each asset.
The risk has remained consistent with the prior year.
— Control assessment: We confirmed our understanding of the impairment assessment process
and assessed the design effectiveness of key controls.
— Carrying value of goodwill: For all cash generating units (CGUs), we examined the cash flow
forecasts and tested compliance with the requirements of IAS 36 ‘Impairment of Assets’.
We tested the clerical accuracy of these forecasts and compared them to the three-year
business plans approved by the Board.
We evaluated the reasonableness of the cash flow forecasts using our understanding of
the CGU and analysing the budgeted growth rates, its historical growth rates and other
relevant market expectations and developments including changes in inflation and
increasing interest rates.
We compared prior periods’ cash flow forecasts to actual results to assess management’s
forecasting accuracy.
We tested the discount rates used by each of the CGUs, as well as the LTGRs, with
involvement of our valuation specialists; we evaluated these model inputs within each
impairment model, by comparing them to a range of economic and industry forecasts and
market data where appropriate, as well as to other similar companies.
We also performed sensitivity analysis on the key assumptions (including the model inputs,
cash flow forecasts, royalty rates and customer retention rates) to understand the impact that
reasonably possible changes would have on the overall carrying value of the goodwill and
purchased intangible assets.
— Purchased intangible assets: We evaluated management’s assessment of the ability to identify
a separate recoverable amount by asset in order to perform an impairment assessment.
We assessed the appropriateness of the amortisation method and useful life used in the
amortisation calculation by comparing to business plans and indicators of asset value.
— Disclosure We assessed the adequacy of the relevant disclosures made in the financial
statements, including the completeness of the sensitivity disclosure.
Key observations communicated to the Audit Committee
We are satisfied that the carrying values of goodwill and purchased intangible assets are materially correct and the related disclosures are compliant with
IAS 36 ‘Impairment of Assets’ and IAS 38 ‘Intangible Assets’.
167 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Risk Our response to the risk
Capitalisation and subsequent impairment of
internally developed software
The Group reported capitalised internally developed
software of £2,717 million (2022: £2,653 million) and an
impairment charge of £10 million (2022: £11 million)
Refer to the Report of the Audit Committee;
Accounting policies; and Note 9 of the Consolidated
Financial Statements
Auditing the capitalisation of software costs is complex
as it involves management judgement in respect of
the criteria set out in IAS 38 ‘Intangible Assets’. This
includes determining whether costs can be capitalised,
identifying when events or changes in circumstances
indicate that the carrying amounts may not be
recoverable, and determining recoverable amounts
involving estimation of discount rates, LTGRs, cash flow
forecasts and the amortisation periods for internally
developed software.
The risk has remained consistent with the prior year.
— Control assessment: We confirmed our understanding of both the capitalisation and
impairment assessment processes and assessed the design and operating effectiveness
of key controls.
— Additions testing: For a sample of additions, we have agreed amounts capitalised to
supporting documentation to verify whether the costs were incurred and meet the
capitalisation criteria of IAS 38 ‘Intangible Assets’.
— Impairment assessment: To assess the completeness of indicators of impairment identified
by management, we selected a sample of assets, including those not yet brought into use or
projects put on hold, and tested and challenged management’s assessment of indicators of
impairment. This included analysis against budgeted spend, identifying projects with no recent
spend and if new projects or business developments may have made previous assets
obsolete.
Where an impairment has been recognised, we tested the key assumptions used within the
assessment, such as the discount rates, LTGR and cash flow forecasts with involvement of
our valuation specialists as needed. We also assessed the sensitivity analysis performed by
management and performed independent additional sensitivity analysis on the impairment
model inputs, to understand the impact that reasonably possible changes to key assumptions
would have on the overall carrying value of the internally developed software.
— Disclosure: We assessed the adequacy of the disclosures made in the financial statements.
Key observations communicated to the Audit Committee
We are satisfied that the carrying values of internally generated software are materially correct and the related disclosures are compliant with IAS 36
‘Impairment of Assets’ and IAS 38 ‘Intangible Assets’.
Accounting for acquisitions
During 2023, the Group completed the acquisition
of AcadiaSoft, Inc, (Acadia).
Net Assets Acquired: £229 million
Goodwill Recognised: £341 million
There are judgements and estimates in accounting
for acquisitions including the determination of the
fair value of net assets acquired and the resulting
goodwill which are presented and disclosed in the
financial statements.
Refer to the Report of the Audit Committee;
Accounting policies; and Note 21 of the Consolidated
Financial Statements
The risk has reduced this year given the lower volume
of businesses acquired and value of the acquisition
compared to the prior year (Four significant
acquisitions, with total net assets acquired of
£288 million, and £569 million of goodwill recognised).
— Control assessment: We confirmed our understanding of the business combinations
accounting process including process and controls relevant to the acquisitions.
We held discussions with management to understand the governance structures and oversight
of the accounting for each of the transactions.
— Technical accounting: We reviewed management’s business combinations accounting papers
and management’s assessment of the acquiree’s accounting policies, understanding the
differences with the Group and resulting impact.
— Net assets acquired and resulting goodwill: We verified the completeness and accuracy of
the carrying value of the acquired net assets. This included tests of detail and analytical review
procedures over significant balance sheet accounts at the acquisition date.
We assessed the reasonableness of the fair values of identifiable assets acquired and liabilities
assumed and resulting goodwill with our valuation specialists.
We assessed the appropriateness of intangible asset valuation models, tested the
completeness and accuracy of the key inputs used and the reasonableness of the key
assumptions including discount rates, royalty rates, attrition rates, contributory asset charge
rates, long-term growth rates and cash flow forecasts. This included developing independent
valuation ranges for net assets acquired.
We involved our Tax specialists to evaluate the appropriateness of deferred taxes related to
the assets acquired and liabilities assumed and to assess the appropriateness of the tax rate
used in relation to each acquisition.
— Disclosure: We assessed the adequacy of the disclosures made in the financial statements.
Key observations communicated to the Audit Committee
We concluded that the fair value of net assets acquired, and the resulting goodwill are materially correct and fall within our independently developed range.
We are satisfied that the Acadia acquisition and the related disclosures are materially correct and are in accordance with IFRS 3 ‘Business Combinations’.
London Stock Exchange Group plc
Annual Report 2023
168
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
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 £59 million (2022:
£61 million), which is 5% (2022: 5%) of pre-tax profit from continuing
operations, calculated by adjusting for certain non-underlying items we
considered to be non-recurring, relating to: investment remeasurement
gain of (£69 million); write-off of assets of £34 million; impairment of
intangible and other assets of £32 million; separation and integration
costs of (£9 million); and, retention costs of £8 million.
We consider the basis of our materiality to be one of the important
considerations for shareholders of the Group in assessing the financial
performance of the Group. It is linked to the key earnings measures
discussed when the Group presents the financial results. In addition,
within non-underlying items, the Group also excludes amortisation of
purchased intangibles to present adjusted operating profit; this amount
is not excluded from our materiality calculation.
Starting basis
— £1,194 million
— Profit before tax from continuing operations
Adjustments
— £4 million decrease
— Certain non-underlying items relating to investment remeasurement
gain of (£69 million), write-off of assets of £34 million, impairment of
intangible and other assets of £32 million, separation and integration
costs of (£9 million) and retention costs of £8 million.
Materiality
— Materiality of £59 million (5% of materiality basis)
Adjusted basis
— £1,190 million
— Adjusted profit before tax from continuing operations
We determined materiality for the parent Company to be £237 million
(2022: £228 million), which is 1% (2022: 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 £24 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% (2022: 75%) of our planning materiality,
namely £44 million (2022: £46 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.
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 £9 million to £33 million (2022: £10 million to £36 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 (2022: £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.
169 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Independent Auditor’s Report to the members of London Stock Exchange Group plc continued
Other information
The other information comprises the information included in the annual
report including the Strategic Report, Governance information and
disclosures (including Board of Directors, Corporate governance,
Complying with the provisions of the Code, Report of the Nomination
Committee, Report of the Audit Committee, Report of Risk Committee,
Directors’ Remuneration Report, Directors’ Report and Statement of
Directors’ responsibilities), other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the
audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of the
other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be
audited has been properly prepared in accordance with the Companies
Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
— the information given in the Strategic report and the Directors’ report
for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
— the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the
parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic
report or the Directors’ report.
We have nothing to report in respect of the following matters in relation
to which the Companies Act 2006 requires us to report to you if,
in our opinion:
— adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
— the parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
— certain disclosures of Directors’ remuneration specified by law are
not made; or
— we have not received all the information and explanations we require
for our audit.
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance
Statement relating to the Group’s compliance with the provisions of
the UK Corporate Governance Code specified for our review by the
Listing Rules.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our
knowledge obtained during the audit:
— Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified;
— Directors’ explanation as to its assessment of the Group’s prospects,
the period this assessment covers and why the period is appropriate;
— Directors’ statement on whether it has a reasonable expectation that
the Group will be able to continue in operation and meet its liabilities;
— Directors’ statement on fair, balanced and understandable;
— Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks;
— The section of the annual report that describes the review of
effectiveness of risk management and internal control systems; and;
— The section describing the work of the audit committee.
Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement, the
Directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Group and parent Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the parent Company or
to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
London Stock Exchange Group plc
Annual Report 2023
170
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, United Kingdom 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
Executive Officer, 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. We also 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 and parent Company’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. We 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, the
Group General Counsel, the Chief Risk Officer, the Group Head of
Compliance 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 2021 and subsequent financial periods.
— The period of total uninterrupted engagement including previous
renewals and reappointments is nine years and nine months,
covering the nine-month period ended 31 December 2014 to the
year ended 31 December 2023.
— 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
company’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 company and the company’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
28 February 2024
171 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Consolidated income statement
2023 | 2022 | ||||||
| Non- | Non- | ||||||
| Adjusted | underlying | Total | Adjusted | underlying | Total | ||
Year ended 31 December | Notes | £m | £m | £m | £m | £m | £m |
| Continuing operations | |||||||
Revenue | 2.1, 3.1 | ||||||
Net treasury income from CCP clearing business | 2.1, 3.1 | ||||||
Other income | 2.1, 3.1 | ||||||
Total income | |||||||
Cost of sales | 2.1 | ( | ( | ( | ( | ||
Gross profit | |||||||
Operating expenses before depreciation, amortisation and impairment | 4 | ( | ( | ( | ( | ( | ( |
Profit on disposal of property, plant and equipment | 2.3 | ||||||
Remeasurement gain | 2.3, 21.1 | ||||||
Income from equity investments | 11.1 | ||||||
Share of loss after tax of associates | ( | ( | |||||
Earnings before interest, tax, depreciation, amortisation and impairment | ( | ( | |||||
Depreciation, amortisation and impairment | 9, 10 | ( | ( | ( | ( | ( | ( |
Operating profit/(loss) | ( | ( | |||||
Finance income | 5.1 | ||||||
Finance costs | 5.2 | ( | ( | ( | ( | ( | ( |
Net finance costs | ( | ( | ( | ( | ( | ( | |
Profit/(loss) before tax | ( | ( | |||||
Taxation | 6.1 | ( | ( | ( | ( | ||
Profit/(loss) from continuing operations | ( | ( | |||||
| Discontinued operations | |||||||
Profit from discontinued operations | 22.1 | ||||||
Profit/(loss) for the year | ( | ( | |||||
| Profit/(loss) from continuing operations attributable to: | |||||||
Equity holders | ( | ( | |||||
Non-controlling interests | 19 | ( | ( | ||||
Profit/(loss) from continuing operations | ( | ( | |||||
| Profit from discontinued operations attributable to: | |||||||
Equity holders | |||||||
Non-controlling interests | |||||||
Profit from discontinued operations | 22.1 | ||||||
Profit/(loss) for the year | ( | ( | |||||
| Earnings per share attributable to equity holders | |||||||
| Continuing operations | |||||||
Basic earnings per share | 7 | ||||||
Diluted earnings per share | 7 | ||||||
| Total operations | |||||||
Basic earnings per share | 7 | ||||||
Diluted earnings per share | 7 | ||||||
| Dividend per share in respect of the financial year | |||||||
Dividend per share paid during the year | 8 | ||||||
Dividend per share declared for the year | 8 |
2
1
1
1 Before non-underlying items ("adjusted").
2 For 2022, interest cost on retirement benefit obligations of £70 million was presented within finance costs. This has been reclassified to finance income to align with the accounting policy.
This change has no overall impact on net finance costs in 2022 (see note 5).
London Stock Exchange Group plc
Annual Report 2023
172
Consolidated statement
of comprehensive income
| 2023 | 2022 | ||
Year ended 31 December | Notes | £m | £m |
| Continuing operations | |||
Profit for the year | |||
| Other comprehensive (loss)/income | |||
| Items that will not be subsequently reclassified to the income statement | |||
Actuarial losses on retirement benefit obligations | 12.2 | ( | ( |
(Losses)/gains on equity instruments designated as fair value through other comprehensive income (FVOCI) | 11.1 | ( | |
Deferred tax relating to items that will not be reclassified | 6.1 | ( | |
( | ( | ||
| Items that may be subsequently reclassified to the income statement | |||
Net gains/(losses) on net investment hedges | 17.4 | ( | |
Gains on cash flow hedge recycled to the income statement | 17.4 | ( | ( |
| Debt instruments at FVOCI: | |||
— Net losses from changes in fair value on debt instruments at FVOCI | ( | ||
— Losses recycled to the income statement | |||
Net exchange (losses)/gains on translation of foreign operations | ( | ||
Deferred tax relating to items that may be reclassified | 6.1 | ||
( | |||
Other comprehensive (loss)/income net of tax from continuing operations | ( | ||
Total comprehensive (loss)/income from continuing operations | ( | ||
| Discontinued operations | |||
Total comprehensive income from discontinued operations | 22.1 | ||
Total comprehensive (loss)/income | ( | ||
| Total comprehensive (loss)/income from continuing operations attributable to: | |||
Equity holders | ( | ||
Non-controlling interests | 19 | ||
Total comprehensive (loss)/income from continuing operations | ( | ||
| Total comprehensive income from discontinued operations attributable to: | |||
Equity holders | |||
Non-controlling interests | |||
Total comprehensive income from discontinued operations | 22.1 | ||
Total comprehensive (loss)/income | ( |
173 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Consolidated balance sheet
| 2023 | 2022 | ||
At 31 December | Notes | £m | £m |
| Assets | |||
| Non-current assets | |||
Intangible assets | 9 | ||
Property, plant and equipment | 10 | ||
Investments in associates | |||
Investments in financial assets | 11.1 | ||
Derivative financial instruments | 17.1 | ||
Other receivables | 13 | ||
Retirement benefit assets | 12.3 | ||
Deferred tax assets | 6.2 | ||
| Current assets | |||
Trade and other receivables | 13 | ||
Clearing member assets | 17.1 | ||
Investments in financial assets | 11.2 | ||
Derivative financial instruments | 17.1 | ||
Current tax receivable | |||
Cash and cash equivalents | 14 | ||
Total assets | |||
| Liabilities | |||
| Current liabilities | |||
Trade and other payables | 15 | ||
Contract liabilities | 3.4 | ||
Borrowings and lease liabilities | 16 | ||
Clearing member financial liabilities | 17.2 | ||
Derivative financial instruments | 17.2 | ||
Current tax payable | |||
Provisions | |||
| Non-current liabilities | |||
Borrowings and lease liabilities | 16 | ||
Other payables | 15 | ||
Contract liabilities | 3.4 | ||
Derivative financial instruments | 17.2 | ||
Retirement benefit obligations | 12.3 | ||
Deferred tax liabilities | 6.2 | ||
Provisions | |||
Total liabilities | |||
Net assets | |||
| Equity | |||
| Capital and reserves attributable to the Company’s equity holders | |||
Ordinary share capital | 18.1 | ||
Share premium | 18.1 | ||
Retained earnings | |||
Other reserves | 18.2 | ||
Total shareholders’ funds | |||
Non-controlling interests | 19 | ||
Total equity |
1
1 For 2022, current lease liabilities of £139 million and non-current lease liabilities of £533 million were presented as trade and other payables. These have been reclassified to current borrowings
and non-current borrowings respectively (see note 16) to better reflect the nature of the liability.
London Stock Exchange Group plc
Registered number 5369106
London Stock Exchange Group plc
Annual Report 2023
174
Consolidated statement of changes in equity
| Attributable to equity holders | ||||||||
| Total | ||||||||
| Ordinary | attributable | Non- | ||||||
| share | Share | Retained | Other | to equity | controlling | Total | ||
| capital | premium | earnings | reserves 1 | holders | interests | equity | ||
| Notes | £m | £m | £m | £m | £m | £m | £m | |
1 January 2022 | ||||||||
Total comprehensive income for the year | ||||||||
Share buyback by the Company | 18.1 | ( | ( | ( | ||||
Dividends | 8, 19 | ( | ( | ( | ( | |||
Share-based payments | 20 | |||||||
Tax on share-based payments less than expense recognised | 6.1 | ( | ( | ( | ||||
Purchase of non-controlling interests | ( | ( | ||||||
| Tradeweb share buyback | ( | ( | ||||||
| Shares withheld from employee options | ||||||||
| exercised (Tradeweb) | ( | ( | ||||||
Tax on investment in partnerships | 6.1 | |||||||
Adjustments to non-controlling interest | ( | ( | ||||||
31 December 2022 | ||||||||
Total comprehensive income for the year | ( | ( | ( | |||||
Share buyback by the Company | 18.1 | ( | ( | ( | ( | |||
Dividends | 8, 19 | ( | ( | ( | ( | |||
Share-based payments | 20 | |||||||
| Tax on share-based payments in excess | ||||||||
of expense recognised | 6.1 | |||||||
Purchase of non-controlling interests | 19 | ( | ( | ( | ( | |||
| Tradeweb share buyback | ( | ( | ||||||
| Shares withheld from employee options | ||||||||
| exercised (Tradeweb) | ( | ( | ||||||
Tax on investment in partnerships | 6.1 | |||||||
Adjustments to non-controlling interest | ||||||||
31 December 2023 |
2
3
2
3
1 Movements in other reserves are detailed in note 18.2.
2 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 authorised the purchase of up to $150 million of Tradeweb’s common stock until 31 December 2023.
3 Tradeweb is required to withhold shares issued as a result of employee share plans in order to settle the associated taxes payable by the employee.
175 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Consolidated cash flow statement
| 2023 | 2022 | ||
Year ended 31 December | Notes | £m | £m |
| Operating activities | |||
Profit from continuing operations | |||
| Adjustments to reconcile profit to net cash flow: | |||
— Taxation | 6.1 | ||
— Net finance costs | 5 | ||
— Amortisation and impairment of intangible assets | 9 | ||
— Depreciation and impairment of property, plant and equipment | 10 | ||
— Profit on disposal of property, plant and equipment | ( | ||
| — Remeasurement gain | 2.3 | ( | ( |
— Share-based payments | 20 | ||
— Foreign exchange losses | |||
— Dividend income | 11.1 | ( | ( |
| — Other movements | ( | ||
| Working capital changes and movements in other assets and liabilities: | |||
— Increase in receivables, contract and other assets | ( | ( | |
— Decrease in payables, contract and other liabilities | ( | ( | |
— Decrease in clearing member financial assets | |||
— Decrease in clearing member financial liabilities | ( | ( | |
Cash generated from operations | |||
Interest received | |||
Interest paid | ( | ( | |
Net taxes paid | ( | ( | |
Net cash flows from continuing operations | |||
Net cash flows from discontinued operations | |||
Net cash flows from operating activities | |||
| Investing activities | |||
Payments for intangible assets | 9 | ( | ( |
Payments for property, plant and equipment | 10 | ( | ( |
Proceeds from disposal of property, plant and equipment | |||
Acquisition of subsidiaries, net of cash acquired | 21.2 | ( | ( |
Proceeds from sale of disposal group, net of cash disposed | |||
Proceeds from disposal of/(investments in) financial assets | ( | ||
Dividends received | 11.1 | ||
Net cash flows from continuing operations | ( | ( | |
Net cash flows from discontinued operations | ( | ||
Net cash flows used in investing activities | ( | ( | |
| Financing activities | |||
Payment of principal portion of lease liabilities | 16.2 | ( | ( |
| Proceeds from borrowings | 16.4 | ||
Repayment of borrowings | 16.4 | ( | ( |
Dividends paid to equity holders | 8 | ( | ( |
Dividends paid to non-controlling interests | 19.1, 19.2 | ( | ( |
Repurchase of shares by Company | 18.1 | ( | ( |
Repurchase of shares by subsidiary (Tradeweb) | ( | ( | |
Purchase of non-controlling interests | ( | ||
Other financing activities | ( | ( | |
Net cash flows (from continuing operations) used in financing activities | ( | ( | |
Increase in cash and cash equivalents | |||
Foreign exchange translation | ( | ||
Cash and cash equivalents at 1 January | |||
Cash and cash equivalents at 31 December | 14 |
1,2
1
1,2
3
1 For 2022, the remeasurement gain of £23
2 Royalties paid of £89 million were separately presented in 2022. This is aggregated with cash generated from operations to align with disclosure in 2023.
3 Proceeds from borrowings includes a net increase in borrowings with short-term maturities of £1,112 million.
London Stock Exchange Group plc
Annual Report 2023
176
Reporting entity
These consolidated financial statements have been prepared for
(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
its registered office is 10 Paternoster Square, London, EC4M 7LS .
During 2023, the Group acquired the businesses listed below.
The results of these businesses have been consolidated from
the date of acquisition (see note 21).
| Cash- | |||
| generating | |||
Acquired business | Acquisition date Segment | unit (CGU) | |
AcadiaSoft, Inc. (Acadia) | 31 March 2023 | Post Trade | Post Trade |
| Yieldbroker Pty | 31 August 2023 | Capital | Tradeweb |
| Limited (Yieldbroker) | Markets |
1. Accounting policies
This section describes our material accounting policy information
and significant accounting judgements and estimates that relate
to the financial statements as a whole. Where an accounting policy
or a significant accounting judgement or estimate is applicable to
a specific note to the financial statements, 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.
Notes to the consolidated financial statements
177 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
1. Accounting policies continued
| Country of | Group | ||
| incorporation | ultimate | ||
| and principal | economic | ||
Name | Principal activity | operations | interest % |
| Banque Centrale de | CCP clearing | France | 82.61 |
| Compensation SA (LCH SA) | services | ||
| Financial & Risk | IP owner | England & | 100.00 |
| Organisation Limited | Wales | ||
Frank Russell Company | Market indices | USA | 100.00 |
| provider | |||
FTSE International Limited | Market indices | England & | 100.00 |
| provider | Wales | ||
LCH Limited | CCP clearing | England & | 82.61 |
| services | Wales | ||
| London Stock | Recognised | England & | 100.00 |
| Exchange plc | investment | Wales | |
| exchange | |||
Refinitiv Asia Pte Ltd | Market and financial | Singapore | 100.00 |
| data provider | |||
Refinitiv France SAS | Market and financial | France | 100.00 |
| data provider | |||
Refinitiv Germany GmbH | Market and financial | Germany | 100.00 |
| data provider | |||
| Refinitiv Hong Kong | Market and financial | Jersey | 100.00 |
| Limited | data provider | ||
Refinitiv Japan KK | Market and financial | Japan | 100.00 |
| data provider | |||
Refinitiv Limited | Market and financial | England & | 100.00 |
| data provider | Wales | ||
Refinitiv US LLC | Market and financial | USA | 100.00 |
| data provider | |||
Tradeweb Markets LLC | Multilateral trading | USA | 51.01 |
| facility |
Notes to the consolidated financial statements continued
London Stock Exchange Group plc
Annual Report 2023
178
1. Accounting policies continued
operation and translated at the reporting date exchange rate.
International accounting standards and interpretations | Effective date |
| Amendments to IFRS 16 Leases: Lease liability in a sale | 1 January 2024 |
| and leaseback | |
| Amendments to IAS 1: | 1 January 2024 |
— Classification of liabilities as current or non-current; and — Non-current liabilities and covenants | |
| Amendments to IAS 7 Statement of Cash Flows | 1 January 2024 |
| and IFRS 7 Financial Instruments Disclosures: | |
| Supplier finance arrangements | |
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of exchangeability | 1 January 2025 |
Notes to the consolidated financial statements continued
179 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
1. Accounting policies continued
| Significant | |||
| estimates | |||
| and | Significant | ||
| Note | assumptions | judgement | |
2.3 | Non-underlying items | ● | |
6.3 | Uncertain tax positions | ● | ● |
9 | Intangible assets | ● | |
12 | Pension and other retirement | ● | ● |
| benefit schemes |
Notes to the consolidated financial statements continued
London Stock Exchange Group plc
Annual Report 2023
180
2.1 Segment results
Results, including adjusted EBITDA, by operating segment for the year ended 31 December 2023 are as follows:
| Data & | Capital | |||||
| Analytics | Markets | Post Trade | Other | Group | ||
Continuing operations | Notes | £m | £m | £m | £m | £m |
| Revenue from external customers | 3.1 | 5,637 | 1,546 | 878 | – | 8,061 |
Net treasury income from CCP clearing business | 3.1 | – | – | 289 | – | 289 |
Other income | 3.1 | – | – | – | 29 | 29 |
Total income | 5,637 | 1,546 | 1,167 | 29 | 8,379 | |
Cost of sales | (913) | (35) | (195) | – | (1,143) | |
Gross profit | 4,724 | 1,511 | 972 | 29 | 7,236 | |
Adjusted operating expenses before depreciation, amortisation and impairment | 4 | (2,348) | (715) | (403) | (8) | (3,474) |
Income from equity investments | – | – | – | 15 | 15 | |
Adjusted EBITDA | 2,376 | 796 | 569 | 36 | 3,777 | |
Adjusted depreciation, amortisation and impairment | 9, 10 | (664) | (128) | (123) | – | (915) |
Adjusted operating profit | 1,712 | 668 | 446 | 36 | 2,862 |
1
1 Data & Analytics revenue includes recoveries of £370 million. Post Trade revenue includes net settlement and similar expenses recovered through the CCP clearing businesses of £5 million
which comprises gross settlement income of £46 million less gross settlement expenses of £41 million.
Notes to the consolidated financial statements continued
181 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
2. Segment information continued
Results, including adjusted EBITDA, by operating segment for the year ended 31 December 2022 are as follows:
| Data & | Capital | |||||
| Analytics | Markets | Post Trade | Other | Group | ||
Continuing operations | Notes | £m | £m | £m | £m | £m |
| Revenue from external customers | 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 | |
Adjusted depreciation, amortisation and impairment | 9, 10 | (607) | (103) | (112) | – | (822) |
Adjusted operating profit | 1,631 | 657 | 405 | 35 | 2,728 |
1
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.
2.2 Adjusted EBITDA and adjusted operating profit
Adjusted EBITDA and adjusted operating profit reconcile to operating
profit and profit before tax as follows:
| 2023 | 2022 | ||
Continuing operations | Notes | £m | £m |
Adjusted EBITDA | 3,777 | 3,550 | |
| Adjusted depreciation, amortisation | |||
and impairment | 9, 10 | (915) | (822) |
Adjusted operating profit | 2,862 | 2,728 | |
| Non-underlying operating expenses | |||
before interest, tax, depreciation, amortisation and impairment | 2.3 | (263) | (233) |
Non-underlying depreciation, amortisation and impairment | 2.3, 9, 10 | (1,228) | (1,078) |
Operating profit | 1,371 | 1,417 | |
| Net finance costs (including | |||
non-underlying items) | 5 | (176) | (176) |
Profit before tax | 1,195 | 1,241 |
2.3 Non-underlying items
The Group separately identifies results before non-underlying items
(we refer to these results as “adjusted”). This note explains the main
non-underlying items in the year, most of which have arisen as a result
of acquisition and subsequent integration activity.
Notes to the consolidated financial statements continued
London Stock Exchange Group plc
Annual Report 2023
182
2. Segment information continued
| 2023 | 2022 | ||
Continuing operations | Notes | £m | £m |
| Non-underlying operating expenses | |||
before interest, tax, depreciation, amortisation and impairment | |||
Transaction costs | 85 | 85 | |
Integration and separation costs | 211 | 278 | |
Restructuring and other costs | 36 | 26 | |
332 | 389 | ||
Profit on disposal of property, plant and equipment | – | (133) | |
Remeasurement gain | 21.1 | (69) | (23) |
(69) | (156) | ||
| Non-underlying operating expenses | |||
before interest, tax, depreciation, amortisation and impairment | 263 | 233 | |
Non-underlying depreciation, amortisation and impairment | |||
| Amortisation of purchased | |||
intangible assets | 9 | 1,057 | 1,013 |
Amortisation and impairment of software and other intangible assets | 9 | 148 | 31 |
Depreciation and impairment of property, plant and equipment | 10 | 23 | 27 |
Impairment of other non-current assets | – | 7 | |
1,228 | 1,078 | ||
Non-underlying items before interest and tax | 1,491 | 1,311 | |
Non-underlying finance costs | 5.2 | 6 | 16 |
Non-underlying items before tax | 1,497 | 1,327 | |
Non-underlying tax | 6.1 | (378) | (278) |
Non-underlying items after tax | 1,119 | 1,049 |
Transaction costs mainly relate to the following:
— Acadia and Yieldbroker acquisition costs – £10 million
(2022: £3 million) (see note 21.4).
— Employment-linked management incentives for the MayStreet Inc.
(MayStreet) and TORA Holdings, Inc. (TORA) acquisitions,
and MayStreet earn-out arrangement costs – £34 million
(2022: £25 million).
— Fair value gain on the contingent consideration payable resulting
from the acquisition of Quantile Group Limited (Quantile) in
2022 – £17 million (2022: nil).
— Refinitiv acquisition costs – £39 million (2022: £36 million) mainly
relating to changes in the tax indemnity receivable from and
payable to Thomson Reuters.
Integration and separation costs mainly consist of costs
to integrate Refinitiv of £209 million (2022: £242 million) and other
recent acquisitions.
Prior to the acquisition of Acadia on 31 March 2023, LSEG held a 14%
equity interest in Acadia. The acquisition date fair value of the previously
held interest resulted in a remeasurement gain of £69 million (see note
21.1). In 2022, the acquisition of Global Data Consortium, Inc. (GDC)
resulted in a £23 million remeasurement gain on the previously
held 11% interest.
Amortisation and impairment of intangible assets of £1,205 million
(2022: £1,044 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. This has resulted in impairment of right-of-use
property assets of £22 million (2022: £12 million).
The non-underlying tax benefit of £378 million (2022: £278 million)
mainly reflects the tax impact of the Group’s non-underlying items
(computed based on the tax rates applicable to the respective
territories).
2.4 Segment assets
Total non-current assets (excluding financial instruments, deferred tax
assets and retirement benefit assets) broken down by asset location,
is shown in the following table:
2023
£m
2022
£m
UK 8,760 9,340
USA 19,853 20,882
Europe, excluding UK 3,823 4,174
Asia 1,078 1,104
Other 377 397
Total 33,891 35,897
Notes to the consolidated financial statements continued
183 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
3. Total income and contract liabilities continued
Notes to the consolidated financial statements continued
London Stock Exchange Group plc
Annual Report 2023
184
3. Total income and contract liabilities continued
Notes to the consolidated financial statements continued
185 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
3. Total income and contract liabilities continued
| Data & | Capital | |||||
| Analytics | Markets | Post Trade | Other | Group | ||
Continuing operations | Note | £m | £m | £m | £m | £m |
| Revenue from external customers | ||||||
| Major product and service lines | ||||||
| Trading & banking solutions | 1,656 | – | – | – | 1,656 | |
| Enterprise data solutions | 1,411 | – | – | – | 1,411 | |
Investment solutions | 1,423 | – | – | – | 1,423 | |
Wealth solutions | 285 | – | – | – | 285 | |
| Customer & | ||||||
third-party risk solutions | 492 | – | – | – | 492 | |
| Recoveries | 370 | – | – | – | 370 | |
Equities | – | 227 | – | – | 227 | |
FX | – | 251 | – | – | 251 | |
Fixed income, derivatives and other | – | 1,068 | – | – | 1,068 | |
OTC derivatives | – | – | 517 | – | 517 | |
Securities & reporting | – | – | 254 | – | 254 | |
Non-cash collateral | – | – | 107 | – | 107 | |
Total revenue | 5,637 | 1,546 | 878 | – | 8,061 | |
Net treasury income | 3.2 | – | – | 289 | – | 289 |
Other income | – | – | – | 29 | 29 | |
Total income | 5,637 | 1,546 | 1,167 | 29 | 8,379 | |
| Timing of revenue recognition | ||||||
Services satisfied at a point in time | 201 | 1,055 | 458 | – | 1,714 | |
Services satisfied over time | 5,436 | 491 | 420 | – | 6,347 | |
Total revenue | 5,637 | 1,546 | 878 | – | 8,061 |
Notes to the consolidated financial statements continued
London Stock Exchange Group plc
Annual Report 2023
186
3. Total income and contract liabilities continued
| Data & | Capital | |||||
| Analytics | Markets | Post Trade | Other | Group | ||
Continuing operations | Note | £m | £m | £m | £m | £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 | 3.2 | – | – | 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 | 978 | 393 | – | 1,544 | |
Services satisfied over time | 5,086 | 481 | 343 | – | 5,910 | |
Total revenue | 5,259 | 1,459 | 736 | – | 7,454 |
| 2023 | 2022 | ||
| Continuing operations | £m | £m | |
| Instruments held at amortised cost | |||
Treasury income on assets | 4,122 | 994 | |
| Treasury income on liabilities | – | 218 | |
| Treasury expense on assets | (959) | (159) | |
Treasury expense on liabilities | (4,041) | (1,352) | |
Cash collateral fee | 272 | 230 | |
Net expense from instruments held at amortised cost | (606) | (69) | |
| Instruments held at fair value | |||
Treasury income | 896 | 326 | |
Treasury expense | (1) | (2) | |
Net income from instruments held at fair value | 895 | 324 | |
Net treasury income | 289 | 255 | |
1 | For 2022, | treasury income and expense on assets and liabilities held at amortised cost and | |
| at fair value have been represented to show the gross income and expenses by category, |
Notes to the consolidated financial statements continued
187 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
| 3. Total income and contract liabilities continued |
| 2023 | 2022 | |
| Group | £m | £m |
Current | 273 | 257 |
Non-current | 72 | 89 |
Total contract liabilities | 345 | 346 |
| 2023 | 2022 | |
| £m | £m | |
1 January | 346 | 346 |
| Contract liabilities assumed on acquisition | ||
of subsidiaries | 16 | 4 |
Disposal of business | – | (11) |
Recognised as revenue during the year | (270) | (249) |
Deferred during the year | 272 | 243 |
Foreign exchange translation | (19) | 13 |
31 December | 345 | 346 |
| 2023 | 2022 | ||
Continuing operations | Notes | £m | £m |
Staff costs | 4.1 | 2,085 | 1,896 |
IT costs | 607 | 567 | |
Professional fees | 404 | 420 | |
Short-term lease costs | 13 | 13 | |
Other costs | 333 | 243 | |
Foreign exchange losses | 32 | 1 | |
| Adjusted operating expenses | |||
| before depreciation, amortisation | |||
and impairment | 3,474 | 3,140 | |
| Non-underlying operating expenses | |||
| before depreciation, amortisation | |||
and impairment | 2.3 | 332 | 389 |
| Total operating expenses | |||
| before depreciation, amortisation | |||
and impairment | 3,806 | 3,529 |
Notes to the consolidated financial statements continued
London Stock Exchange Group plc
Annual Report 2023
188
4. Operating expenses before depreciation, amortisation and impairment continued
| Staff costs | |||
| 2023 | 2022 | ||
Continuing operations | Notes | £m | £m |
Salaries and other benefits | 2,159 | 1,905 | |
Social security costs | 204 | 191 | |
Pension costs | 12.1 | 101 | 81 |
Share-based payment expense | 20 | 143 | 158 |
Total payments made to employees | 2,607 | 2,335 | |
Amounts capitalised as development costs | 9 | (365) | (281) |
Total staff costs from continuing operations | 2.242 | 2,054 | |
Adjusted staff costs | 2,085 | 1,896 | |
Non-underlying staff costs | 157 | 158 | |
Total staff costs from continuing operations | 2,242 | 2,054 |
| 2023 | 2022 | ||
Discontinued operations | Note | £m | £m |
Salaries and other benefits | – | 18 | |
Social security costs | – | 2 | |
Pension costs | – | 1 | |
Total payments made to employees | – | 21 | |
Amounts capitalised as development costs | 9 | – | (1) |
Total staff costs from discontinued operations | – | 20 |
| 2023 | 2022 | |
| £m | £m | |
Salaries and other benefits | 18 | 16 |
Pension costs | 1 | 1 |
Share-based payments | 9 | 8 |
Total compensation | 28 | 25 |
Continuing operations | 2023 | 2022 |
UK | 4,880 | 4,559 |
USA | 3,276 | 3,127 |
India | 6,730 | 6,113 |
Europe, excluding UK | 2,723 | 2,292 |
Philippines | 2,254 | 2,090 |
Sri Lanka | 1,613 | 1,572 |
China | 1,394 | 1,452 |
Other Asia | 2,064 | 1,860 |
Africa and Middle East | 620 | 623 |
Other | 676 | 753 |
| Average number of employees | 26,230 | 24,441 |
| 2023 | 2022 | |
| £m | £m | |
| Audit of parent and consolidated | ||
financial statements | 7 | 6 |
Audit of subsidiary companies | 7 | 7 |
| Non-audit services | 1 | 1 |
Total auditors' fees | 15 | 14 |
Notes to the consolidated financial statements continued
189 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
| 2023 | 2022 | |||
Continuing operations | Notes | £m | £m | |
Bank deposit and other interest income | 125 | 29 | ||
| Derivative financial instruments | ||||
interest income | 22 | – | ||
| Fair value gain on derivative financial | ||||
instruments and hedged items | 17.4c | 2 | – | |
| Net interest income on net retirement | ||||
| benefit assets | 12.1 | 8 | 11 | |
| Lease interest income | 1 | 1 | ||
Other finance income | 1 | – | ||
Adjusted finance income | 159 | 41 | ||
1 | Calculated using the effective interest method. | |||
2 | For 2022, | interest cost on retirement benefit obligations of £70 million had been presented | ||
| as finance costs. This has been reclassified to net interest income on net retirement benefit | ||||
| assets to align with the accounting policy. This change has no overall impact on net finance | ||||
| costs in 2022. |
| 2023 | 2022 | ||
Continuing operations | Notes | £m | £m |
Interest payable on bank and other borrowings | (222) | (148) | |
| Derivative financial instruments | |||
interest expense | (42) | (15) | |
| Fair value loss on derivatives | |||
financial instruments | (5) | – | |
| Amortisation of arrangement fees | (3) | (3) | |
| Lease interest expense | 16.2 | (17) | (15) |
| Foreign exchange losses | (30) | – | |
Other finance expenses | (10) | (20) | |
| Adjusted finance costs | (329) | (201) | |
Non-underlying finance costs | 2.3 | (6) | (16) |
| Total finance costs | (335) | (217) |
London Stock Exchange Group plc
Annual Report 2023
190
| 2023 | 2022 | ||
Continuing operations | Notes | £m | £m |
| Current tax | |||
| UK corporation tax for the year | |||
at 23.5% (2022: 19%) | 73 | 67 | |
Overseas tax for the year | 202 | 125 | |
Adjustments in respect of previous years | (6) | 81 | |
Total current tax | 269 | 273 | |
| Deferred tax | |||
| Deferred tax expense/(benefit) | |||
for the year | 61 | (29) | |
Adjustments in respect of previous years | (27) | (4) | |
| Deferred tax (benefit)/expense | |||
in relation to amortisation and impairment of intangible assets | (56) | 22 | |
Total deferred tax | 6.2 | (22) | (11) |
Total tax | 247 | 262 | |
Adjusted tax | 625 | 540 | |
Non-underlying tax | 2.3 | (378) | (278) |
Notes to the consolidated financial statements continued
191 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
6. Taxation continued
The tax charge for the year differs from that derived from the
standard rate of corporation tax in the UK of 23.5% (2022: 19%)
as explained below:
| 2023 | 2022 | |
| Continuing operations | £m | £m |
Profit before tax from continuing operations | 1,195 | 1,241 |
Profit multiplied by standard rate of corporation tax in the UK | 281 | 236 |
Overseas earnings taxed at higher rate | 36 | 4 |
Adjustment arising from changes in tax rates | (44) | (3) |
Expenses not deductible/(income not taxable) | 2 | (53) |
Adjustments in respect of previous years | (33) | 77 |
Deferred tax not recognised | 5 | 1 |
Total tax | 247 | 262 |
Tax on items recognised in other comprehensive income
| 2023 | 2022 | |
| Continuing operations | £m | £m |
| Deferred tax (expense)/benefit on: | ||
| — Actuarial movements on retirement | ||
benefit obligations | (35) | 98 |
— Gains/losses of financial assets (at fair value through other comprehensive income) | 2 | (13) |
Total tax recognised in other comprehensive income | (33) | 85 |
Tax on items recognised in equity
| 2023 | 2022 | |
| £m | £m | |
| Current tax benefit on: | ||
— Share-based payments in excess of expense recognised | – | 14 |
Total current tax recognised in equity | – | 14 |
| Deferred tax benefit/(expense) on: | ||
| — Share-based payments less than/in excess | ||
of expense recognised | 15 | (92) |
— Investment in partnerships (recognised in non-controlling interests) | 62 | 100 |
— Other | 2 | – |
Total deferred tax recognised in equity | 79 | 8 |
Total tax recognised in equity | 79 | 22 |
| 2023 | 2022 | |
| £m | £m | |
Deferred tax assets | 664 | 622 |
Deferred tax liabilities | (2,140) | (2,200) |
Net deferred tax liabilities | (1,476) | (1,578) |
London Stock Exchange Group plc
Annual Report 2023
192
6. Taxation continued
| Tax losses | |||||||||
| Goodwill | and other | Provisions | |||||||
| and | carry- | Property, | Retirement | and other | |||||
| intangible | forward | plant and | Share | benefit | Investment in | temporary | |||
| assets | attributes | equipment | schemes | obligations | partnerships | differences | Total | ||
Group | Note | £m | £m | £m | £m | £m | £m | £m | £m |
1 January 2022 | (2,282) | 444 | 129 | 123 | (130) | 351 | 38 | (1,327) | |
| Deferred tax on acquisition | |||||||||
of subsidiaries | (87) | 24 | – | – | – | – | – | (63) | |
Tax recognised on discontinued operations | (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) | |
| Deferred tax on acquisition | |||||||||
of subsidiaries | 21.2 | (77) | 11 | – | – | – | – | 3 | (63) |
Tax recognised in the income statement | 74 | (27) | (17) | (1) | 43 | (24) | (26) | 22 | |
Tax recognised in other comprehensive income | – | – | – | – | (35) | – | 2 | (33) | |
Tax recognised in equity | – | – | – | 15 | – | 62 | 2 | 79 | |
| Foreign exchange | |||||||||
translation and other | 151 | (26) | (1) | (2) | (3) | (26) | 4 | 97 | |
31 December 2023 | (2,668) | 575 | 69 | 65 | (40) | 466 | 57 | (1,476) |
Notes to the consolidated financial statements continued
193 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
6. Taxation continued
6.3. Uncertain tax positions
1
London Stock Exchange Group plc
Annual Report 2023
194
2023 | 2022 | |||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | |
Basic earnings per share | 138.9p | – | 138.9p | 141.8p | 91.9p | 233.8p |
Diluted earnings per share | 138.1p | – | 138.1p | 141.1p | 91.4p | 232.5p |
Adjusted basic earnings per share | 323.9p | – | 323.9p | 317.8p | 10.6p | 328.4p |
Adjusted diluted earnings per share | 322.1p | – | 322.1p | 316.1p | 10.5p | 326.6p |
2023 | 2022 | ||||||
| Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||
| Note | £m | £m | £m | £m | £m | £m | |
Profit for the financial year attributable to the Company’s equity holders | 761 | – | 761 | 790 | 512 | 1,302 | |
| Adjustments: | |||||||
— Total non-underlying items net of tax | 2.3 | 1,119 | – | 1,119 | 1,049 | (453) | 596 |
— Non-underlying items attributable to non-controlling interests | (105) | – | (105) | (69) | – | (69) | |
Adjusted profit for the year attributable to the Company’s equity holders | 1,775 | – | 1,775 | 1,770 | 59 | 1,829 |
| 2023 | 2022 | |
| millions | millions | |
| Weighted average number of shares | 548 | 557 |
Dilutive effect of share options and awards | 3 | 3 |
Diluted weighted average number of shares | 551 | 560 |
Notes to the consolidated financial statements continued
195 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
| 2023 | 2022 | |
| £m | £m | |
| Final dividend for the year ended 31 December | ||
2021 paid 25 May 2022: 70.0p per ordinary share | – | 390 |
| Interim dividend for the year ended 31 December | ||
| 2022 paid 20 September 2022: 31.7p per | ||
ordinary share | – | 177 |
| Final dividend for the year ended 31 December | ||
2022 paid 24 May 2023: 75.3p per ordinary share | 415 | – |
| Interim dividend for the year ended 31 December | ||
| 2023 paid 20 September 2023: 35.7p per | ||
ordinary share | 196 | – |
611 | 567 |
London Stock Exchange Group plc
Annual Report 2023
196
9. Intangible assets continued
Notes to the consolidated financial statements continued
197 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
9. Intangible assets continued
| Purchased intangible assets | ||||||||
| Software, | ||||||||
| licences | ||||||||
| Customer | and | |||||||
| and supplier | Databases | intellectual | Software | |||||
| Goodwill | relationships | Brands | and content | property | and other | Total | ||
| Note | £m | £m | £m | £m | £m | £m | £m | |
| Cost | ||||||||
1 January 2022 | 17,509 | 8,721 | 1,956 | 2,434 | 702 | 3,232 | 34,554 | |
| Intangible assets acquired on acquisition | ||||||||
of subsidiaries | 569 | 188 | – | 3 | 149 | – | 909 | |
Additions | – | – | – | – | – | 868 | 868 | |
Disposal of business | – | – | (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 | |
| Intangible assets acquired on acquisition | ||||||||
of subsidiaries | 21.2 | 370 | 281 | – | – | 47 | – | 698 |
| Additions | – | – | – | – | – | 962 | 962 | |
| Disposals and write-off | – | – | (1) | – | – | (82) | (83) | |
Foreign exchange translation | (953) | (538) | (114) | (154) | (93) | (149) | (2,001) | |
31 December 2023 | 19,276 | 9,668 | 1,998 | 2,580 | 857 | 4,860 | 39,239 | |
| Accumulated amortisation and impairment | ||||||||
1 January 2022 | 23 | 956 | 398 | 224 | 315 | 914 | 2,830 | |
Amortisation charge for the year | – | 590 | 150 | 232 | 41 | 587 | 1,600 | |
Impairment | – | – | – | – | – | 11 | 11 | |
Disposal of business | – | – | (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 | |
| Amortisation charge for the year | – | 607 | 149 | 229 | 72 | 790 | 1,847 | |
| Impairment | – | – | – | – | – | 10 | 10 | |
| Disposals and write-off | – | – | (1) | – | – | (82) | (83) | |
Foreign exchange translation | – | (91) | (39) | (32) | (66) | (51) | (279) | |
31 December 2023 | 30 | 2,166 | 693 | 687 | 373 | 2,143 | 6,092 | |
| Net book values | ||||||||
31 December 2023 | 19,246 | 7,502 | 1,305 | 1,893 | 484 | 2,717 | 33,147 | |
31 December 2022 | 19,829 | 8,275 | 1,529 | 2,244 | 536 | 2,653 | 35,066 |
London Stock Exchange Group plc
Annual Report 2023
198
Notes to the consolidated financial statements continued
9. Intangible assets continued
| 2023 | 2022 | |
| £m | £m | |
| Data & Analytics | 13,767 | 14,414 |
Capital Markets, excluding Tradeweb | 2 | 2 |
| Tradeweb | 4,889 | 5,152 |
| Post Trade | 588 | 261 |
19,246 | 19,829 |
Assumption | Determination of assumption |
| Short- and medium-term | The short-term revenue and cost growth assumptions are based on the business plans prepared by management for |
| revenue and cost growth | the three-year period ending 31 December 2026 and extended by a further three years for trended medium-term growth. |
| 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 | Cash flows beyond an initial six-year period are extrapolated using estimated long-term growth rates, which are based on |
growth rates (used to determine terminal values) | external estimates of GDP and inflation |
Pre-tax discount rates | Weighted average cost of capital is 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 |
| Capital Markets, | ||||||||
| Data & Analytics | excluding Tradeweb | Tradeweb | Post Trade | |||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| Assumptions | % | % | % | % | % | % | % | % |
Long-term growth rates | 4.1 | 4.2 | 3.6 | 3.5 | 4.1 | 3.9 | 3.4 | 3.4 |
Pre-tax discount rates | 12.1 | 11.4 | 10.3 | 12.2 | 11.4 | 10.7 | 12.2 | 14.3 |
199 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
9. Intangible assets continued
| Change required for value-in-use | ||||
| to equal carrying amount | ||||
| Capital | ||||
| Markets, | ||||
| Data & | excluding | |||
| Assumptions | Analytics | Tradeweb | Post Trade | Tradeweb |
Reduction in terminal cash flow (%) | (40.7) | N/A | N/A | (28.9) |
Reduction in long-term growth rates (percentage points) | (3.6) | N/A | N/A | (2.0) |
Increase in pre-tax discount rates (percentage points) | 3.7 | N/A | N/A | 2.2 |
| Carrying value of | Remaining | ||
| material purchased | amortisation | ||
| intangible assets | period | ||
| 2023 | 2022 | ||
| £m | £m | 2023 | |
| Customer and supplier relationships | |||
Refinitiv | 5,635 | 6,428 | 13 years |
Tradeweb | 889 | 954 | 10-17 years |
Frank Russell | 305 | 346 | 11-16 years |
Acadia | 233 | N/A | 17 years |
| Brands | |||
Refinitiv | 532 | 660 | 2-12 years |
Tradeweb | 169 | 194 | 12 years |
Frank Russell | 442 | 498 | 16 years |
| Databases and content | |||
Refinitiv | 1,878 | 2,219 | 8-9 years |
London Stock Exchange Group plc
Annual Report 2023
200
Notes to the consolidated financial statements continued
201 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
10. Property, plant and equipment continued
Land & Buildings | Plant and equipment | ||||||
| Leasehold | |||||||
| Freehold | Right-of-use | improve- | Right-of-use | ||||
| property | assets | ments | assets | Owned | Total | ||
| Note | £m | £m | £m | £m | £m | £m | |
| Cost | |||||||
1 January 2022 | 55 | 605 | 103 | 60 | 502 | 1,325 | |
Property, plant and equipment acquired on acquisition of subsidiaries | – | 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 | – | (12) | – | (34) | (15) | (61) | |
Foreign exchange translation | (2) | 32 | 7 | 4 | 24 | 65 | |
31 December 2022 | 53 | 672 | 125 | 70 | 624 | 1,544 | |
Property, plant and equipment acquired on acquisition of subsidiaries | 21.2 | – | 1 | – | – | 2 | 3 |
Additions | 5 | 20 | 8 | 49 | 79 | 161 | |
Lease modifications | – | 74 | – | – | – | 74 | |
Disposals, reclassifications and other | (41) | (33) | 20 | (4) | 38 | (20) | |
Foreign exchange translation | – | (23) | (3) | (2) | (20) | (48) | |
31 December 2023 | 17 | 711 | 150 | 113 | 723 | 1,714 | |
| Accumulated depreciation and impairment | |||||||
1 January 2022 | 31 | 158 | 49 | 19 | 236 | 493 | |
Depreciation charge for the year | 1 | 101 | 20 | 18 | 143 | 283 | |
Impairment | – | 12 | – | – | – | 12 | |
Disposals and other | (3) | (10) | (3) | – | (19) | (35) | |
Disposal of business | – | (4) | – | (16) | (5) | (25) | |
Foreign exchange translation | – | 10 | 1 | 1 | 7 | 19 | |
31 December 2022 | 29 | 267 | 67 | 22 | 362 | 747 | |
| Depreciation charge for the year | – | 105 | 15 | 28 | 116 | 264 | |
| Impairment | – | 22 | – | – | – | 22 | |
Disposals, reclassifications and other | (27) | (30) | 5 | (5) | 45 | (12) | |
Foreign exchange translation | – | (10) | (1) | (1) | (11) | (23) | |
31 December 2023 | 2 | 354 | 86 | 44 | 512 | 998 | |
| Net book values | |||||||
31 December 2023 | 15 | 357 | 64 | 69 | 211 | 716 | |
31 December 2022 | 24 | 405 | 58 | 48 | 262 | 797 | |
London Stock Exchange Group plc
Annual Report 2023
202
| 2023 | 2022 | ||
| Notes | £m | £m | |
| Non-current | |||
Equity instruments | 11.1 | 372 | 394 |
| Current | |||
Debt instruments | 11.2 | – | 226 |
Total investments in financial assets | 17.1 | 372 | 620 |
| 2023 | 2022 | |
| £m | £m | |
1 January | 394 | 351 |
Additions | – | 1 |
Disposals | (1) | – |
Transfer to investments in associates | – | (1) |
Fair value (losses)/gains recognised in other comprehensive income | (12) | 21 |
Foreign exchange translation | (9) | 22 |
31 December | 372 | 394 |
| 2023 | 2022 | |
| £m | £m | |
Euroclear | 307 | 314 |
PrimaryBid Limited | 31 | 31 |
Finbourne Technology Limited | 8 | 8 |
Sumscope Inc. | 6 | 17 |
| 2023 | 2022 | |
| Group | £m | £m |
1 January | 226 | – |
| Additions | – | 217 |
| Disposals | (223) | – |
Foreign exchange translation | (3) | 9 |
31 December | – | 226 |
Notes to the consolidated financial statements continued
203 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
| This note describes the retirement benefit costs recognised in the income statement, and assets and liabilities recognised in the balance sheet. |
London Stock Exchange Group plc
Annual Report 2023
204
12. Pension and other retirement benefit schemes continued
12.1 Amounts recognised in the income statement
Continuing Notes
2023
£m
2022
£m
Defined contribution schemes 88 74
Defined benefit scheme –
current/past service cost,
curtailment, and expenses 13 7
Pension costs recognised in
staff costs 4.1 101 81
Net interest income 5.1 (8) (11)
93 70
12.2 Amounts recognised in other comprehensive income in respect
of retirement benefit schemes
| 2023 | 2022 | ||
| Note | £m | £m | |
1 January | (213) | 116 | |
| Net actuarial losses recognised | |||
in the year | 12.3 | (85) | (329) |
31 December | (298) | (213) |
| 2023 | 2022 | ||
| Note | £m | £m | |
1 January | 167 | 483 | |
| Pension (expense)/income, including | |||
net interest income | (5) | 5 | |
Actuarial losses | 12.2 | (85) | (329) |
Employer contributions and benefits paid | 14 | 17 | |
Other | 1 | (11) | |
Foreign exchange translation | 1 | 2 | |
31 December | 93 | 167 |
| 2023 | 2022 | ||
| Note | £m | £m | |
| Large UK schemes | 12.4 | 157 | 216 |
Other plans | (64) | (49) | |
| Net retirement benefit asset | 93 | 167 |
| confirmation from the Government as to whether it will issue new regulations in response. |
| The Group is considering, with the Trustees of the Large UK schemes, the impact on the |
| pension schemes. No reliable estimate can be made at this stage and no impact is included |
| in these disclosed benefit scheme liabilities. |
Notes to the consolidated financial statements continued
205 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
12. Pension and other retirement benefit schemes continued
| Net surplus/ | |||
| Assets | Liabilities | (deficit) | |
| £m | £m | £m | |
1 January 2022 | 3,811 | (3,267) | 544 |
| Pension expense/(income) | |||
| recognised in the income statement | |||
— Past/current service cost and administrative fees | – | (7) | (7) |
— Curtailment | – | 7 | 7 |
— Interest income/(cost) | 79 | (66) | 13 |
Remeasurements recognised in other comprehensive income | |||
— Movement on plan assets, excluding interest income, recognised in other comprehensive income | (1,426) | – | (1,426) |
| — Actuarial gains – | |||
financial assumptions | – | 1,213 | 1,213 |
| — Actuarial gains – | |||
demographic assumptions | – | 23 | 23 |
— Actuarial losses – experience | – | (164) | (164) |
| Employer contributions | 21 | – | 21 |
Plan participants’ contributions | 1 | (1) | – |
Benefits paid | (117) | 117 | – |
Other | – | (7) | (7) |
31 December 2022 | 2,369 | (2,152) 217 |
| 2023 | 2022 | ||
| Fair value of assets | £m | £m | |
| Equities | |||
— | Quoted | 92 | 29 |
— | Not quoted | 14 | 20 |
| Bonds | |||
— | Quoted | 3 | 250 |
— | Not quoted | 817 | 773 |
Buy-in policy | 1,026 | 723 | |
Cash and cash equivalents | 25 | 366 | |
Multi-assets and other | 354 | 208 | |
Total fair value of assets | 2,331 | 2,369 |
London Stock Exchange Group plc
Annual Report 2023
206
12. Pension and other retirement benefit schemes continued
2023 | 2022 | |
| Discount rate | ||
— Non-insured | 4.50% | 4.80% |
— Insured | 4.50% | 4.80% |
Price inflation | 3.13% | 3.33% |
Rate of increase in salaries | 3.10% | 3.30% |
| Life expectancy from age 65 (years) | ||
— Non-retired male member | 23.8 | 24.3 |
— Non-retired female member | 25.9 | 26.4 |
— Retired male member | 22.2 | 22.7 |
— Retired female member | 24.2 | 24.7 |
| Sensitivity analysis |
| 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 as at 31 December 2023. |
| scheme obligations | |||
| 2023 | 2022 | ||
| £m | £m | ||
Discount rate | +0.5% | (135) | (138) |
Price inflation | +0.5% | 83 | 81 |
Mortality rate | +1 year | 79 | 64 |
1 | The sensitivity analysis may not be representative of an actual change in the scheme |
| obligations as it is unlikely that changes in assumptions would occur in isolation of one | |
| another. The analysis is done in a similar way to calculating the scheme obligations |
Notes to the consolidated financial statements continued
207 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
12. Pension and other retirement benefit
schemes continued
London Stock Exchange Group plc
Annual Report 2023
208
13. Trade and other receivables continued
| 2023 | 2022 | ||
| Notes | £m | £m | |
| Non-current | |||
Net investments in leases | 62 | 71 | |
Tax indemnity receivable | 66 | 79 | |
Convertible loan notes | – | 12 | |
Deposits receivable | 19 | 23 | |
Other receivables | 31 | 24 | |
| Total non-current receivables | |||
classified as financial assets | 17.1 | 178 | 209 |
| Current | |||
Trade receivables | 941 | 766 | |
Fees receivable | 244 | 263 | |
| Expected credit loss on trade | |||
receivables and fees receivable | (13) | (9) | |
Net trade receivables | 1,172 | 1,020 | |
Net investments in leases | 9 | 12 | |
Deposits receivable | 34 | 20 | |
Other receivables 1 | 602 | 95 | |
| Current trade and other receivables | |||
classified as financial assets | 17.1 | 1,817 | 1,147 |
Prepayments | 230 | 214 | |
Contract assets | 4 | 3 | |
Total current trade and other receivables | 2,051 | 1,364 | |
Total receivables | 2,229 | 1,573 |
1 Other receivables include £299 million (2022: £10 million) from matched principal trades
within the Group's Tradeweb business that had passed their settlement date. An equivalent
amount of £276 million (2022: £9 million) is shown within other payables in note 15. All trades
were settled within a short period after the balance sheet date. Other receivables also
includes £147 million (2022: £9 million) as margin receivable on reverse repurchase contracts
within the Group’s Post Trade business.
| 2023 | 2022 | |
| £m | £m | |
1 January | 9 | 7 |
New provisions for expected credit losses | 14 | 6 |
Amounts written off as uncollectible | (9) | (3) |
Foreign exchange translation | (1) | (1) |
31 December | 13 | 9 |
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.
The future minimum rentals receivable
1
as at 31 December are
as follows:
| 2023 | 2022 | |
| £m | £m | |
Less than 1 year | 10 | 12 |
Between 1 and 2 years | 6 | 10 |
Between 2 and 5 years | 17 | 17 |
Over 5 years | 47 | 52 |
Total | 80 | 91 |
1 The future minimum rentals receivable above reflect the gross rental receivable and are not
discounted. The net investments in leases disclosed within trade and other receivables are
discounted to reflect the net present value to the Group at the year end.
14. 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.
| 2023 | 2022 | ||
| Note | £m | £m | |
Cash at bank | 755 | 922 | |
Cash equivalents | 2,825 | 2,287 | |
| Total cash and cash equivalents | |||
| classified as financial assets | 17.1 | 3,580 | 3,209 |
1
1 At 31 December 2023, cash and cash equivalents include £1,329 million (2022: £1,219 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, and 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.
Notes to the consolidated financial statements continued
209 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
| 2023 | 2022 | ||
| Notes | £m | £m | |
| Non-current | |||
Contingent consideration payable | 21 | 38 | |
| Tradeweb tax receivable | |||
agreement liability | 312 | 323 | |
Tax indemnity payable | 242 | 264 | |
Other payables | 5 | 24 | |
| Non-current payables | |||
classified as financial liabilities | 17.2 | 580 | 649 |
Deferred compensation | 21 | – | |
Total non-current payables | 601 | 649 | |
| Current | |||
Trade payables | 258 | 413 | |
Share buyback obligation | – | 200 | |
Accrued expenses | 1,024 | 1,049 | |
| Other payables | 459 | 266 | |
Current payables classified as financial liabilities | 17.2 | 1,741 | 1,928 |
Social security and other taxes | 155 | 76 | |
Total current trade and other payables | 1,896 | 2,004 | |
Total payables | 2,497 | 2,653 |
London Stock Exchange Group plc
Annual Report 2023
210
| 2023 | 2022 | ||
| Notes | £m | £m | |
| Non-current | |||
| Bank borrowings – | |||
| committed bank facilities | (8) | (5) | |
Bonds | 7,022 | 6,860 | |
Trade finance loans | 1 | 1 | |
Lease liabilities | 518 | 533 | |
Total non-current borrowings | 7,533 | 7,389 | |
| Current | |||
Bank borrowings | 17 | 1,295 | |
Commercial paper | 1,206 | – | |
Bonds | 825 | – | |
Lease liabilities | 118 | 139 | |
Total current borrowings | 2,166 | 1,434 | |
Total borrowings | 9,699 | 8,823 | |
| Total borrowings excluding | |||
lease liabilities | 16.1 | 9,063 | 8,151 |
Lease liabilities | 16.2 | 636 | 672 |
Total borrowings | 9,699 | 8,823 |
Notes to the consolidated financial statements continued
211 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
16. Borrowings, lease liabilities and net debt continued
The Group has the following committed bank facilities and term loans, commercial paper, unsecured bonds, bank overdrafts and trade finance loans:
| Carrying value | |||||
| Facility/ | |||||
| Maturity | bond | 2023 | 2022 | Interest rate | |
| date | £m | £m | £m | % | |
| Committed bank facilities | |||||
Multi-currency revolving credit facility | Dec 2027 | 1,925 | (5) | (2) | see note |
Multi-currency revolving credit facility | Dec 2027 | 1,075 | (3) | (3) | see note |
| Total committed bank facilities | 3,000 | (8) | (5) | ||
Commercial paper | 1,206 | – | 0.952 | ||
| Committed term loans | |||||
$2,000 million term loan | Dec 2023 | – | 1,295 | see note | |
Total committed term loans | – | 1,295 | |||
| Bonds | |||||
$500 million bond, issued April 2021 | Apr 2024 | 392 | 392 | 415 | 0.650 |
€500 million bond, issued September 2017 | Sep 2024 | 433 | 433 | 443 | 0.875 |
€500 million bond, issued April 2021 | Apr 2025 | 433 | 433 | 443 | – |
$1,000 million bond, issued April 2021 | Apr 2026 | 784 | 782 | 828 | 1.375 |
€700 million bond, issued September 2023 | Sep 2026 | 622 | 620 | – | 4.125 |
€500 million bond, issued December 2018 | Dec 2027 | 433 | 431 | 441 | 1.750 |
€500 million bond, issued April 2021 | Apr 2028 | 433 | 431 | 441 | 0.250 |
$1,000 million bond, issued April 2021 | Apr 2028 | 784 | 781 | 828 | 2.000 |
€500 million bond, issued September 2017 | Sep 2029 | 433 | 431 | 441 | 1.750 |
£500 million bond, issued April 2021 | Apr 2030 | 500 | 495 | 494 | 1.625 |
€700 million bond, issued September 2023 | Sep 2030 | 636 | 634 | – | 4.231 |
$1,250 million bond, issued April 2021 | Apr 2031 | 981 | 976 | 1,033 | 2.500 |
€500 million bond, issued April 2021 | Apr 2033 | 433 | 428 | 438 | 0.750 |
$750 million bond, issued April 2021 | Apr 2041 | 588 | 580 | 615 | 3.200 |
Total bonds | 7,885 | 7,847 | 6,860 | ||
Trade finance loans | Nov 2025 | 1 | 1 | 7.274 | |
Bank overdraft | 17 | – | |||
Total borrowings excluding lease liabilities | 9,063 | 8,151 |
2
2
1
2
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.
London Stock Exchange Group plc
Annual Report 2023
212
16. Borrowings, lease liabilities and net debt continued
Committed bank facilities: Multi-currency revolving credit facilities
In November 2023, the Group amended its £1,425 million revolving
credit facility, increasing the facility amount to £1,925 million and
extending the maturity to December 2027. The Group retained access
to its £1,075 million revolving credit facility, which also matures in
December 2027. No amounts were outstanding on either facility
as at 31 December 2023.
Committed term loan
US dollar term loan repayments totalling $1,560 million were made
during the year, with the term loan being fully repaid in October 2023.
Commercial paper
During the year, the Group updated its US Commercial Paper
(USCP) Programme and Euro Commercial Paper (ECP) Programme,
increasing the limits to $2.5 billion and £1.5 billion respectively.
As at 31 December 2023, $937 million (£735 million) was outstanding
under the USCP Programme, and €353 million (£306 million) and
£165 million under the ECP Programme (2022: nil).
Bonds
In September 2023, the Group issued €1.4 billion of bonds under
its £4 billion Euro Medium Term Note Programme (EMTN). The issue
consisted of two tranches of €700 million each, maturing in 2026 and
2030. The Group entered into a series of euro interest rate swaps to
swap fixed interest obligations to floating interest obligations. The bonds
and interest rate swaps have been designated as hedged items and
hedging instruments in a fair value hedging relationship (see note 17.4c).
The carrying values of the bonds have been adjusted for fair value
movements attributable to interest rate risk. The Group also entered into
a series of cross-currency interest rate swaps to swap the euro debt into
US dollar debt (see note 17.4d).
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.
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 2023.
Fair values
All the Group’s borrowings are recognised at amortised cost on the
balance sheet, except where the borrowing has been designated
as a hedged item in a fair value hedge relationship. In some cases,
amortised cost 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 17). 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 17). The fair values of these instruments are based on
cash flows which are discounted using a rate based on borrowing cost.
2023 | 2022 | |||
| Carrying | Fair | Carrying | Fair | |
| value | value | value | value | |
| Group | £m | £m | £m | £m |
Non-current | 7,015 | 6,390 | 6,856 | 5,903 |
Current | 2,048 | 2,034 | 1,295 | 1,301 |
Total borrowings excluding lease liabilities | 9,063 | 8,424 | 8,151 | 7,204 |
2023 | 2022 | |||||
| Drawn | Swapped 1 | Effective | Drawn | Swapped | Effective | |
| Currency | £m | £m | £m | £m | £m | £m |
Sterling | 652 | – | 652 | 485 | – | 485 |
Euro | 4,148 | (1,818) | 2,330 | 2,652 | (695) | 1,957 |
US dollar | 4,263 | 1,818 | 6,081 | 5,014 | 695 | 5,709 |
Total borrowings excluding lease liabilities | 9,063 | – | 9,063 | 8,151 | – | 8,151 |
Notes to the consolidated financial statements continued
213 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
16. Borrowings, lease liabilities and net debt continued
16.2 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.
Movements in lease liabilities were as follows:
| 2023 | 2022 | ||
| Notes | £m | £m | |
1 January | 672 | 715 | |
Lease liabilities assumed on acquisition of subsidiaries | 21 | 1 | 1 |
Lease liabilities derecognised on disposal of business | – | (22) | |
Leases terminated early | (2) | (2) | |
New lease contracts | 66 | 80 | |
Lease modifications | 74 | 16 | |
Lease interest expense | 5.2 | 17 | 15 |
Lease payments – principal | (156) | (150) | |
Lease payments – interest | (17) | (15) | |
Foreign exchange translation | (19) | 34 | |
31 December | 636 | 672 | |
Current lease liabilities | 118 | 139 | |
Non-current lease liabilities | 518 | 533 | |
Total lease liabilities | 636 | 672 |
The maturity of the Group’s lease commitments is disclosed within
the risk management note (see note 17.5). The potential future lease
payments, should the Group exercise extension and termination options,
would result in an increase in right-of-use assets and lease liabilities
of up to £245 million.
The weighted average discount rate used by the Group for lease
liabilities was 2.9% (2022: 2.3%).
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.
London Stock Exchange Group plc
Annual Report 2023
214
16. Borrowings, lease liabilities and net debt continued
16.3 Net debt
Net debt comprises cash and cash equivalents less lease liabilities and borrowings, adjusted for derivative financial instruments.
| 2023 | 2022 | ||
| Notes | £m | £m | |
| Non-current | |||
Bank borrowings | 16.1 | 8 | 5 |
Bonds | 16.1 | (7,022) | (6,860) |
Trade finance loans | 16.1 | (1) | (1) |
Lease liabilities | 16.2 | (518) | (533) |
Derivative financial assets | 17.1 | 94 | 12 |
Derivative financial liabilities | 17.2 | (22) | (87) |
Total due after one year | (7,461) | (7,464) | |
| Current | |||
Cash and cash equivalents | 14 | 3,580 | 3,209 |
Bank borrowings | 16.1 | (17) | (1,295) |
Commercial paper | 16.1 | (1,206) | – |
Bonds | 16.1 | (825) | – |
Lease liabilities | 16.2 | (118) | (139) |
Derivative financial assets | 17.1 | 11 | 36 |
Derivative financial liabilities | 17.2 | (60) | (9) |
Total due within one year | 1,365 | 1,802 | |
Net debt | (6,096) | (5,662) |
| Trade | ||||||
| Bank | Commercial | finance | Lease | Total | ||
| borrowings | Bonds | paper | loans | liabilities | borrowings | |
| £m | £m | £m | £m | £m | £m | |
1 January 2022 | 1,347 | 6,306 | – | 1 | 715 | 8,369 |
Cash flows from financing activities | (209) | – | – | – | (150) | (359) |
| Other movements | 4 | 5 | – | – | 73 | 82 |
Foreign exchange | 148 | 549 | – | – | 34 | 731 |
31 December 2022 | 1,290 | 6,860 | – | 1 | 672 | 8,823 |
Cash flows from financing activities | (1,244) | 1,206 | 1,166 | – | (156) | 972 |
| Arrangement fees paid | (5) | (5) | – | – | – | (10) |
| Other movements | 3 | 51 | 34 | – | 139 | 227 |
Foreign exchange | (35) | (265) | 6 | – | (19) | (313) |
31 December 2023 | 9 | 7,847 | 1,206 | 1 | 636 | 9,699 |
Notes to the consolidated financial statements continued
215 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
London Stock Exchange Group plc
Annual Report 2023
216
17. Financial assets and financial liabilities continued
Notes to the consolidated financial statements continued
217 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
17. Financial assets and financial liabilities continued
| Amortised | ||||
| cost | FVOCI | FVPL | Total | |
| 31 December 2023 | £m | £m | £m | £m |
| Clearing business financial assets | ||||
— Clearing member trading assets | – | – | 652,593 | 652,593 |
— Other receivables from clearing members | 7,139 | – | – | 7,139 |
| — Other financial assets | – | 17,275 | – | 17,275 |
| — Clearing member cash and cash equivalents | 86,528 | – | – | 86,528 |
Total clearing member assets | 93,667 | 17,275 | 652,593 | 763,535 |
| Trade and other receivables | 1,980 | – | 15 | 1,995 |
Cash and cash equivalents | 3,580 | – | – | 3,580 |
Investments in financial assets – equity instruments | – | 372 | – | 372 |
| Derivative financial instruments designated as fair value hedges | ||||
— Interest rate swaps | – | – | 47 | 47 |
| Derivative financial instruments not designated as hedges | ||||
— Cross-currency interest rate swaps | – | – | 45 | 45 |
— Foreign exchange forward contracts | – | – | 7 | 7 |
— Embedded foreign exchange contracts | – | – | 6 | 6 |
Total derivative financial instruments | – | – | 105 | 105 |
Total financial assets | 99,227 | 17,647 | 652,713 | 769,587 |
| Amortised cost | FVOCI | FVPL | Total | |
| 31 December 2022 | £m | £m | £m | £m |
| Clearing business financial assets | ||||
— Clearing member trading assets | 1,997 | – | 661,370 | 663,367 |
— Other receivables from clearing members | 5,945 | – | – | 5,945 |
— Other financial assets | – | 18,415 | – | 18,415 |
— Clearing member cash and cash equivalents | 104,707 | – | – | 104,707 |
Total clearing member assets | 112,649 | 18,415 | 661,370 | 792,434 |
| Trade and other receivables | 1,344 | – | 12 | 1,356 |
Cash and cash equivalents | 3,209 | – | – | 3,209 |
Investments in financial assets – debt instruments | – | 226 | – | 226 |
Investments in financial assets – equity instruments | – | 394 | – | 394 |
| Derivative financial instruments not designated as hedges | ||||
— Foreign exchange forward contracts | – | – | 14 | 14 |
— Embedded foreign exchange contracts | – | – | 34 | 34 |
Total derivative financial instruments | – | – | 48 | 48 |
Total financial assets | 117,202 | 19,035 | 661,430 | 797,667 |
London Stock Exchange Group plc
Annual Report 2023
218
17. Financial assets and financial liabilities continued
| Amortised | |||
| cost | FVPL | Total | |
| 31 December 2023 | £m | £m | £m |
| Clearing business financial liabilities | |||
— Clearing member trading liabilities | – | 652,593 | 652,593 |
— Other payables to clearing members | 111,448 | – | 111,448 |
Total clearing member financial liabilities | 111,448 | 652,593 | 764,041 |
| Trade and other payables | 2,300 | 21 | 2,321 |
Borrowings | 9,699 | – | 9,699 |
| Derivative financial instruments designated as net investment hedges | |||
— Cross-currency interest rate swaps | – | 52 | 52 |
| Derivative financial instruments not designated as hedges | |||
— Foreign exchange forward contracts | – | 11 | 11 |
— Embedded foreign exchange contracts | – | 19 | 19 |
Total derivative financial instruments | – | 82 | 82 |
Total financial liabilities | 123,447 | 652,696 | 776,143 |
| Amortised | |||
| cost | FVPL | Total | |
| 31 December 2022 | £m | £m | £m |
| 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 | 2,539 | 38 | 2,577 |
| Borrowings | 8,823 | – | 8,823 |
| Derivative financial instruments designated as net investment hedges | |||
— Cross-currency interest rate swaps | – | 84 | 84 |
| Derivative financial instruments not designated as hedges | |||
— Foreign exchange forward contracts | – | 6 | 6 |
— Embedded foreign exchange contracts | – | 6 | 6 |
Total derivative financial instruments | – | 96 | 96 |
Total financial liabilities | 142,586 | 661,504 | 804,090 |
Notes to the consolidated financial statements continued
219 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
17. Financial assets and financial liabilities continued
| Quoted prices | Significant | Significant | ||
| in active | observable | unobservable | ||
| markets | inputs | inputs | ||
| (Level 1) | (Level 2) | (Level 3) | Total | |
| £m | £m | £m | £m | |
| Clearing business financial assets | ||||
— Derivative instruments | 10 | 7,271 | – | 7,281 |
— Non-derivative instruments | – | 645,312 | – | 645,312 |
— Other financial assets | 17,275 | – | – | 17,275 |
17,285 | 652,583 | – | 669,868 | |
Investments in financial assets – equity | – | – | 372 | 372 |
| Derivative financial instruments designated as fair value hedges | ||||
— Interest rate swaps | – | 47 | – | 47 |
| Derivative financial instruments not designated as hedges | ||||
— Cross-currency interest rate swaps | – | 45 | – | 45 |
— Foreign exchange forward contracts | – | 7 | – | 7 |
— Embedded foreign exchange contracts | – | 6 | – | 6 |
— Trade and other receivables – other | – | – | 15 | 15 |
| Total financial assets measured at fair value | 17,285 | 652,688 | 387 | 670,360 |
| Quoted prices | Significant | Significant | ||
| in active | observable | unobservable | ||
| markets | inputs | inputs | ||
| (Level 1) | (Level 2) | (Level 3) | Total | |
| 31 December 2022 | £m | £m | £m | £m |
| 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 |
Investments in financial assets – equity | – | – | 394 | 394 |
| Derivative financial instruments not designated as hedges | ||||
— Foreign exchange forward contracts | – | 14 | – | 14 |
— Embedded foreign exchange contracts | – | 34 | – | 34 |
— Trade and other receivables – convertible loan notes | – | – | 12 | 12 |
| Total financial assets measured at fair value | 18,739 | 661,320 | 406 | 680,465 |
London Stock Exchange Group plc
Annual Report 2023
220
17. Financial assets and financial liabilities continued
| Quoted prices | Significant | Significant | ||
| in active | observable | unobservable | ||
| markets | inputs | inputs | ||
| (Level 1) | (Level 2) | (Level 3) | Total | |
| 31 December 2023 | £m | £m | £m | £m |
| Clearing business financial liabilities | ||||
— Derivative instruments | 10 | 7,271 | – | 7,281 |
— Non-derivative instruments | – | 645,312 | – | 645,312 |
10 | 652,583 | – | 652,593 | |
Contingent consideration payable | – | – | 21 | 21 |
| Derivative financial instruments designated as net investment hedges | ||||
— Cross-currency interest rate swaps | – | 52 | – | 52 |
| Derivative financial instruments not designated as hedges | ||||
— Foreign exchange forward contracts | – | 11 | – | 11 |
— Embedded foreign exchange contracts | – | 19 | – | 19 |
| Total financial liabilities measured at fair value | 10 | 652,665 | 21 | 652,696 |
| Quoted prices | Significant | Significant | ||
| in active | observable | unobservable | ||
| markets | inputs | inputs | ||
| (Level 1) | (Level 2) | (Level 3) | Total | |
| 31 December 2022 | £m | £m | £m | £m |
| 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 |
| Derivative financial instruments designated as net investment hedges | ||||
— Cross-currency interest rate swaps | – | 84 | – | 84 |
| Derivative financial instruments not designated as hedges | ||||
— Foreign exchange forward contracts | – | 6 | – | 6 |
— Embedded foreign exchange contracts | – | 6 | – | 6 |
| Total financial liabilities measured at fair value | 98 | 661,368 | 38 | 661,504 |
Notes to the consolidated financial statements continued
221 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
17. Financial assets and financial liabilities continued
€700 million cross-currency interest rate swap | 2023 | 2022 |
| Fair value of derivative liability on the | ||
balance sheet | (£52m) | (£84m) |
Nominal value of hedging instrument | $836m | $836m |
Hedge ratio | 1:1 | 1:1 |
Hedge effectiveness | 100% | 100% |
Change in fair value of derivative | £32m | (£40m) |
Change in value of net investment | (£32m) | £40m |
| Cumulative amount held in hedging reserve | (£52m) | (£84m) |
Euro denominated bonds | 2023 | 2022 |
Carrying value of debt on the balance sheet | (£1,295m) | (£1,326m) |
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 | £31m | (£73m) |
Change in value of net investment | (£31m) | £73m |
Cumulative amount held in hedging reserve | £29m | (£2m) |
| Revolving credit facility, bridge facility and | ||
commercial paper | 2023 | 2022 |
Change in carrying value of hedging instruments | – | – |
Change in value of net investments | – | – |
Cumulative amount held in hedging reserve | £8m | £8m |
London Stock Exchange Group plc
Annual Report 2023
222
17. Financial assets and financial liabilities continued
€1,400 million interest rate swaps | 2023 | 2022 |
| Fair value of derivative asset on the | ||
balance sheet | £47m | – |
Change in fair value of the derivative | £47m | – |
Nominal value of the hedging instruments | €1,400m | – |
Hedge ratio | 1:1 | – |
Carrying amount of the borrowings on the balance sheet | (£1,254m) | – |
| Accumulated amounts of fair value adjustment | ||
on the hedged items | (£45m) | – |
Change in value of hedged items | (£45m) | – |
| Hedge ineffectiveness recorded in net finance | ||
income in the income statement | (£2m) | – |
| Traded against | ||||
| Traded against sterling | US dollars | |||
| 2023 | 2022 | 2023 | 2022 | |
| Sell/(buy) | £m | £m | £m | £m |
Euro | (598) | (784) | 97 | 48 |
US dollar | 635 | (40) | – | – |
Sterling | – | – | – | (309) |
Hong Kong dollar | (32) | – | – | – |
Japanese yen | (29) | – | – | (36) |
Singapore dollar | (22) | – | – | (32) |
Romanian leu | (22) | – | – | – |
Australian dollar | (20) | – | – | (22) |
Canadian dollar | (13) | – | – | (14) |
Swiss franc | (8) | – | – | (8) |
Other currencies | (10) | – | – | – |
| 2023 | 2022 | ||
| Note | £m | £m | |
1 January | (102) | 14 | |
Amounts recycled to the income statement | 18.2 | (3) | (3) |
Foreign exchange translation | 2 | – | |
| Net gains/(losses) on net | |||
investment hedges | 18.2 | 63 | (113) |
31 December | (40) | (102) |
Notes to the consolidated financial statements continued
223 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
17. Financial assets and financial liabilities continued
| Capital risk | ||||
Risk description | Risk management approach | |||
| Capital risk relates to the Group’s ability to | The Group, which consists of both regulated and unregulated entities, is profitable and strongly cash | |||
| meet regulatory capital requirements and | generative. It can manage its capital structure (which consists of equity and debt capital) and react to | |||
| minimum internal investment returns. | changes in economic conditions by varying returns to shareholders, issuing new shares or increasing or | |||
| There is a risk that the Group’s entities may | reducing borrowings. The Board reviews dividend policy and funding capacity on a regular basis and the | |||
| not maintain, or have access to, sufficient | Group maintains comfortable levels of debt facility headroom. A high-level summary of the Group’s capital | |||
| structure is presented below: | ||||
high-quality capital to meet their regulatory, or other obligations. This could result in a loss | 2023 | 2022 | ||
| of regulatory approvals and/or the imposition | Book value of capital | £m | £m | |
| of financial sanctions. | Total shareholders’ funds | 23,807 | 25,996 | |
| The main capital risks faced by the Group are: | Group borrowings excluding lease liabilities | 9,063 | 8,151 | |
| — An increased regulatory capital requirement | ||||
| of its regulated companies | The Group maintains a Capital Management Policy, the execution of which is overseen by the Group’s | |||
| — Negative yields on its investments | Financial, Investment and Capital Committee. The Group seeks to allocate capital in order to maintain a | strong balance sheet, meet regulatory requirements, drive growth and offer suitable returns to shareholders. | ||
| — An inability to raise debt or equity | Regulated entities within the Group monitor compliance with policy and the capital requirements set by their | |||
| financing as a result of its own poor financial | respective regulatory authorities. | |||
| performance, or poor financing conditions | 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: | ||||
| 2023 | 2022 | |||
| Regulatory and operational capital | £m | £m | ||
| Total regulatory and operational capital | 1,348 | 1,427 | ||
Amount included in cash and cash equivalents | 1,329 | 1,219 | ||
1 | Includes investments in financial assets of £nil (2022: £191 million) and letters of credit totalling £19 million (2022: £17 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 1.5-2.5 times | ||||
| (moving from a target range of 1.0-2.0 times during 2023). Leverage is calculated as operating net debt | ||||
| (i.e. net debt after excluding lease liabilities and amounts set aside for regulatory and operational purposes) | ||||
| to adjusted EBITDA before foreign exchange gains or losses (Group adjusted earnings from continuing | ||||
| operations before net finance costs, tax, depreciation, amortisation and impairment and before foreign | ||||
| exchange gains or losses). At 31 December 2023, leverage was 1.8 times (2022: 1.8 times). | ||||
| While the Group’s bank borrowing facilities do not include financial covenants, the Group takes into account | ||||
| certain financial metrics (including liquidity headroom and the leverage ratio) 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. | ||||
London Stock Exchange Group plc
Annual Report 2023
224
17. Financial assets and financial liabilities continued
| Credit and concentration risk | ||||
Risk description | Risk management approach | |||
| Credit risk relates to the potential for | Group | |||
| a Group counterparty (including CCP | Credit risk is governed by policies set by the Group Risk function. Limits and thresholds for credit and | |||
| members, and any counterparty where | concentration risk are reviewed regularly. | |||
| there is exposure through payment, clearing | Group companies make judgements on the credit quality of their clients. This is based on the client’s financial | |||
| or settlement processes) to be unable to | position, the recurring nature of billing and collection arrangements and historical evidence relating to the | |||
| meet its financial obligations to the Group | client’s ability to meet its financial liabilities as they fall due. The Group is exposed to a large number of | |||
| when due. | clients and so we deem concentration risk on the Group’s receivables to be low. | |||
| Credit concentration risk may arise through | The Group’s main credit risk exposure arises on the financial assets shown earlier in note 17.1. There have | |||
| been no significant increases in credit risk for these assets and no estimated credit losses have been | ||||
| Group entities having large individual | recognised on other financial instruments. | |||
| or connected exposures to groups of | Non-CCP entities | |||
| counterparties whose likelihood of default | The principal source of non-CCP credit risk is the creditworthiness of the investment counterparties with | |||
| is driven by common underlying factors. | 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. The margins are in the form of cash and 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: | ||||
| 2023 | 2022 | |||
| Total collateral held | £bn | £bn | ||
Collateral security | Cash received | 110 | 127 | |
Non-cash pledged | 172 | 147 | ||
Guarantees pledged | 2 | 2 | ||
Total collateral as at 31 December | 284 | 276 | ||
Maximum collateral held during the year | 312 | 310 | ||
| 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. | ||||
| 2023 | 2022 | |||
| £bn | £bn | |||
Total investment portfolio | 104 | 123 | ||
Maximum portfolio size during the year | 147 | 157 | ||
| Additional portfolio information: | ||||
Amount invested securely | 99.99% | 99.99% | ||
Weighted average maturity (days) | 65 | 53 |
Notes to the consolidated financial statements continued
225 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
17. 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 2023 was with the French Government with an aggregate | |||||
| exposure of 43% of the total investment portfolio (2022: 40% 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. | |||||
| Trade receivables | |||||
| Fees | |||||
| receivable | <180 days | >180 days | Total | ||
| 31 December 2023 | £m | £m | £m | £m | |
Expected credit loss rate | <1% | <1% | 14.2% | ||
Total receivables | 244 | 870 | 71 | 1,185 | |
Expected credit loss | – | (3) | (10) | (13) | |
Net trade and fees receivables | 244 | 867 | 61 | 1,172 | |
| Trade receivables | |||||
| Fees | |||||
| receivable | <180 days | >180 days | Total | ||
| 31 December 2022 | £m | £m | £m | £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 | |
| Country risk | |||
Risk description | Risk management approach | ||
| Country risk relates to those risks that are | The Group maintains a country risk framework to help assess and monitor the risk of doing business with, | ||
inherent when doing business with, or operating in, a country. | or operating in, a country. | ||
| Group CCPs have specific risk management frameworks that address country risk for both clearing and | |||
| Some governments may be unable or find it | margin operations. Contained in these frameworks are a suite of stress scenarios that consider deterioration | ||
| difficult to service their debts. This could have | of sovereign credit quality as well as other risk factors. These scenarios support CCPs in developing and | ||
| adverse effects, particularly on the Group’s | maintaining the appropriate country risk measurement, monitoring and mitigation tools. Risk Committees | ||
| CCPs, potentially impacting cleared products, | oversee these risks and the associated policy frameworks to protect the Group against a potentially adverse | ||
| margin collateral, investments, the clearing | impact arising from volatility in the sovereign debt markets. | ||
| membership and the financial industry | The Group CCPs’ sovereign exposures at the end of the financial reporting periods were: | ||
| as a whole. | |||
| In addition, geopolitical events could impact | 2023 | 2022 | |
| our ability to operate in a country or impact the | Country/organisation | £bn | £bn |
| value of our assets in that country. We may | France | 22 | 30 |
| even need to relocate activities or change | USA | 13 | 15 |
| our operating model in response. | UK | 11 | 7 |
European Union (supranational) | 2 | 20 | |
Other | 2 | 2 |
London Stock Exchange Group plc
Annual Report 2023
226
17. 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 | Group |
| to meet its short- and long-term payment | The Group is profitable, has strong free cash flow and generates annuity-like revenue which is not |
| obligations as they fall due. | significantly impacted by seasonal variations. The Group maintains sufficient liquid resources to meet its |
| Additionally, the Group’s CCPs, and certain | financial obligations as they fall due, and to invest in capital expenditure, pay dividends, meet its pension |
| other Group entities, must maintain a level | commitments and support or fund acquisitions or repay borrowings. Subject to regulatory constraints |
| of liquidity (consistent with regulatory | impacting certain entities, funds can (generally) be lent across the Group and cash earnings can be remitted |
| requirements) to make sure their services | through regular dividend payments by subsidiary companies. This is an important component of the Group |
| Treasury cash management policy and approach. | |
operate smoothly and to be able to continue to operate in the event of | Management monitors the Group’s cash flow forecasts and overlays sensitivities to these forecasts to reflect |
| a significant stress event. | assumptions about more challenging market conditions or stress events. The Group will take the appropriate |
| The Group’s settlement and custodial | 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. | |
| risks relate to the potential for a partner | |
| firm to default on its obligations in respect | Non-CCP entities |
| of custody, settlement, payment or other | The Group Treasury Policy requires the Group to maintain adequate credit facilities provided by a diversified |
| administration activities, or that no action | lending group to cover its expected funding requirements and ensure a minimum level of headroom for at |
| is taken by the Group to mitigate these | least the next 24 months. The financial strength of the Group’s lenders is monitored regularly. |
| risks. This also includes the risk that | For full details of the Group’s borrowings and facilities, see note 16.1. |
| client assets are immobilised as a result | CCPs |
| of a third-party bankruptcy. | 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. |
| Less than | Between 1 | Between 2 | Over | ||
| 1 year | and 2 years | and 5 years | 5 years | Total | |
| 31 December 2023 | £m | £m | £m | £m | £m |
Borrowings (excluding lease liabilities) | 2,166 | 581 | 3,394 | 3,930 | 10,071 |
Trade and other payables | 1,896 | – | – | – | 1,896 |
Lease liabilities | 137 | 113 | 235 | 253 | 738 |
Clearing member liabilities | 764,041 | – | – | – | 764,041 |
Derivative financial instruments | 60 | 6 | – | 16 | 82 |
Other non-current payables | – | 55 | 314 | 241 | 610 |
| Less than | Between 1 | Between 2 | Over | ||
| 1 year | and 2 years | and 5 years | 5 years | Total | |
| 31 December 2022 | £m | £m | £m | £m | £m |
Borrowings (excluding lease liabilities) | 1,440 | 967 | 2,008 | 4,754 | 9,169 |
Trade and other payables | 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 | – | 64 | 338 | 247 | 649 |
Notes to the consolidated financial statements continued
227 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
17. Financial assets and financial liabilities continued
| Market risk – foreign exchange risk | ||||||
Risk description | Risk management approach | |||||
| The Group operates globally with primary | Translational risk | |||||
| centres in the UK, Europe and North America. | The Group manages its translational risk, where possible, by matching the currency of its debt to the | |||||
| It also has growing and strategically important | currency of its earnings, to make sure certain key financial metrics are protected from material foreign | |||||
| businesses in Asia. The Group’s principal | exchange rate volatility. The Group also seeks to balance the currency of its assets with its liabilities. In order | |||||
| currencies of operation are sterling, US dollars, | to mitigate the impact of unfavourable currency exchange rate movements on earnings and net assets, | |||||
| and the euro. | non-sterling cash earnings are centralised and applied to debt and interest payments in the same currency. | |||||
| The Group is exposed to transactional foreign | 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. | ||||||
| exchange risk and translational risk. | ||||||
| Transactional risk arises when we buy or sell | A material proportion of the Group's debt is held in or swapped into euros and US dollars as noted below: | |||||
goods or services in a currency other than our entities’ functional currencies. We may | 2023 | 2022 | ||||
| be exposed to movements in that currency. | Currency of debt | £m | £m | |||
| Translational risk arises from the translation | Euro denominated drawn debt | 4,148 | 2,652 | |||
| of account balances recorded in an entity’s | Euro denominated cross-currency interest rate swaps | (1,818) | (695) | |||
| functional currency into the Group's reporting | ||||||
| currency for the purpose of statutory reporting. | US dollar denominated drawn debt | 4,263 | 5,014 | |||
| Transactional foreign exchange risk may | US dollar denominated cross-currency interest rate swaps | 1,818 | 695 | |||
| present itself in payment of intragroup | The cross-currency interest rate swaps are directly linked to euro fixed debt. A proportion of the euro and | |||||
| dividends or when interest obligations, which | US dollar denominated debt, including the cross-currency swaps, provide a hedge against the Group’s net | |||||
are in a different currency, are due. However, both of these operations play their part in | investment in euro and US dollar denominated entities. | |||||
| controlling the level of translational foreign | At 31 December 2023, the Group’s designated hedges of its net investments were effective. | |||||
| exchange exposure the Group faces. | Transactional risk | |||||
| Transactional foreign exchange risk may also | While transactional foreign exchange exposure is limited, the Group mitigates this by either hedging material | |||||
| arise when investing in, or divesting from, | transactions with appropriate derivative instruments or by settling currency payables or receivables within | |||||
| operations denominated in currencies | a short timeframe. The Group Treasury Policy requires cash flows of single transactions or a series of linked | |||||
| other than sterling. | transactions of more than £2 million or equivalent per annum to be hedged. The risk is also minimised | |||||
| In addition, the Group has some contracts/ | by the periodic exchange of cash into each Group entity’s functional currency. Where appropriate, hedge | |||||
| cash flow profiles with a foreign exchange | accounting for derivatives is considered in order to mitigate material levels of income statement volatility. | |||||
| component that could trigger embedded | Governance and sensitivity | |||||
| derivative recognition and, as such, | The Group’s Risk Committee reviewed the approach to foreign exchange risk management during the | |||||
| fair value accounting treatment. | quarter ended 31 December 2023. | |||||
| 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 2023 and 2022 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 | 2023 | |||||
| Profit | Profit | |||||
| after tax | Equity | after tax | Equity | |||
| £m | £m | £m | £m | |||
Euro | Sterling weakens | 5 | (68) | 6 | (71) | |
Sterling strengthens | (4) | 64 | (5) | 64 | ||
US dollar | Sterling weakens | 7 | (66) | 18 | (68) | |
Sterling strengthens | (6) | 60 | (16) | 61 | ||
| The sensitivity of profit after tax reflects foreign exchange gains or losses on translation of financial assets | ||||||
| and financial liabilities, including cash and borrowings but excluding hedged balances. | ||||||
| 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. | ||||||
London Stock Exchange Group plc
Annual Report 2023
228
17. 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 | The Group’s interest rate management policy focuses on protecting the Group’s credit rating and limiting the |
| impact of changes in interest rates on cash | impact of interest rate increases on Group earnings. To support this objective, the Group targets a maximum |
| held and investments in financial assets, | debt floating rate component of 50%. This approach reflects the broad natural hedge of floating rate |
| and on borrowings held at floating rates. | borrowings provided by the significant balances of cash and cash equivalents held effectively at floating |
| rates of interest. | |
| The Group may also face future interest rate | |
| exposure connected to M&A transactions | At 31 December 2023 the floating rate component of total debt was 26% (2022: 16%). |
| where significant debt financing is involved. | Where the Group has committed to M&A transactions and is exposed to prospective interest rate risk on |
| The Group’s CCPs have member liabilities, and | borrowings, the Group Treasury function will assess the exposure and consider hedging solutions that |
| separately achieve returns which support the | conform with policy and seek to limit future interest costs. |
| payment of these liabilities. A CCP’s interest | In the Group’s CCPs, interest-bearing assets are generally invested in secured instruments or structures. |
| rate risk can increase if the reference rates | These tend to be for a longer term than interest-bearing liabilities, whose interest rate is reset daily. This |
| used to calculate liabilities increase while the | makes investment returns vulnerable to volatility in overnight rates and shifts in spreads between overnight |
| reference rates that underpin investment | and term rates. Interest rate exposures (and the risk to CCP capital) are managed within defined risk appetite |
| returns decrease (or do not increase by | parameters against which sensitivities are monitored daily. |
| the same amount). | In our review of the sensitivities to potential movements in interest rates, we have considered interest rate |
| Group companies that offer guaranteed | volatility over the last year and prospects for rates over the next 12 months. We have concluded that a |
| settlement of traded securities can also | 1 percentage point downward movement (with a limited prospect of material upward movement) reflects |
| be exposed to latent interest rate risk | a reasonable level of risk to current rates. If interest rates on cash and cash equivalents and borrowings had |
(and market risk more generally) in the event of a counterparty default. | been 1 percentage point lower, with all other variables held constant, profit after tax for 2023 would have |
| been £9 million lower (2022: £8 million higher, based on interest rates being 1 percentage point higher) | |
| mainly as a result of lower interest income on floating rate cash and cash equivalents, partially offset by | |
| lower 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 lower, with all other variables held constant, the Group’s profit after tax would have | |
| been £1 million higher (2022: £1 million lower, based on interest rates being 1 percentage point higher). |
Notes to the consolidated financial statements continued
229 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
17. Financial assets and financial liabilities continued
| Amounts | |||||
| Amount | not netted, | ||||
| as reported in | but available | ||||
| Gross | Amount | the balance | in event | Net | |
| amount | offset | sheet | of default | amount | |
| 31 December 2023 | £m | £m | £m | £m | £m |
| Other financial assets | 2,340,881 | (2,333,561) | 7,320 | (7,320) | – |
| Repurchase agreements | 769,971 | (124,698) | 645,273 | (645,273) | – |
| Derivative financial instruments | 115 | – | 115 | (12) | 103 |
Total assets | 3,110,967 | (2,458,259) | 652,708 | (652,605) | 103 |
| Other financial liabilities | (2,353,867) | 2,346,547 | (7,320) | 7,320 | – |
Reverse repurchase agreements 2 | (769,971) | 124,698 | (645,273) | 645,273 | – |
| Derivative financial instruments | (69) | – | (69) | 12 | (57) |
Total liabilities | (3,123,907) | 2,471,245 | (652,662) | 652,605 | (57) |
| Amounts | |||||
| Amount | not netted, | ||||
| as reported in | but available | ||||
| Gross | Amount | the balance | in event | Net | |
| amount | offset | sheet | of default | amount | |
| 31 December 2022 | £m | £m | £m | £m | £m |
| Other financial assets | 2,404,794 | (2,397,255) | 7,539 | (7,539) | – |
| Repurchase agreements | 798,844 | (145,013) | 653,831 | (653,831) | – |
| Derivative financial instruments | 15 | 15 | (6) | 9 | |
Total assets | 3,203,653 | (2,542,268) | 661,385 | (661,376) | 9 |
| Other financial liabilities | (2,413,095) | 2,405,556 | (7,539) | 7,539 | – |
Reverse repurchase agreements 2 | (798,844) | 145,013 | (653,831) | 653,831 | – |
| Derivative financial instruments | (96) | – | (96) | 6 | (90) |
Total liabilities | (3,212,035) | 2,550,569 | (661,466) | 661,376 | (90) |
London Stock Exchange Group plc
Annual Report 2023
230
| Number of | Ordinary | Share | ||
| shares | share capital | premium 2 | Total | |
| millions | £m | £m | £m | |
1 January 2022 | 557 | 39 | 978 | 1,017 |
| Issue of shares to the Employee Benefit Trust | 1 | – | – | – |
Share buyback | (4) | – | – | – |
31 December 2022 | 554 | 39 | 978 | 1,017 |
| Issue of shares to the Employee Benefit Trust | 2 | – | – | – |
Share buyback | (15) | (1) | – | (1) |
31 December 2023 | 541 | 38 | 978 | 1,016 |
Notes to the consolidated financial statements continued
231 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
18. Share capital, share premium and other reserves continued
| Foreign | |||||||
| Merger | Capital | Reverse | exchange | ||||
| relief | redemption | acquisition | Hedging | translation | |||
| reserve | reserve | reserve | reserve | reserve | Total | ||
| Note | £m | £m | £m | £m | £m | £m | |
1 January 2022 | 18,286 | 514 | (512) | 14 | 505 | 18,807 | |
Changes in fair value recognised | – | – | – | (113) | – | (113) | |
Amount recycled to income statement | – | – | – | (3) | – | (3) | |
Foreign exchange differences on translation of foreign operations | – | – | – | – | 2,448 | 2,448 | |
31 December 2022 | 18,286 | 514 | (512) | (102) | 2,953 | 21,139 | |
Shares cancelled | – | 1 | – | – | – | 1 | |
Changes in fair value recognised | 17.4 | – | – | – | 63 | – | 63 |
Amount recycled to income statement | 17.4 | – | – | – | (3) | – | (3) |
Foreign exchange differences on translation of foreign operations | – | – | – | 2 | (1,328) | (1,326) | |
31 December 2023 | 18,286 | 515 | (512) | (40) | 1,625 | 19,874 |
Financial information for subsidiary entities or groups that have material
non-controlling interests is provided below:
| Proportion of economic interest | ||
held by non-controlling interests | 2023 | 2022 |
Tradeweb group | 49.0% | 48.8% |
LCH Group | 17.4% | 17.4% |
Turquoise Global Holdings Limited | 15.8% | 15.8% |
| Profit from continuing | |||
| operations allocated to | 2023 | 2022 | |
non-controlling interests | Notes | £m | £m |
Tradeweb group | 19.1 | 110 | 116 |
LCH Group | 19.2 | 77 | 72 |
Other | – | 1 | |
187 | 189 |
London Stock Exchange Group plc
Annual Report 2023
232
Notes to the consolidated financial statements continued
19. Non-controlling interests continued
| Accumulated balance of | 2023 | 2022 | |
non-controlling interests | Notes | £m | £m |
Tradeweb group | 19.1 | 1,828 | 1,813 |
| LCH Group | 19.2 | 300 | 333 |
Other | 9 | 9 | |
2,137 | 2,155 |
1
1 During the year, the LCH Group acquired an additional 11% of LCH SA for £95 million, taking
its ownership to 100%. The Group recognised a decrease in non-controlling interests of
£53 million and a decrease in equity attributable to equity holders of £42 million.
Summarised financial information for the Tradeweb and LCH groups is
provided below.
19.1 Tradeweb group
The Group has a 45.7% economic interest in Tradeweb Markets Inc,
a US company. Tradeweb Markets Inc is the parent company of
Tradeweb Markets LLC in which the Group holds a further direct
interest. This gives the Group an effective economic interest of 51.0%
in Tradeweb Markets LLC.
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 include the impact of acquisition accounting.
| Summarised financial information | 2023 | 2022 |
| attributable to non-controlling interests | £m | £m |
Profit for the year attributable to non-controlling interests | 110 | 116 |
| Total comprehensive income for the year | ||
attributable to non-controlling interests | 3 | 308 |
| Dividends paid to non-controlling interests | ||
in the year | 33 | 30 |
1
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.
1
| 2023 | 2022 | |
| Summarised balance sheet | £m | £m |
Non-current assets | 7,909 | 8,500 |
Current assets | 1,846 | 1,245 |
Current liabilities | (540) | (212) |
Non-current liabilities | (504) | (470) |
Net assets | 8,711 | 9,063 |
| Attributable to: | ||
Equity holders of the company | 6,883 | 7,250 |
Non-controlling interests | 1,828 | 1,813 |
Total equity | 8,711 | 9,063 |
1 The summarised balance sheet includes goodwill and purchased intangible assets together
with associated amortisation, impairment and deferred tax.
| Summarised total comprehensive | 2023 | 2022 |
income 1 and cash flows | £m | £m |
Total income for the year | 1,078 | 961 |
Total profit for the year | 433 | 328 |
Total comprehensive income for the year | 169 | 805 |
Net increase in cash and cash equivalents | 288 | 331 |
1 The summarised total comprehensive income of the Tradeweb group excludes any
amortisation and impairment of goodwill and purchased intangible assets (together with any
associated deferred tax) attributable to non-controlling interests.
19.2 LCH Group
The Group owns 82.6% of LCH Group Holdings Limited, which is the
parent of LCH Limited, based in the UK, and LCH SA, based in France.
During the year, the LCH Group acquired the 11% non-controlling interest
in LCH SA, giving it a 100% interest in LCH SA.
| Summarised financial information | 2023 | 2022 |
| attributable to non-controlling interests | £m | £m |
Profit for the year attributable to non-controlling interests | 77 | 72 |
| Total comprehensive income for the year | ||
attributable to non-controlling interests | 65 | 82 |
| Dividends paid to non-controlling interests | ||
in the year | 47 | 50 |
1
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.
1
| 2023 | 2022 | |
| Summarised balance sheet | £m | £m |
Non-current assets | 501 | 557 |
Current assets | 765,621 | 794,130 |
Current liabilities | (764,511) | (793,064) |
Non-current liabilities | (24) | (52) |
Net assets | 1,587 | 1,571 |
| Attributable to: | ||
Equity holders of the company | 1,287 | 1,238 |
Non-controlling interests | 300 | 333 |
Total equity | 1,587 | 1,571 |
1 The summarised balance sheet includes goodwill and purchased intangible assets together
with associated amortisation, impairment and deferred tax.
| Summarised total comprehensive income | 2023 | 2022 |
| and cash flows | £m | £m |
Total income for the year | 1,063 | 952 |
Total profit for the year | 418 | 368 |
Total comprehensive income for the year | 356 | 411 |
Net increase in cash and cash equivalents | 239 | 126 |
1
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.
233 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
| 2023 | 2022 | ||
Continuing operations | Notes | £m | £m |
| Group share plans | 20.1 | 87 | 79 |
| Shares issued to Management | |||
Incentive Plan (MIP) participants | 20.2 | 2 | 16 |
89 | 95 | ||
| Tradeweb share schemes | |||
(recognised in non-controlling interests) | 20.3 | 54 | 63 |
Total share-based payment expense | 4.1 | 143 | 158 |
| 2023 | 2022 | |
| £m | £m | |
Share-based payments | 86 | 94 |
Cash receipts from employees on vesting | 6 | 5 |
92 | 99 |
London Stock Exchange Group plc
Annual Report 2023
234
Notes to the consolidated financial statements continued
20. Share-based payments continued
Movements in the number of share options and awards outstanding and
their weighted average exercise prices are as follows:
SAYE | LTIP/RSAP | ISIP | ||
| Weighted | ||||
| average | ||||
| exercise | ||||
| price | ||||
| Number | £ | Number | Number | |
1 January 2022 | 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 |
Granted | 185,579 | 65.97 | 1,567,358 | 18,619 |
Exercised | (115,432) | 56.53 | (978,175) | (351) |
Lapsed/forfeited | (58,319) | 62.78 | (506,727) | (1,787) |
31 December 2023 | 546,098 | 64.98 | 3,168,127 | 31,333 |
1,2
2
Exercisable at
31 December 2023 | 10,804 | 64.61 | – | – |
31 December 2022 | 3,183 | 63.39 | – | – |
1 At 31 December 2023, RSAP awards of 1,237,425 shares were outstanding (2022: 1,078,328).
2 The LTIP/RSAP and ISIP awards have a nil exercise price. 9,192 matching shares were granted
under the RSAP in the year (2022: 106,637).
The weighted average share price of London Stock Exchange Group plc
shares during the year was £81.66 (2022: £76.11).
The range of exercise prices and weighted average remaining
contractual life of awards and options outstanding are as follows:
2023 | 2022 | |||
| Weighted | Weighted | |||
| average | average | |||
| remaining | remaining | |||
| contractual | contractual | |||
| Number | life | Number | life | |
| outstanding | Years | outstanding | Years | |
| SAYE | ||||
— Less than £60 | 414 | 0.1 | 121,379 | 0.1 |
— Between £60 and £65 | 364,237 | 1.3 | 412,891 | 1.7 |
— Between £65 and £70 | 181,447 | 2.9 | – | – |
LTIP/RSAP | 3,168,127 | 1.3 | 3,085,671 | 1.3 |
ISIP | 31,333 | 1.7 | 14,852 | 2.1 |
Total | 3,745,558 | 3,634,793 |
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.
The Black-Scholes model was used to determine the related fair value
for the RSAP, SAYE and remaining 60% of LTIP awards that are subject
to adjusted EPS.
The inputs into both models include the share price at grant date,
expected volatility, dividend yields, annual risk-free interest rate and
expected life of the awards. The volatility assumption is based on the
historical three-year volatility of the Company’s 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.
235 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
20. Share-based payments continued
The key assumptions used in the valuations were as follows:
| LTIP Performance | |||||||
Shares | RSAP | ||||||
| Date of grant | 17-Mar | 13-Sep | 17-Mar | 16-Jun | 13-Sep | 14-Dec | |
Grant date share price (£) | 73.26 | 83.34 | 73.26 | 87.66 | 83.34 | 93.22 | |
Expected life (years) | from | 3.0 | 3.0 | 0.50 | 0.46 | 0.22 | 0.23 |
to | 4.0 | – | 4.00 | 3.75 | 4.51 | 2.98 | |
Exercise price (£) | nil | nil | nil | nil | nil | nil | |
Dividend yield (%) | from | 1.05 | 1.13 | 1.03 | 1.04 | 1.06 | 1.17 |
to | – | – | 1.35 | 1.34 | 1.32 | 1.33 | |
Risk-free interest rate (%) | from | 3.37 | 4.55 | 3.33 | 4.78 | 5.05 | 4.02 |
to | – | – | 3.65 | 5.10 | 4.62 | 4.64 | |
Volatility (%) | from | 31.02 | 26.63 | 20.71 | 19.84 | 12.38 | 12.70 |
to | – | – | 30.04 | 30.77 | 29.00 | 25.84 | |
Fair value (£) | from | – | – | 70.32 | 84.33 | 79.47 | 90.03 |
to | – | – | 72.77 | 87.12 | 83.10 | 92.94 | |
Fair value TSR (£) | from | 35.33 | 46.86 | – | – | – | – |
to | 34.98 | – | |||||
Fair value EPS (£) | from | 70.32 | 80.58 | ||||
to | 70.99 | – | – | – | – | – |
SAYE | DBP | ISIP | ||
Date of grant | from | 29-Sep | 17-Mar | 1-Jan |
to | – | – | 31-Dec | |
Grant date share price (£) | from | 82.40 | 73.26 | 73.46 |
to | – | – | 93.58 | |
Expected life (years) | from | 3.34 | – | 2.28 |
to | – | – | 3.12 | |
Exercise price (£) | 65.97 | nil | nil | |
Dividend yield (%) | from | 1.26 | – | 1.01 |
to | – | – | 1.24 | |
Risk-free interest rate (%) | from | 4.55 | – | 3.25 |
to | – | – | 5.09 | |
Volatility (%) | from | 27.23 | – | 23.94 |
to | – | – | 31.13 | |
Fair value (£) | 27.15 | 73.26 | 79.36 |
London Stock Exchange Group plc
Annual Report 2023
236
Notes to the consolidated financial statements continued
20. Share-based payments continued
20.2 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 three-year vesting period. The MIP share-based payment
expense is classified as a non-underlying transaction cost.
20.3 Tradeweb share schemes
Tradeweb grants awards, including performance-based restricted share
units (PRSUs), performance share units (PSUs) 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 shares at the end of a three-year vesting
period. The number of shares a participant will receive upon vesting
is determined by a performance modifier, which is adjusted based on
Tradeweb’s financial performance in the grant year. The fair value of
the equity-settled PRSUs is calculated as at the grant date using the
share price.
— PSUs (Equity-Settled)
PSUs are promises to issue shares at the end of a three-year vesting
period. The number of shares a participant will receive upon vesting
is determined by a performance modifier, which is adjusted based on
Tradeweb’s total shareholder return over a three-year performance
period. The fair value of the equity-settled PSUs is calculated as at
the grant date using the Monte Carlo Simulation model.
— 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.
237 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
21. Business combinations continued
21.1 Details of businesses acquired
| Voting | ||||
| equity | ||||
| Acquisition | interest | |||
Acquired business | Description of business | Reason for acquisition | date | acquired |
Acadia | A leading provider of automated | With deep domain expertise in margining, collateral and | 31 March | 86% |
| uncleared margin processing and | risk management, Acadia is complementary to LSEG’s | 2023 | ||
| integrated risk and optimisation services | Post Trade capabilities. The transaction will strengthen | |||
| for the global derivatives community. | LSEG’s provision of resilient and systemically important | |||
| financial markets infrastructure to our customers. | ||||
Yieldbroker | Operator of an Australian trading platform | With innovation relating to the electronification of fixed | 31 August | 100% |
| for Australian and New Zealand | income markets, the acquisition of Yieldbroker aligns with | 2023 | ||
| government bonds and interest rate | Tradeweb’s capabilities and mission to make markets more | |||
| derivatives covering the institutional | efficient. The acquisition will leverage the innovative trading | |||
| and wholesale client sectors. | and industry experience of Yieldbroker to create more liquid, | |||
| transparent and efficient fixed income markets. |
1
1 Prior to the acquisition LSEG held a 14% interest in Acadia and on 31 March 2023 recognised a £69 million non-underlying remeasurement gain on this investment in associate (see note 2.3).
21.2 Consideration transferred, assets acquired and liabilities assumed, and resulting goodwill
Goodwill arising from the acquisitions has been recognised as follows:
| Acadia | Yieldbroker | Other | Total | |
| £m | £m | £m | £m | |
| Purchase consideration | ||||
— Cash (including settlement of share options) | 484 | 65 | 3 | 552 |
— Fair value of previous interest held | 86 | – | – | 86 |
Total purchase consideration | 570 | 65 | 3 | 638 |
| Less: Fair value of identifiable net assets acquired | ||||
| — Intangible assets: Customer and supplier relationships | (250) | (31) | – | (281) |
| — Intangible assets: Software | (46) | – | (1) | (47) |
— Other non-current assets, excluding deferred tax assets | (2) | (2) | – | (4) |
— Cash and cash equivalents | (17) | (10) | (2) | (29) |
— Other current assets | (16) | (2) | – | (18) |
— Total liabilities, excluding deferred tax liabilities | 36 | 11 | 1 | 48 |
| — Deferred tax liabilities/(assets) | 66 | (3) | – | 63 |
Fair value of identifiable net assets acquired | (229) | (37) | (2) | (268) |
Goodwill | 341 | 28 | 1 | 370 |
Allocated to cash-generating unit | Post Trade | Tradeweb | D&A |
1
1
2
1 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)
– Software: relief from royalty method (income approach)
2 The deferred tax liability mainly comprises the tax effect of the intangible assets.
The goodwill is attributable to the anticipated growth in the underlying business and future technology not yet developed.
None of the goodwill recognised is expected to be deductible for income tax purposes.
London Stock Exchange Group plc
Annual Report 2023
238
Notes to the consolidated financial statements continued
21. Business combinations continued
21.3 Revenue and profit contribution
From the respective acquisition dates, for the period ended
31 December 2023, the material acquired businesses contributed
revenue and profit before tax as follows:
| 2023 | ||
Acadia | Yieldbroker | |
| Nine | Four | |
| months | months | |
| £m | £m | |
Revenue | 45 | 4 |
Adjusted EBITDA | 12 | – |
Loss before tax | (6) | (1) |
If the acquisitions had all occurred on 1 January 2023, estimated Group
revenue and adjusted EBITDA would have been as follows:
| 2023 | |
| Pro-forma | |
| Group | |
| Continuing | £m |
Revenue | 8,084 |
Adjusted EBITDA | 3,781 |
21.4 Acquisition-related costs, including employment-linked
management incentive and earn-out arrangements
Acquisition-related costs are recognised as non-underlying items in the
income statement (see note 2.3). The Group incurred acquisition-related
costs as follows:
| 2023 | ||
| Acadia | Yieldbroker | |
| £m | £m | |
| Transaction costs | 7 | 3 |
Finance costs | – | 1 |
Acquisition-related costs | 7 | 4 |
1
1 Transaction costs include retention bonuses and advisor and professional fees.
| 2022 | ||
| Note | £m | |
Total income | 132 | |
Cost of sales and operating expenses | (58) | |
Profit before tax | 74 | |
Tax | (16) | |
Profit after tax of discontinued operation | 58 | |
Profit on disposal of discontinued operation, after tax (non-underlying) | 22.2 | 454 |
| Profit (and total comprehensive income) | ||
from discontinued operation | 512 |
| 2022 | |
| £m | |
Proceeds from disposal | 903 |
Carrying value of net assets disposed | (241) |
Transaction costs | (44) |
Profit on disposal of discontinued operation, before tax | 618 |
Income tax on gain | (164) |
Profit on disposal of discontinued operation, after tax | 454 |
239 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
| 2023 | 2022 | |
| £m | £m | |
Amounts advanced to associates | 15 | – |
Contract | Description | Minimum commitment | |
10-year strategic partnership with Microsoft | To architect LSEG’s data infrastructure using | Minimum cloud-related spend of $2.8 billion | |
| the Microsoft Cloud, and to jointly develop new | over the term of the partnership 1 | ||
| products and services for data and analytics | |||
| Agreement with Reuters News, entered into | To receive news and editorial content | Minimum CPI adjusted payment, which was | |
in 2018, | for a 30-year term | $368 million for 2023 |
For many of these matters it is too early to determine the likely outcome,
or to reliably estimate the amount of any loss as a consequence and
therefore no provision is made. While the outcome of legal and
regulatory matters can be inherently difficult to assess and/or the
potential loss often cannot be reliably estimated, we do not believe that
the liabilities, if any, which could result from the resolution of the legal
and regulatory matters that arise in the normal course of business are
likely to have a material adverse effect on our consolidated financial
position, profit, or cash resources. However, it is possible that future
results could be materially affected by any developments relating to
any such legal and regulatory matters.
25. Events after the reporting period
r8fin acquisition
On 19 January 2024, Tradeweb acquired R8FIN Holdings LP (r8fin),
a technology provider that specialises in algorithmic-based execution
for US Treasuries and interest rate futures. The total purchase price
consideration is $125 million, consisting of $90 million in cash and
$35 million in shares of Class A common stock of Tradeweb, subject
to working capital and other adjustments.
Purchase of non-controlling interests
In February 2024, LSEG acquired 3.24% of the share capital in
LCH Group Holdings Limited from certain minority shareholders
for €168 million, taking LSEG’s ownership of LCH Group Holdings
Limited to 85.85%.
London Stock Exchange Group plc
Company Financial Statements
Year ended 31 December 2023
Registered number 5369106
London Stock Exchange Group plc
Annual Report 2023
240
241 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
At 31 December Notes
2023
£m
2022
£m
Assets
Non-current assets
Investments in subsidiaries 3 24,954 24,922
Investments in associates – 1
Other receivables 4 143 76
Deferred tax assets 16 8
25,113 25,007
Current assets
Trade and other receivables 4 1,489 1,296
Derivative financial instruments – 11
Cash and cash equivalents 5 5 77
1,494 1,384
Total assets 26,607 26,391
Liabilities
Current liabilities
Trade and other payables 6 991 1,494
Borrowings 7 433 –
Derivative financial instruments 35 –
1,459 1,494
Non-current liabilities
Borrowings 7 1,350 1,815
Other payables 6 172 188
Derivative financial instruments 16 84
1,538 2,087
Total liabilities 2,997 3,581
Net assets 23,610 22,810
Equity
Capital and reserves attributable to the Company's equity holders
Ordinary share capital 38 39
Share premium 978 978
Retained earnings
1
3,796 2,996
Other reserves 18,798 18,797
Total equity 23,610 22,810
1 As permitted by Section 408 of the Companies Act 2006, the Company's income statement has not been presented in these financial statements. The profit for the year was £2,252 million
(2022: loss of £82 million).
The financial statements on pages 241–254 were approved by the Board on 28 February 2024 and signed on its behalf by:
David Schwimmer Anna Manz
Chief Executive Officer Chief Financial Officer
28 February 2024
London Stock Exchange Group plc
Registered number 5369106
Company balance sheet
London Stock Exchange Group plc
Annual Report 2023
242
Year ended 31 December Note
Number
of shares
1
millions
Ordinary
share
capital
£m
Share
premium
£m
Retained
earnings
£m
Other reserves
Total
attributable
to equity
holders
£m
Merger
relief
reserve
2
£m
Capital
redemption
reserve
3
£m
1 January 2022 557 39 978 4,086 18,283 514 23,900
Loss for the year – – – (82) – – (82)
Dividends
4
– – – (567) – – (567)
Share buyback
5
(4) – – (503) – – (503)
Issue of shares to the Employee Benefit Trust (EBT)
6
1 – – – – – –
Share-based payments
7
8 – – – 78 – – 78
Impairment of loans to the EBT
7
– – – (20) – – (20)
Cash receipts from employees on vesting
7
– – – 4 – – 4
31 December 2022 554 39 978 2,996 18,283 514 22,810
Profit for the year – – – 2,252 – – 2,252
Dividends
4
– – – (611) – – (611)
Share buyback
5
(15) (1) – (1,007) – 1 (1,007)
Issue of shares to the EBT
6
2 – – – – – –
Share-based payments 8 – – – 83 – – 83
Reversal of impairment of loans to the EBT
8
– – – 77 – – 77
Cash receipts from employees on vesting – – – 6 – – 6
31 December 2023 541 38 978 3,796 18,283 515 23,610
1 At 31 December 2023, the Company held 7,632,733 (2022: 3,797,344) treasury shares which were acquired as part of its share buyback programme.
2 The merger relief reserve is a potentially distributable reserve arising as a result of shares issued to acquire subsidiaries.
3 The capital redemption reserve was set up as a result of a court approved capital reduction scheme and is non-distributable.
4 Dividends declared and paid are disclosed in note 8 of the Group's consolidated financial statements. The Board proposed a final dividend in respect of the year ended 31 December 2023 of
79.3p per share (31 December 2022: 75.3p per share).
5 The share buyback is disclosed in note 18 of the Group's consolidated financial statements.
6 The Board approved the allotment and issue of 98,134 ordinary shares at par to the EBT (2022: 883,174 ordinary shares at par) and the transfer of 1,904,252 treasury shares (2022: nil) to settle
employee share plans.
7 The share-based payments movements recognised within equity for the year ended 31 December 2022 have been disaggregated to be consistent with 2023.
8 Following the transfer of treasury shares to the EBT and the consequent increase in its net assets, the impairment of loans to EBT recognised in prior years has been reversed by £77 million.
Company statement of changes in equity
243 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Reporting entity
These financial statements have been prepared for London Stock Exchange Group plc (the “Company”). The Company is a public limited company,
incorporated and domiciled in England and Wales. The address of its registered office is 10 Paternoster Square, London, EC4M 7LS.
1. Accounting policies
This section describes the Company’s material accounting policy
information that relates to its financial statements and notes as a whole.
Where an accounting policy 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.
1.1 Basis of preparation
The Company’s financial statements are prepared in accordance with
the Companies Act 2006 and Financial Reporting Standard (FRS) 101
Reduced Disclosure Framework. The Company adopted FRS 101 on
1 January 2023 with a transition date of 1 January 2022 and there were
no adjustments to prior period information as a result of this change.
The following disclosure exemptions under FRS 101 have been
considered and applied where deemed to be applicable:
— Paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based Payment
(details of the number and weighted-average exercise prices of
share options, and how the fair value of goods or services received
was determined)
— IFRS 7 Financial Instruments: Disclosures
— Paragraph 91 to 99 of IFRS 13 Fair Value Measurement (including
disclosure of valuation techniques and inputs used for fair value
measurement of assets and liabilities)
— The following paragraph of IAS 1 Presentation of Financial Statements
– 10 (d) (statement of cash flows)
– 16 (statement of compliance with all IFRS)
– 111 (cash flow information)
– 134-136 (capital management disclosures)
— IAS 7 Statement of Cash Flows
— Paragraph 30 and 31 of IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors (requirement for the disclosure of
information when an entity has not applied a new IFRS that has been
issued but is not yet effective)
— The requirements in IAS 24 Related Party Disclosures to disclose
related party transactions entered into between two or more
members of a group, provided that any subsidiary which is a party
to the transaction is wholly owned by such a member
— Paragraph 17 of IAS 24 Related Party Disclosures (key management
compensation) and paragraph 18A of IAS 24 Related Party
Disclosures, related to key management services provided by
a separate management entity
— IAS 36 Impairment of Assets disclosure of impairment reviews
— Paragraphs 88C and 88D of IAS 12 Income Taxes (qualitative and
quantitative information about its exposure to Pillar Two income taxes)
The financial statements are prepared on a historical cost basis except
for derivative financial instruments which are measured at fair value. The
financial statements have been prepared on a going concern basis (see
note 1.2 to the consolidated financial statements for this assessment).
As permitted by Section 408 of the Companies Act 2006, the
Company’s income statement has not been presented in these
financial statements.
1.2 Significant accounting estimates, assumptions and judgements
Estimates, assumptions and judgements are regularly reviewed based
on historical experience, current circumstances and expectations of
future events. There are no significant accounting estimates,
assumptions and judgements in the preparation of the Company
financial statements that have a significant effect on the amounts
recognised in its financial statements.
1.3 Material accounting policy information applied in the current
reporting period that relates to the Company financial statements
as a whole
Foreign currencies
The financial statements are presented in sterling, which is the
Company’s functional currency.
Transactions in foreign currencies are initially recorded and translated
into the functional currency at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies are translated into sterling at the exchange rate prevailing at
the reporting date. Foreign exchange gains and losses resulting from
the settlement of such foreign currency transactions or from the
translation of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, either within
operating expenses or net finance costs depending on the nature of
the item or transaction.
Non-monetary items measured in terms of historical cost in a foreign
currency are not retranslated. Non-monetary items measured at fair
value that are denominated in foreign currencies are retranslated at the
exchange rate at the date when the fair value was determined. The
foreign exchange gain or loss on assets and liabilities carried at fair
value is reported as part of the fair value gain or loss. This means
foreign exchange gains and losses on non-monetary assets and
liabilities held at fair value through profit or loss are recognised in
the income statement within operating expenses.
Taxation
Current income tax assets and liabilities are measured at the amount
expected to be recovered from or paid to taxation authorities.
Dividends
Dividend distributions to the Company’s equity holders are recognised
as a liability in the Company financial statements in the period in which
the dividends are approved by the Company’s shareholders.
2. Income statement
2.1 Employees
The Company had no employees in the year (2022: nil). Details of
Directors’ emoluments are disclosed in the Remuneration Report on
pages 117 to 153.
2.2 Auditors’ remuneration
The fees paid or are payable to the Company’s auditors, Ernst and
Young LLP, and its associates for 2023 in respect of audit services
were £0.6 million (2022: £0.5 million).
Notes to the Company financial statements
London Stock Exchange Group plc
Annual Report 2023
244
3. Investments in subsidiaries
Accounting policy
Investments in subsidiaries, as well as loans and other
contributions to subsidiaries, are recognised at cost less
accumulated impairment.
Investments in subsidiaries are reviewed for impairment when
events indicate the carrying amount may not be recoverable.
When an indication of impairment is identified, the investment’s
recoverable amount is estimated as the higher of its fair value
less costs of disposal and its value-in-use. An impairment loss
is recognised when the recoverable amount of an investment
is less than its carrying amount.
Shares
£m
Other
1
£m
Total
£m
Cost
1 January 2022 24,338 1,017 25,355
Additional investments in subsidiaries 130 – 130
31 December 2022 24,468 1,017 25,485
Additional investments
in subsidiaries
2,3
2,599 – 2,599
Disposals
3
(1,797) – (1,797)
31 December 2023 25,270 1,017 26,287
Accumulated impairment
1 January 2022 563 – 563
Impairment – – –
31 December 2022 563 – 563
Impairment
4
770 – 770
31 December 2023 1,333 – 1,333
Net book value
31 December 2023 23,937 1,017 24,954
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 £496 million in LSEGH US PT, Inc. to fund the
acquisition of an additional 86% of the voting equity interest of AcadiaSoft, Inc. and £5 million
in London Stock Exchange Reg Holdings Limited to fund acquisitions and investments.
3 On 31 December 2023, the Company contributed 100% of the shares of LSEG US HoldCo,
Inc. with carrying value of £1,797 million to Refinitiv Parent Limited in exchange for Refinitiv
Parent Limited issuing new ordinary shares to the Company for £2,098 million.
4 Following a dividend payment from London Stock Exchange Group Holdings (Italy) Limited
and the consequent reduction in its net assets, the value of the Company's investment in the
subsidiary has been reduced by £770 million to the recoverable amount that is based on the
net asset value (as a proxy for fair value less costs of disposal) of £150 million. The fair value
is classified as Level 3 of the fair value hierarchy.
A full list of the Group's subsidiaries as at 31 December 2023 is provided
in note 10.1.
4. Trade and other receivables
Accounting policy
Amounts due from Group companies are initially measured at
fair value and are subsequently reported at amortised cost less
provision for expected credit losses. Allowances for expected
credit losses are made based on the risk of non-payment, taking
into account ageing, previous experience, economic conditions
and forward-looking data.
The Company 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.
2023
£m
2022
£m
Non-current
Tax indemnity receivable 47 56
Amounts due from Group companies
1
96 20
Total non-current other receivables 143 76
Current
Amounts due from Group companies
2
1,330 1,199
Group relief receivable 142 85
Other receivables 6 –
Prepayments 11 12
Total current trade and other receivables 1,489 1,296
Total receivables 1,632 1,372
1 Amounts falling due from Group companies after more than one year are unsecured,
repayable on demand and interest free, however, there is no intention to seek repayment of
these amounts before 31 December 2024.
2 Amounts falling due from Group companies within one year are unsecured, repayable on
demand and are predominantly interest bearing.
Notes to the Company financial statements continued
245 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the Company financial statements continued
5. Cash and cash equivalents
2023
£m
2022
£m
Cash at bank 5 18
Cash equivalents – 59
Total cash and cash equivalents 5 77
6. Trade and other payables
Accounting policy
Amounts due to group companies are initially recognised at
fair value and 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.
The Company 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.
2023
£m
2022
£m
Non-current
Tax indemnity payable 172 188
Total non-current other payables 172 188
Current
Trade payables 6 6
Other payables 52 16
Share buyback obligation – 200
Accrued expenses 15 23
Amounts due to group companies
1
918 1,249
Total current trade and other payables 991 1,494
Total payables 1,163 1,682
1 Amounts due to Group companies are unsecured, repayable on demand and are
predominantly interest bearing.
7. 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, 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 method.
2023
£m
2022
£m
Non-current
Bank borrowings – committed bank facilities
1
(8) (5)
Bonds 1,358 1,820
Total non-current borrowings 1,350 1,815
Current
Bonds 433 –
Total current borrowings 433 –
Total borrowings 1,783 1,815
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.
London Stock Exchange Group plc
Annual Report 2023
246
Notes to the Company financial statements continued
7. Borrowings continued
The Company has the following committed bank facilities and unsecured bonds:
Maturity
date
Facility/
bond
£m
Carrying value
Interest
rate
%
2023
£m
2022
£m
Committed bank facilities
Multi-currency revolving credit facility Dec 2027 1,925 (5) (2) see note
2
Multi-currency revolving credit facility Dec 2027 1,075 (3) (3) see note
2
Total committed bank facilities
1
3,000 (8) (5)
Bonds
€500 million bond, issued September 2017 Sep 2024 433 433 443 0.875
€500 million bond, issued December 2018 Dec 2027 433 431 441 1.750
€500 million bond, issued September 2017 Sep 2029 433 432 441 1.750
£500 million bond, issued April 2021 Apr 2030 500 495 495 1.625
Total bonds 1,799 1,791 1,820
Total borrowings 1,783 1,815
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.
8. Share-based payments
Accounting policy
The Group operates a number of equity-settled share-based
payment plans for the employees of its subsidiaries using the
Company’s equity instruments. The share-based payment is
recharged to its subsidiaries by the Company with a
corresponding increase in retained earnings within equity.
The expense is determined by the fair value (using a stochastic
valuation model) of the options granted or shares awarded at the
date of the grant. The calculated expenses are recognised over
the relevant vesting periods.
Further details on the share plans are provided in the Directors’
Remuneration Report on pages 117–153 and note 20 to the
consolidated financial statements.
The Company has an Employee Benefit Trust (EBT) to administer the
share plans and to acquire Company shares to meet the commitments
to Group employees. At 31 December 2023, 1,178,957 Company shares
were held by the trust (2022: 259,129). The EBT is fully funded by the
Company via loans, cash gifts and the issue and transfer of shares.
The cost of the shares held by the EBT are recognised directly in equity.
247 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the Company financial statements continued
9. Financial guarantees
The Company has guaranteed unsecured bonds issued by LSEGA Financing Plc and LSEG Netherlands B.V. which at 31 December 2023 amount to
£6,056 million (2022: £5,040 million).
10. Group companies
10.1 Subsidiaries
A full list of the Company's subsidiaries as at 31 December 2023 is provided below.
Companies owned directly by the Company
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
United Kingdom – England & Wales
10 Paternoster Square, London
EC4M 7LS
London Stock Exchange (C) Limited Ordinary £ 100.00
100.00
Ordinary € 100.00
London Stock Exchange Group
(Services) Limited
Ordinary 100.00 100.00
London Stock Exchange Group
Holdings (Italy) Limited
Ordinary 100.00 100.00
London Stock Exchange Group
Holdings (R) Limited
Ordinary 100.00 100.00
London Stock Exchange Group
Holdings Limited
Ordinary 100.00 100.00
London Stock Exchange plc Ordinary 100.00 100.00
London Stock Exchange Reg
Holdings Limited
Ordinary 100.00 100.00
LSEGA Financing plc Ordinary 100.00 100.00
LSEGA Limited Ordinary 100.00 100.00
LSEGA2 Limited Ordinary 100.00 100.00
LSEGH (Luxembourg) Limited Ordinary 100.00 100.00
Cayman Islands
C/o Intertrust Corporate Services
(Cayman) Ltd, 1 Nexus Way, Camana
Bay, Grand Cayman, KY1-9005
Refinitiv Parent Limited Ordinary
1
70.45 100.00
Netherlands
10th Floor, Eduard van Beinumstraat
24, Amsterdam 1077 CZ
LSEG Netherlands B.V. Ordinary 100.00 100.00
United States
C/o United Agent Group Inc, Suite 201,
Brandywine Plaza, 1521 Concord Pike,
Wilmington DE 19803
LSEGH US PT, Inc. Common
Stock
100.00 100.00
Companies owned indirectly by the Company
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
Australia
Level 10, 60 Margaret Street, Sydney,
NSW 2000
EnergybankLink Pty Limited Ordinary 100.00 100.00
Global Data Consortium Australia
Pty Limited
Ordinary 100.00 100.00
Lipper Australia Pty Limited Ordinary 100.00 100.00
Refinitiv Australia Pty Limited Ordinary 100.00 100.00
Telfer Investments Australia Pty Limited Ordinary 100.00
100.00
Special 100.00
Telfer Pty Limited Ordinary 100.00
100.00
Special 100.00
Tora Trading Services Pty Limited Ordinary 100.00 100.00
C/o Pilot Partners, Level 10, Waterfront
Place, 1 Eagle Street, Brisbane, QLD 4000
The Red Flag Group (Australia)
Pty Limited
Ordinary 100.00 100.00
Level 6, 14 Martin Place, Sydney,
NSW 2000
Tradeweb Australia Pty Ltd
(formerly Yieldbroker Pty Ltd)
Ordinary A 100.00
51.01
Ordinary B 100.00
21 Dorset Road, Northbridge, NSW 2063
TWAS Holding I Pty Limited Ordinary 100.00 51.01
TWAS Holding II Pty Limited Ordinary 100.00 51.01
Austria
The ICON Vienna, Wiedner Gürtel 13,
A/12.OG/1123, 1100 Vienna
Refinitiv Austria GmbH Ordinary 100.00 100.00
Bahrain
Flat 1002, Building 1459, Road 4626,
Block 346, Manama
R.M.E. Bahrain Limited W.L.L. Ordinary 100.00 100.00
Bermuda
C/o Conyers Corporate Services
(Bermuda) Ltd, Clarendon House,
2 Church Street, Hamilton, HM 11
Refinitiv (Canvas) Holdings 1 Limited Common 100.00 100.00
Refinitiv (Canvas) Holdings 2 Limited Common 100.00 100.00
Refinitiv (Canvas) Holdings 3 Limited Common 100.00 100.00
Refinitiv UK Holding Company Limited Ordinary 100.00 100.00
London Stock Exchange Group plc
Annual Report 2023
248
Notes to the Company financial statements continued
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
Brazil
Avenida Doutor Cardoso de Melo 1855,
Vila Olimpia, Sao Paulo 04548-005
Refinitiv Brasil Servicos
Economicos Limitada
Ordinary 100.00 100.00
Refinitiv Tecnologia em Sistemas
Brasil Limitada
Ordinary 100.00 100.00
British Virgin Islands
C/o Harkom Corporate services, Jayla
Place, Wickhams Cay I, 2nd Floor,
Road Town, Tortola, VG1110
The Red Flag Group (BVI) Limited Ordinary 100.00 100.00
Canada
C/o Miller Thompson LLP, Suite 5800, 40
King Street West, Toronto, ON M5H 3S1
FTSE Global Debt Capital Markets, Inc Ordinary 100.00 100.00
Suite 2400, 333 Bay Street, Toronto,
ON M5H 2T6
Millennium IT Software (Canada) Inc Common 100.00 100.00
Suite 400, 333 Bay Street, Toronto, ON
M5H 2R2
Refinitiv Canada Holdings Limited Common 100.00 100.00
Cayman Islands
C/o Intertrust Corporate Services
(Cayman) Ltd, 1 Nexus Way, Camana
Bay, Grand Cayman, KY1-9005
Caspian Holdings Limited Ordinary 100.00 100.00
Refinitiv TW Holdings Limited Ordinary 100.00 100.00
Tora Trading Services Limited Ordinary 100.00 100.00
TWC Limited Ordinary 100.00 51.01
Zawya Limited Common 100.00 100.00
China
Room 02D-H, 6/F Dong Wai Diplomatic
Building, 23 Dong Zhi Men Wai Da Jie,
Beijing 100600
FTSE (Beijing) Consulting Limited Ordinary 100.00 100.00
21-016, Pearl River Tower, 15 Zhujiang
West Road, Guangzhou 510623
Guangzhou Data Development
Services Limited
Contribution
Unit
100.00 100.00
Room 1811, The Towers Offices at
Oriental Plaza, 1 East Chang'an
Avenue, Beijing 100006
Refinitiv Financial Technology Information
Service (China) Group Co. Limited
Contribution
Unit
100.00 100.00
Unit 3006, Azia Centre, 1233 Lujiazui
Huang Road, Shanghai 200120
Refinitiv Information Services (China)
Co. Limited
Contribution
Unit
100.00 100.00
A2 Tower, ZhongGuanCun #1, 81 BeiQing
Road, Haidian District, Beijing 100193
Refinitiv Technology (China) Co. Limited Contribution
Unit
100.00 100.00
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
3F Agile International Plaza, 525 Middle
Xizang Road, Huangpu District, Shanghai
The Red Flag Group (Shanghai) Limited Ordinary 100.00 100.00
Floors 3 & 4, No. 1 Lane, 65 Huanlong
Road, Shanghai Free Trade Zone,
Shanghai 200120
TradeWeb Information Technology
(Shanghai) Co. Ltd.
Contribution
Unit
100.00 51.01
Room 312-04, New Times Plaza, 1 Taizi
Road, Shenzhen, Guangdong 518067
Zhi Cheng Worldwide Management
Consulting (Shenzhen) Co. Limited
Ordinary 100.00 100.00
Cook Islands
C/o Cook Islands Trust Corporation,
1st Floor, BCI House, PO Box 141,
Avaura, Rarotonga
Alta Limited Ordinary 100.00 100.00
Data Development Services Limited Ordinary 100.00 100.00
Lipper Asia Limited Ordinary 100.00 100.00
Monitor Services Hong Kong Limited Ordinary 100.00 100.00
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
Refinitiv Costa Rica Srl Ordinary 100.00 100.00
Cyprus
Neas Egkomis 33, 1st floor, Flat/Office
208, Egkomi, Nicosia 2409
Refinitiv Cyprus Limited Ordinary 100.00 100.00
Czechia
Na Perstyne 342/1, Staré Mesto,
110 00 Praha 1
Refinitiv Czech Republic s.r.o. Ordinary 100.00 100.00
Denmark
Vesterbrogade 1E, 4.Sal, DK-1620,
Copenhagen V
Refinitiv Denmark A/S Ordinary 100.00 100.00
Finland
Spaces Postitalo, Mannerheiminaukio
1A, Helsinki 00100
Refinitiv Finland OY AB Ordinary 100.00 100.00
France
La Centorial, 16-18 rue du Quatre-
Septembre, 75002 Paris
Banque Centrale de Compensation
(LCH SA)
Ordinary 100.00 82.61
Beyond Ratings Ordinary 100.00 100.00
Refinitiv France Holdings SARL Ordinary 100.00 100.00
Refinitiv France SAS Ordinary 100.00 100.00
20 Avenue Andre Malraux, 92300
Levallois-Perret
The Red Flag Group (France) SAS Ordinary 100.00 100.00
10. Group companies continued
249 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the Company financial statements continued
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
Germany
Maurenbrecher Strasse 16, 47803 Krefeld
Quaternion Risk Management
Deutschland GmbH
Ordinary 100.00 100.00
Friedrich-Ebert-Anlage 49, 60327
Frankfurt am Main
Refinitiv Germany GmbH Ordinary 100.00 100.00
Refinitiv Germany Holdings GmbH Ordinary 100.00 100.00
Greece
53 Solonos Street, 10672 Athens
Refinitiv Hellas Single Member SA Ordinary 100.00 100.00
Guernsey
C/o Alternative Risk Management Ltd,
Level 5, Mill Court, La Charroterie, St.
Peter Port GY1 1EJ
Refinitiv Europe Middle East and Africa
(Central Region) Limited
Ordinary 100.00 100.00
Hong Kong SAR
18/F ICBC Tower, 3 Garden Road,
Central
FTSE China Index Limited Ordinary 100.00 100.00
FTSE International (Hong Kong) Limited Ordinary 100.00 100.00
IntegraScreen Limited Ordinary 100.00 100.00
LSEG HK Financing Limited Ordinary 100.00 100.00
The Red Flag Group (HK) Limited Ordinary 100.00 100.00
The Red Flag Group Limited Ordinary 100.00 100.00
The Red Flag Group Products
(HK) Limited
Ordinary 100.00 100.00
C/o Mauve Limited, 20th Floor, The
Wellington, 198 Wellington St, Central
Tora Trading Services (Asia) Limited Ordinary 100.00 100.00
Tora Trading Services Limited Ordinary 100.00 100.00
Hungary
Szervita tér 8, Budapest 1052
Refinitiv Hungary Kft. Ordinary 100.00 100.00
India
One World Center, 12th Floor, Tower 1, 841
Senapati Bapat Marg, Mumbai 400013
Millennium Information Technologies
(India) (Private) Limited
Ordinary 100.00 100.00
Refinitiv Global Private Limited Ordinary 100.00 100.00
Refinitiv India Private Limited Ordinary 100.00 100.00
Refinitiv India Shared Services
Private Limited
Ordinary 100.00 100.00
Refinitiv India Transaction Services
Private Limited
Ordinary 100.00 100.00
Indonesia
Menara Astra, #37-118, Jl. Jendral
Sudirman Kav 5-6, Jakarta Pusat,
Jakarta 10220
PT Refinitiv Services Indonesia Ordinary
Bearer
100.00 100.00
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
PT LSEG Transaction
Services Indonesia
Class A 100.00
100.00
4
Class B –
Ireland
12/13 Exchange Place, IFSC,
Dublin, D01 P8H1
Financial & Risk Transaction Services
Ireland Limited
Ordinary 100.00 100.00
Refinitiv Ireland Limited Ordinary 100.00 100.00
10 Earlsfort Terrace, Dublin, DO2 T380
LSEG Ireland Limited Ordinary 100.00 100.00
1 Stokes Place, St Stephen's Green,
Dublin, DO2 DE03
LSEG Ireland 2 Limited Ordinary 100.00 100.00
LSEG Ireland 3 Limited Ordinary 100.00 100.00
54 Fitzwilliam Square, Dublin 2, DO2 X308
Quaternion Risk Management Ltd Ordinary 100.00 100.00
Israel
121-123 Derech Menachem Begin, Azrieli
Sarona Building, 30 Fl, Tel Aviv 6701203
Refinitiv Israel Limited Ordinary 100.00 100.00
Italy
Piazza Generale Armando Diaz 2,
Milan 20123
FTSE Italy S.p.a. Ordinary 100.00 100.00
Refinitiv Italy Holding S.p.a. Ordinary 100.00 100.00
Refinitiv Italy S.p.a. Ordinary 100.00 100.00
Japan
Level 11 Aoyama Palacio Tower, 3-6-7
Kita-Aoyama, Minato-ku, Tokyo 107-0061
AcadiaSoft Japan GK Ordinary 100.00 100.00
1-2-1, Otemachi First Square East Tower 11F,
Otemachi, Chiyoda-ku, Tokyo, 100-0004
Mergent Japan KK Ordinary 100.00 100.00
30/F Akasaka Biz Tower, 5-3-1
Akasaka, Minato-Ku, Tokyo 107-6330
Refinitiv Japan KK Ordinary 100.00 100.00
Tora Trading Services KK Ordinary 100.00 100.00
Tradeweb Japan KK Ordinary 100.00 51.01
Jersey
C/o Crestbridge Jersey, 47 Esplanade,
St Helier JE1 0BD
LSEGA Jersey Limited Ordinary 100.00 100.00
Refinitiv Hong Kong Limited Ordinary 100.00 100.00
De Carteret House, 7 Castle St,
St. Helier JE2 3BT
Tora Trading Services (Jersey) Limited Ordinary 100.00 100.00
Korea
9F S Tower, 82 Saemunan-ro,
Jongno-gu, Seoul 03185
Refinitiv Korea Limited Common
– Voting
100.00 100.00
10. Group companies continued
London Stock Exchange Group plc
Annual Report 2023
250
Notes to the Company financial statements continued
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
Luxembourg
C/o Crestbridge Luxembourg, 1 Boulevard
de la Foire, Luxembourg L-1528
globeSettle S.à r.l. Ordinary 100.00 100.00
LSEG LuxCo 1 S.à r.l. Ordinary 100.00 100.00
LSEG LuxCo 2 S.à r.l. Ordinary 100.00 100.00
Malaysia
Suite 13.03, 13th floor, Menara
Tan & Tan, 207 Jalan Tun Razak,
Kuala Lumpur 50400
IntegraScreen (Malaysia) Sdn Bhd Ordinary 100.00 100.00
LSEG Malaysia Sdn Bhd Ordinary 100.00 100.00
Refinitiv Malaysia Sdn Bhd Ordinary 100.00 100.00
Refinitiv Transaction Services
Malaysia Sdn Bhd
Ordinary 100.00 100.00
The Red Flag Group (Malaysia) Sdn Bhd Ordinary 100.00 100.00
Mauritius
C/o Ocorian Corporate Administrators
Ltd, 6th Floor Tower A, Ebene, Cyber
City, Mauritius 72201
Reuters Asia Pacific Limited Ordinary 100.00 100.00
Mexico
Torre 3, Privada Paseo de los
Tamarindos 120, Bosques de las
Lomas, Mexico City 05120
FTSE Mexico S de R.L. de C.V. Ordinary 100.00 100.00
Torre Esmeralda II, Blvd. Manuel Avila
Camacho 36, Piso 19, Lomas de
Chapultepec, Mexico City 11000
Refinitiv de Mexico, S.A. de C.V. Common 100.00 100.00
Netherlands
Zuidas 2, Barbara Strozzilaan 201,
Amsterdam 1083 HN
Global Data Consortium Netherlands B.V. Ordinary 100.00 100.00
10th Floor, Eduard van Beinumstraat
24, Amsterdam 1077 CZ
LSEG Regulatory Reporting B.V.
(formerly UnaVista TRADEcho B.V.)
Ordinary 100.00 100.00
Refinitiv Netherlands B.V. Ordinary 100.00 100.00
Refinitiv Netherlands Finance B.V. Ordinary 100.00 100.00
Refinitiv Netherlands Holdings B.V. Ordinary 100.00 100.00
Refinitiv Netherlands Overseas
Holdings B.V.
Ordinary 100.00 100.00
Turquoise Global Holdings Europe B.V. Ordinary 100.00 100.00
Antonio Vivaldistraat 50, Amsterdam
1083 HP
Tradeweb EU B.V. Ordinary 100.00 51.01
Strawinskylaan 4117, Amsterdam, 1077 ZX
Quantile B.V. Ordinary 100.00 100.00
Preference 100.00
Tradeweb Execution Services B.V. Ordinary 100.00 51.01
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
New Zealand
C/o Business Advisory Group Limited,
Level 9, 55 Shortland Street,
Auckland 1010
Refinitiv New Zealand Limited Ordinary 100.00 100.00
Norway
Dronning Eufemias gate 16, 0191 Oslo
Refinitiv Norge AS Ordinary 100.00 100.00
Panama
Marbella Office Plaza, 10th Floor,
Banistmo Tower, Office 1027, Aquilino
de la Guardia Street, Panama City
IntegraScreen (Panama), Inc. Ordinary 100.00 100.00
The Red Flag Group International
(Panama) S.A.
Ordinary 100.00 100.00
Peru
102 Real 2, Avenida Victor Andrés
Belaúnde 147, Lima 15073
Refinitiv Peru Srl Ordinary 100.00 100.00
Philippines
Unit 1801, The Peak Tower, 107 L.P.
Leviste Street, Salcedo Village, Brgy
Bel-Air, Makati City 1227, Metro Manila
AcadiaSoft Philippines Inc. Ordinary 100.00 100.00
Unit 7-2, Net Square, 3rd Avenue
Corner 28th Street, E-Square, Crescent
Park West, Bonifacio Global City,
Taguig City 1634, Metro Manila
The Red Flag Group (Philippines) Inc. Ordinary 100.00 100.00
Poland
Ul. Opolska 22, 40-084 Katowice
IntegraScreen Sp. z o.o. Ordinary 100.00 100.00
Ul. Marszalkowska 126/134, 00-008
Warsaw
Refinitiv Poland Sp. z o.o. Ordinary 100.00 100.00
UI. Kotlarska 11, 31-539 Krakow
The Red Flag Group (Poland) Sp. z o.o. Ordinary 100.00 100.00
Portugal
Rua Mouzinho da Silveira 10, Lisboa,
1250-167
Refinitiv Portugal Unipessoal Limitada Ordinary 100.00 100.00
Romania
6L Iuliu Maniu Boulevard, Campus 6.1,
4th Floor, District 6, Bucharest 061344
LSEG Business Services RM S.R.L. Ordinary 100.00 100.00
Refinitiv Romania S.R.L. Ordinary 100.00 100.00
Strada Nicolae Iorga 1, Cluj-Napoca
400063
Tora Trading Services S.R.L. Ordinary 100.00 100.00
Russian Federation
5 Petrovka Street, Berlin House,
Business Centre, Moscow 107031
10. Group companies continued
251 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the Company financial statements continued
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
Refinitiv RUS LLC Ordinary 100.00 100.00
Saudi Arabia
Al Thalatten Commercial Centre, 2nd
Floor, Olaya Thalateen, Corner Dhabab
Street, PO Box 62422, Riyadh 11585
Refinitiv Saudi for Information and
Communication Technology
Ordinary 75.00 100.00
5
Singapore
1 Raffles Quay, #28-01, Singapore 048583
Global Data Consortium Singapore Pte Ltd Ordinary 100.00 100.00
Infosight Singapore Pte Ltd Ordinary 100.00 100.00
Refinitiv Asia Pte Ltd Ordinary 100.00 100.00
Refinitiv Transaction Services Pte Ltd Ordinary 100.00 100.00
The Red Flag Group Pte Ltd Ordinary 100.00 100.00
9 Raffles Place, #26-01, Republic Plaza,
Singapore 048619
Tora Trading Services Pte Ltd Ordinary 100.00 100.00
Spain
Paseo de la Castellana 95, 7a, Edificio
Torre Europa, Madrid 28046
Refinitiv SL Ordinary 100.00 100.00
Sri Lanka
Exchange House, Trace Expert City,
Maradana, Colombo 10
LSEG Business Services Colombo
(Private) Limited
Ordinary 100.00 100.00
65/2, Sir Chittampalam A Gardiner
Mawatha, Colombo 02
Millennium IT Services (Private) Limited Ordinary 100.00 100.00
1 Millennium Drive, Malabe, Colombo 10115
Millennium IT Software (Private) Limited Ordinary 100.00 100.00
Sweden
PO Box 1732, SE-111 87 Stockholm
Refinitiv Sweden AB Ordinary 100.00 100.00
Switzerland
Rue de Lausanne 17, 1201 Genève
Refinitiv International Holdings SARL Ordinary 100.00 100.00
Refinitiv SA Ordinary 100.00 100.00
Baarerstrasse 112, 6300 Zug
The Red Flag Group (Switzerland) AG Ordinary 100.00 100.00
Taiwan, China
26F, 100 Song Ren Road, Xinyi District,
Taipei City 110
FTSE International Taiwan Limited Ordinary 100.00 100.00
Thailand
U Chu Liang Building, 34th Floor,
968 Rama IV Road, Silom, Bangrak,
Bangkok 10500
Refinitiv (Thailand) Limited A Ordinary 100.00 100.00
4
B Preference 100.00
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
Refinitiv Holdings (Thailand) Limited Preference – 100.00
4
Ordinary 100.00
Refinitiv Software (Thailand) Limited Ordinary 100.00 100.00
4
Turkey
Is Kuleleri, Kule 2, Kat 1-2, 4. Levent,
Istanbul 34330
Refinitiv Enformasyon Limited Sirketi Ordinary 100.00 100.00
United Arab Emirates
Office 15501, Level 15, The Gate
Building, Dubai International Finance
Centre, PO Box 121208, Dubai
FTSE International (MEA) Limited Ordinary 100.00 100.00
Premises 501, 5th Floor, Thomson
Reuters Building, Dubai Media City,
PO Box 1426, Dubai
Refinitiv Middle East FZ-LLC Ordinary 100.00 100.00
Office 104, Building 3, PO Box 500 630,
Dubai Internet City, Dubai
The Red Flag Group FZ-LLC Ordinary 100.00 100.00
Unit GD-GB-00-15-BC-52-0 Level 15,
Gate District Gate Building, Dubai
International Financial Centre, Dubai
Tradeweb (DIFC) Limited Ordinary 100.00 51.01
P.O. Box 41640, Green Tower,
District-Deira, Dubai
Zawya Internet Content Provider LLC Ordinary 49.00 100.00
4
United Kingdom – England & Wales
1 Fore Street Avenue, London EC2Y 9DT
Tradeweb Europe Limited Ordinary 100.00 51.01
Tradeweb Execution Services Limited Ordinary 100.00 51.01
Suite 1, 7th Floor, 50 Broadway, London
SW1H 0BL
AcadiaSoft (UK) Ltd Ordinary 100.00 100.00
10 Paternoster Square, London EC4M 7LS
Avox Limited Ordinary 100.00 100.00
Blaxmill (Eleven) Limited Ordinary 100.00 100.00
Blaxmill (Nine) Limited Ordinary 100.00 100.00
Blaxmill (Ten) Limited Ordinary 100.00 100.00
Blaxmill (Thirteen) Limited Ordinary 100.00 100.00
Blaxmill (Thirty-Three) Limited Ordinary 100.00 100.00
Blaxmill (Twelve) Limited Ordinary 100.00 100.00
Blaxmill (Twenty-Eight) Limited Ordinary 100.00 100.00
BondClear Limited Ordinary 100.00 82.61
CommodityClear Limited Ordinary 100.00 82.61
Criminal Law Week Limited Ordinary 100.00 100.00
Enterprise Risk Management
Technology Limited
Ordinary 100.00 100.00
EquityClear Limited Ordinary 100.00 82.61
ForexClear Limited Ordinary 100.00 82.61
FTSE (Australia) Limited Ordinary 100.00 100.00
10. Group companies continued
London Stock Exchange Group plc
Annual Report 2023
252
Notes to the Company financial statements continued
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
FTSE (Japan) Limited Ordinary 100.00 100.00
FTSE Fixed Income Europe Limited Ordinary 100.00 100.00
FTSE Global Debt Capital
Markets Limited
Ordinary 100.00 100.00
FTSE International Limited Ordinary 100.00 100.00
International Commodities
Clearing House Limited
Ordinary 100.00 82.61
LCH Group Holdings Limited Ordinary 82.61 82.61
LCH Limited Ordinary 100.00 82.61
LCH.Clearnet Group Limited Ordinary 100.00 82.61
London Stock Exchange
Connectivity Solutions LP
Partnership
interest
6
– 100.00
London Stock Exchange LEI Limited Ordinary 100.00 100.00
LSEG (ELT) Limited Ordinary 100.00 100.00
LSEG (F) Limited Ordinary 100.00 100.00
LSEG (M) Financing Limited Ordinary 100.00 100.00
LSEG Business Services Limited Ordinary 100.00 100.00
LSEG Employment Services Limited Ordinary 100.00 100.00
LSEG F1 Limited Ordinary
3
100.00 100.00
LSEG F2 Limited Ordinary 100.00 100.00
LSEG F3 Limited Ordinary 100.00 100.00
LSEG Foundation (charitable
incorporated organisation)
– – –
LSEG Pension Trustees Limited Ordinary 100.00 100.00
LSEG Post Trade Services Limited Ordinary 100.00 100.00
LSEG Regulatory Reporting Limited
(formerly UnaVista Limited)
Ordinary 100.00 100.00
LSEG Technology Limited Ordinary 100.00 100.00
LUH Financing Limited Limited by
guarantee
6
– 100.00
Monitor Trading Limited Ordinary 100.00 100.00
Refinitiv Group Nominees Limited Limited by
guarantee
6
– 100.00
Refinitiv UK Financial Limited Ordinary 100.00 100.00
RepoClear Limited Ordinary 100.00 82.61
SSC Global Business Services Limited Ordinary 100.00 100.00
SwapAgent Limited Ordinary 100.00 82.61
SwapClear Limited Ordinary 100.00 82.61
The London Clearing House Limited Ordinary 100.00 82.61
The London Produce Clearing
House Limited
Ordinary 100.00 82.61
The Stock Exchange (Holdings) Limited Ordinary 100.00 100.00
TicketAid Limited Ordinary 100.00 100.00
Tora Trading Services Limited Ordinary 100.00 100.00
Turquoise Global Holdings Limited Ordinary A 100.00 84.17
Ordinary B 67.46
UK LSEG Financing 1 Limited Ordinary 100.00 100.00
UK LSEG Financing Limited Ordinary 100.00 100.00
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
Five Canada Square, Canary Wharf,
London E14 5AQ
Financial & Risk Organisation Limited Ordinary 100.00 100.00
Global World-Check Ordinary 100.00 100.00
Global World-Check Holdings
(Nominee) Limited
Ordinary 100.00 100.00
Global World-Check Holdings Limited Ordinary 100.00 100.00
Lipper Limited Ordinary 100.00 100.00
REDI Technologies Limited Ordinary 100.00 100.00
Refinitiv Benchmark Services (UK) Limited Ordinary 100.00 100.00
Refinitiv Limited Ordinary 100.00 100.00
Refinitiv Transaction Services Limited Ordinary 100.00 100.00
Refinitiv UK (Rest Of World)
Holdings Limited
Ordinary 100.00 100.00
Refinitiv UK Eastern Europe Limited Ordinary 100.00 100.00
Refinitiv UK Holdings Limited Ordinary 100.00 100.00
Refinitiv UK Overseas Holdings Limited Ordinary 100.00 100.00
Refinitiv UK Parent Limited Ordinary 100.00 100.00
Reuters Pension Fund Limited Limited by
guarantee
7
– 100.00
Reuters SPS Trustee Limited Limited by
guarantee
7
– 100.00
RRP Pension Trustee Limited Limited by
guarantee
7
– 100.00
The Red Flag Group (UK) Limited* Ordinary 100.00 100.00
World Bureau of Metal Statistics Limited* Ordinary 100.00 100.00
Cannon Green Building, 27 Bush Lane,
London, EC4R 0AN
Quantile Group Limited Ordinary 100.00 100.00
Quantile Technologies Limited Ordinary 100.00 100.00
United Kingdom – Scotland
Exchange Tower, 19 Canning Street,
Edinburgh EH3 8EG
Lilac Energy Software Solutions Limited Ordinary 100.00 100.00
Quorate Technology Limited Ordinary 100.00 100.00
United States
C/o Corporation Service Company, 251
Little Falls Drive, Wilmington, DE 19808
BondDesk Group LLC Membership
Interest
100.00 51.01
DW SEF LLC Membership
Interest
100.00 51.01
Quaternion Risk Management US Inc. Ordinary 100.00 100.00
Refinitiv US Tradeweb LLC Ordinary
2
100.00 45.72
Tech Hackers LLC Membership
Interest
100.00 51.01
Tradeweb Direct LLC Contribution
Unit
100.00 51.01
Tradeweb Global Holding LLC Ordinary 100.00 51.01
10. Group companies continued
253 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
Notes to the Company financial statements continued
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
Tradeweb Global LLC Ordinary 100.00 51.01
Tradeweb IDB Markets, Inc. Ordinary 100.00 51.01
Tradeweb LLC Common 100.00 51.01
Tradeweb Markets Inc. Class A
2
–
45.72
Class B
2
100.00
Class C
2
100.00
Class D
2
98.23
Tradeweb Markets LLC Membership
Interest
100.00 51.01
TW SEF LLC Limited
Liability
Company
Interest
100.00 51.01
TWEL Holding LLC Limited
Liability
Company
Interest
100.00 51.01
C/o Corporation Service Company,
80 State Street, Albany, NY 12207
Dealerweb Inc. Common 100.00 51.01
C/o United Agent Group Inc, Suite 201,
Brandywine Plaza, 1521 Concord Pike,
Wilmington DE 19803
EPIC Acquisition Sub LLC Membership
Interest
100.00 100.00
FTSE Fixed Income LLC Membership
Interest
100.00 100.00
FX Alliance International, LLC Common 100.00 100.00
FX Alliance, LLC Common 100.00 100.00
Giact Systems, LLC Membership
Interest
100.00 100.00
IAG US LLC Member
Shares
100.00 100.00
Intrinsic Research Systems, Inc. Common 100.00 100.00
LCH.Clearnet LLC Ordinary 100.00 82.61
LSEG Information Services (US) Inc. Ordinary 100.00 100.00
LSEG Financing Corporation Ordinary 100.00 100.00
LSEG Financing LLC Membership
Units
100.00 100.00
LSEG US Fin Corp Ordinary 100.00 100.00
LSEG US Holdco, Inc. Common 100.00 100.00
LSEGA, Inc. Common
Stock
100.00 100.00
LSEGH (I) LLC Ordinary 100.00 100.00
LSEGH Inc. Common 100.00 100.00
Maystreet Inc. Common
Stock
100.00 100.00
Mergent, Inc. Ordinary 100.00 100.00
Millennium IT (USA) Inc. Common 100.00 100.00
Refinitiv Global Markets Inc. Common 100.00 100.00
Name, address and
country of incorporation
Class of
share held
Share
ownership
%
Parent
Ultimate
economic
interest %
Refinitiv US IP Corp Ordinary 100.00 100.00
Refinitiv US LLC Member
Interest
100.00 100.00
Refinitiv US Organization LLC Member
Interest
100.00 100.00
Refinitiv US Personal Focus Inc. Ordinary 100.00 100.00
Refinitiv US PME LLC Class A 100.00
100.00
Class B 100.00
Refinitiv US SEF LLC Ordinary 100.00 100.00
Refinitiv US Services Corp Ordinary 100.00 100.00
The Red Flag Group Inc. Ordinary 100.00 100.00
The Yield Book, Inc. Common 100.00 100.00
Tora Holdings, Inc. Common 100.00 100.00
Tora Trading Investments LLC Common 100.00 100.00
Tora Trading Services LLC Common 100.00 100.00
Turquoise Global Holdings US, Inc. Common 100.00 84.17
Yield Book Tangible Property BRE LLC Member
Interest
100.00 100.00
Yield Book Software BRE LLC Member
Interest
100.00 100.00
C/o Corporation Service Company, 1821
Logan Avenue, Cheyenne, WY 82001
TIPS LLC Member
Interest
100.00 51.01
C/o Corporation Trust Company, 1209
Orange Street, Wilmington, DE 19801
AcadiaSoft Inc. Common
stock
100.00 100.00
C/o United Agent Group Inc, 15720
Brixham Hill Avenue #300, Charlotte,
NC 28277
Global Data Consortium, Inc. Common 100.00 100.00
C/o United Agent Group Inc, 155 E.
Boardwalk #490, Fort Collins, CO 80525
Lipper Inc. Ordinary 100.00 100.00
C/o United Agent Group Inc, 707 W.
Main Avenue #B1, Spokane, WA 99201
Frank Russell Company Common 100.00 100.00
C/o United Agent Group Inc, 600
Mamaroneck Avenue #400, Harrison,
NY 10528
FTSE Americas, Inc. Ordinary 100.00 100.00
REDI Global Technologies LLC Member
Interest
100.00 100.00
* In liquidation.
1 29.55% is held by the Company indirectly.
2 The Group's voting interest in Tradeweb Markets Inc. is 89.94%.
3 0.53% directly held by the Company.
4 The Group's equity interest is 49.00%, but the ultimate economic interest is 100.00%.
5 The Group's equity interest is 75.00%, but the ultimate economic interest is 100.00%.
6 The Group's voting and economic interest is 100%.
7 The Group has control through its right to appoint a majority of directors.
10. Group companies continued
London Stock Exchange Group plc
Annual Report 2023
254
Notes to the Company financial statements continued
10.2 Associates
As at 31 December 2023, the Company does not directly own any associates.
The Group’s associate undertakings are:
Name, address and country of incorporation Identity of each class of share held
Share
ownership %
held by the
investing
company
Ultimate
economic
interest %
Australia
Level 10, 60 Margaret Street, Sydney, NSW2000
ASX Refinitiv Charity Foundation Ltd Charitable incorporated organisation 50.00 50.00
British Virgin Islands
OMC Chambers, Wickhams Cay 1, Road Town, Tortola
LabCi Holding Inc Ordinary 47.62 47.62
United Kingdom – England & Wales
3 Spring Mews, London SE11 5AN
Citywire Holdings Limited Ordinary 16.40 16.40
1
107 Cheapside, London EC2V 6DN
Fomtech Limited Ordinary 28.84 28.84
1 The Group has significant influence over Citywire Holdings Limited due to its right to appoint at least one of the company’s directors.
All associates have the same year end as the Group, except Fomtech Limited which has a 31 August year end.
10. Group companies continued
255 London Stock Exchange Group plc
Annual Report 2023
Glossary
$
US dollar, unless otherwise specified.
Acadia
Acquired March 2023, provider of automated uncleared margin
processing and integrated risk and optimisation services for the
global derivatives community.
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.
Alternative Performance Measures
An Alternative Performance Measure (APM) is a financial measure
of historical or future financial performance, financial position, or
cashflows, other than a financial measure defined or specified in
the applicable financial reporting framework. APMs should be
considered in addition to, and not as a substitute for, IFRS
measures of financial performance and liquidity. The Group’s
APMs are defined below.
Non-underlying items
The Group classifies income or expenses as non-underlying
when it does not arise in the normal course of business and it is
material by amount or nature... This can include: amortisation
and impairment of goodwill and purchased intangible assets;
incremental amortisation and impairment of any fair value
adjustments of intangible assets recognised as a result of
acquisitions; and tax on non-underlying items, as well as any
other income or expenses not considered to drive the
operating results of the Group. More information can be found in
note 2.3 to the consolidated financial statements on page 181.
‘Adjusted’ measures
We use ‘adjusted’ measures including adjusted EBITDA to assess
the profitability and performance of our business.
The ‘adjusted’ measures reported by the Group are:
— Adjusted operating expenses before depreciation,
amortisation and impairment
— Adjusted EBITDA1
— Adjusted depreciation, amortisation and impairment
— Adjusted operating profit
— Adjusted net finance costs
— Adjusted profit before tax
— Adjusted profit for the year
1
— Adjusted earnings per share (EPS)
2,3
These are not measures of performance under IFRS but provide
supplemental data that help convey an understanding of the
Group’s financial performance and exclude non-underlying items
per the above definition above. For more information on our
adjusted measures, refer to note 2 to the financial statements
on page 180.
1 Adjusted profit for the year is used to calculate adjusted EPS and is reconciled
to profit before taxation in note 7 to the financial statements on page 194 and on
the face of the income statement.
2 Adjusted profit for the year is used to calculate adjusted EPS and adjusted diluted
EPS and is reconciled to profit before taxation in note 7 to the consolidated financial
statements on page 194 and on the face of the consolidated income statement
on page 171.
3 While basic EPS reflects all Group activities, diluted EPS 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.
Constant currency growth
We serve customers in over 170 different countries and a
significant proportion of our income is generated in currencies
other than our reporting currency, sterling. Movements in
exchange rates can therefore have a significant impact on our
reported financial growth rates and so it can be helpful for us
remove this volatility when assessing business performance. We
calculate constant currency growth rates – for P&L items down to
and including the operating profit line – on the basis of consistent
FX rates applied across the current and prior year period.
Organic (constant currency) growth
In the last two years, we have completed five material acquisitions
and one disposal. We measure organic growth rates in order to
compare business performance to prior periods independent
of this activity. Organic growth is calculated on a constant
currency basis, adjusting the results to remove disposals from
the entirety of the current and prior year periods, and by including
acquisitions from the date of acquisition with a comparable
adjustment to the prior year.
(Equity) free cash flow
We use equity free cash flow to determine residual cash inflow
or outflow, after operational usages of cash such as interest
payments, taxes paid, dividends paid to minority interests and
capital expenditure. Equity free cash flow represents the cash
that we have available to distribute to shareholders via dividends
and buybacks, and for other uses such as M&A activity. Unless
specified otherwise, references to “free cash flow” in the
Annual Report should be taken to mean equity free cash flow.
For a reconciliation from equity free cash flow to reported cash
flow, refer to page 56.
(Dividend) payout ratio
Our dividend payout ratio or “payout ratio” represents the ratio of
the total amount of dividends paid to shareholders relative to our
adjusted earnings per share.
Annualised Subscription Value (ASV) growth
Our ASV growth metric measures the year-on-year expansion in
the annualised value of our book of subscription contracts,
at a point in time. By annualising the value of contracts that
have recently been initiated, the metric should act as a leading
indicator of Data & Analytics subscription growth (96% of Data
& Analytics revenue).
Cost and revenue synergies
We use our cost and revenue synergy programmes to quantify
the financial value directly generated by LSEG’s acquisition of
Refinitiv, which closed in January 2021. Our runrate synergy
achievement figures represent the incremental annual revenue
or cost savings delivered as a result of synergies between
the two legacy organisations, which were identified prior to
the acquisition.
London Stock Exchange Group plc
Annual Report 2023
256
Glossary continued
API
Application Programming Interface.
ASV
Annual Subscription Value. A point in time measure of our recurring
book of subscription contracts vs 12 months ago.
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.
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.
CDSClear
LCH’s over-the-counter credit default swap (CDS) clearing service.
CFC
Controlled foreign company
CMIT
The UK Capital Markets Industry Taskforce comprises CEOs, Chairs and
industry leaders representing private and publicly listed companies,
asset owners and managers, and the advisory services that support
their access to capital and investments.
Combined Group
Combination of LSEG and Refinitiv following completion of the Refinitiv
acquisition on 29 January 2021.
Company
London Stock Exchange Group plc.
Derivatives
Tradable financial instruments whose value is determined by the value
of underlying instruments; this could be equity, an index, a commodity
or any other tradable instrument.
— Exchange traded derivatives (ETD)
Listed derivatives traded on an electronic trading venue such as
an exchange and cleared through a clearing house.
— Over the counter (OTC)
Derivatives are negotiated privately between two parties and may
be cleared through a clearing house.
EBITDA
Earnings before interest, tax, depreciation and amortisation.
Exchange Traded Fund (ETF)
Low-cost and flexible investments that track indices and sectors.
FCA
Financial Conduct Authority, the current regulator of conduct of
providers of financial services in the UK and of UK trading venues
such as Recognised Investment Exchanges (RIEs) and MTFs.
Fintech
Financial technology.
ForexClear
LCH’s over-the-counter foreign exchange clearing service.
FTSE Russell
FTSE International Limited and its subsidiaries, the Group subsidiary
that is a leading global provider of index and analytics solutions.
FXall
The Group’s dealer-to-client electronic FX trading and
workflow platform.
FX Matching
The Group’s dealer-to-dealer FX trading venue.
GDC
Global Data Consortium. Acquired May 2022, a provider of identity
verification data to support clients with KYC requirements.
GIACT
The Group’s digital identity and payments verification platform.
Refinitiv acquired GIACT in December 2020 and it was included
in the acquisition of Refinitiv in January 2021.
Green Economy Mark
Mark recognising equity issuers on London Stock Exchange with
50% or more green revenues.
Group/LSEG
The Company and its Group undertakings.
Hampton-Alexander Review
An independent, business-led initiative established in 2016 to increase
the representation of women in senior leadership positions and on
boards of FTSE 350 Companies.
IPO
Initial Public Offering – the process whereby companies join our
markets and raise capital for the first time.
KYC
‘Know your customer’ screening.
LCH or LCH Group
LCH Group Limited and its subsidiaries, the Group’s 82.6% owned
global clearing and risk management business.
Lipper
Lipper provides global, independent fund performance data in a
precise, granular fund classification system, and includes mutual funds,
closed-end funds (CEFs), exchange-traded funds (ETFs), hedge funds,
domestic retirement funds, pension funds, and insurance products.
LSE
London Stock Exchange plc.
Main Market
The market for companies which have been admitted to trading on
the London Stock Exchange’s principal market.
MayStreet
Acquired May 2022, a provider of global low-latency technology and
market data to industry participants including banks, asset managers
and hedge funds.
257 London Stock Exchange Group plc
Annual Report 2023
Glossary continued
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.
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.
NTI
Net Treasury Income. Income earned on cash deposited with LCH
(the Central Counterparty) as margin and default funds as part of the
risk management process.
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.
Quantile
Acquired December 2022, a provider of portfolio, margin and
capital optimisation and compression services for the global financial
services market.
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.
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.
Science Based Targets Initiative (SBTi)
A coalition established in 2015 between the CDP, the United Nations
Global Compact, World Resources Institute and WWF which aims
to enable companies to set emission reduction targets in line with
leading climate science.
Secondary Market
The public market on which securities once issued are traded.
SEDOL
The Group’s securities identification service.
SETS
The electronic order book operated by the London Stock Exchange
for the trading of the most liquid securities.
Sustainable Bond Market (SBM)
A dedicated segment of London Stock Exchange for social and
sustainable bonds.
Sustainable issuers
The total number of issuers across the Sustainable Bond Market
and the Voluntary Carbon Market, plus those that display the
Green Economy Mark.
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.
London Stock Exchange Group plc
Annual Report 2023
258
Glossary continued
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.
TORA
Acquired August 2022, our cloud-based multi-asset trading software,
with functions including order management and portfolio rebalancing.
Turquoise
Turquoise Global Holdings Limited, the Group’s 84.2% owned
pan-European MTF equity trading subsidiary, a venture between
the Group and a number of global investment bank clients.
UnaVista
The Group’s web-based matching, reconciliation and data integration
engine that provides matching of post trade data in a simple,
automated process and the Trade Repository approved by ESMA.
Voluntary Carbon Market (VCM)
The Voluntary Carbon Market enables private investors, governments,
non-governmental organisations, and businesses to voluntarily
purchase carbon offsets to offset their emissions.
Workspace
LSEG’s data & analytics workflow solution designed to provide access
to company financial data and economic indicators as well as news,
analytics and productivity tools.
World Check
The Group’s risk intelligence database designed to assist organisations
in meeting their KYC and third-party due diligence screening obligations.
259 London Stock Exchange Group plc
Annual Report 2023
FINANCIAL STATEMENTS
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 28 February 2024 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 7.0%
1
— Qatar Investment Authority 7.0%
— BlackRock (Index/BGI) 5.7%
— 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 a 10.2%
2
economic 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 – 25 April 2024
— Q1 Trading Statement (revenues only) – 25 April 2024
— Ex dividend date for final dividend – 18 April 2024
— Final dividend record date – 19 April 2024
— Final dividend payment – 22 May 2024
— Half year end – 30 June 2024
— Interim Results (for six months ended 30 June 2024) –
01 August 2024
— Q3 Trading Statement (revenues only) – 24 October 2024
— Financial year end 31 December 2024
— Preliminary Results February 2025
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
2024 AGM
The AGM for the year ended 31 December 2023 will be held on
25 April 2024 at Butchers’ Hall, 87 Bartholomew Close, London,
EC1A 7EB, starting at 10.30 am.
Investor Relations
1 Represents total voting rights held by BCP York Holdings (Delaware) LP, York Holdings II
Limited and York Holdings III Limited.
2 As at 28 February 2024.
London Stock Exchange Group plc
Annual Report 2023
260
Investor Relations
London Stock Exchange Group plc
10 Paternoster Square
London
EC4M 7LS
For enquiries relating to shareholdings in
London Stock Exchange Group plc:
Shareholder helpline: +44 (0)20 7797 3322. Email: ir@lseg.com
Visit the Investor Relations section of our website for up-to-date
information including the latest share price, announcements,
financial reports and details of analysts and consensus forecasts:
www.lseg.com/investor-relations
Registered office
London Stock Exchange Group plc
10 Paternoster Square
London
EC4M 7LS
Registered company number
London Stock Exchange Group plc: 5369106
Registrar information
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
T +44 (0)371 384 2030 or +44 (0)121 415 7047
Lines open 8:30 to 17:30. Monday to Friday.
www.shareview.co.uk
Independent auditors
Ernst & Young LLP
1 More London Place
London
SE1 2AF
Principal legal adviser
Freshfields Bruckhaus Deringer LLP
65 Fleet Street
London
EC4Y 1HS
T +44 (0)20 7936 4000
Corporate brokers
Citi
33 Canada Square
Canary Wharf
London
E14 5LB
T +44 (0)20 7500 5000
www.citigroup.com
Morgan Stanley
25 Cabot Square
Canary Wharf
London
E14 4QA
T +44 (0)20 7425 8000
www.morganstanley.com
Goldman Sachs
Plumtree Court
25 Shoe Lane
London
EC4A 4AU
T +44 (0)20 7774 1000
www.goldmansachs.com
Investor Relations continued
AIM, London Stock Exchange, London Stock Exchange Group,
LSE, the London Stock Exchange Coat of Arms Device, FTSE Russell,
SEDOL, SETS and UnaVista, are registered trade marks of London
Stock Exchange plc. Main Market and the Green Economy Mark
are un-registered trade mark of London Stock Exchange plc.
Beyond Ratings is a registered trade mark of Beyond Ratings.
CDSClear is a registered trade mark of LCH S.A.
FTSE, FTSE Russell is a registered trade mark of the London
Stock Exchange Group companies and is used by FTSE
International Limited under licence.
GIACT is a registered trade mark of Giact Systems, LLC.
LCH, SwapClear, SwapAgent, EquityClear, ForexClear and
RepoClear are registered trade marks of LCH Limited.
LSEG and the LSEG Coat of Arms is a trade mark of
London Stock Exchange Group plc
MillenniumIT is a registered trade mark of Millennium Information
Technologies Limited. Refinitiv, the Refinitiv logo, Refinitiv Workspace,
Lipper, World-Check, REDI, FXall, Eikon, Red Flag Group, Scivantage and
Datastream are registered trademarks of Financial & Risk Organisation
Limited and Refinitiv US Organization LLC, as applicable.
Tradeweb is a registered trade mark of TRADEWEB MARKETS LLC.
Turquoise is a registered trade mark of Turquoise Global
Holdings Limited.
The Yield Book and WGBI are registered trade marks of
The Yield Book, Inc.
Disclaimers
Designed and produced by Friend
www.friendstudio.com
Board and Executive Committee photography by Henrik Andersen
(LSEG) and Nabor Godoy (www.godoyshots.com).
This report is printed on Vision Superior which is made of
FSC® certified and other controlled material.
Printed sustainably in the UK by Pureprint, a Carbon Neutral company
with FSC® Chain of custody and an ISO 14001-certified environmental
management system recycling over 100% of all dry waste.
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