Q3 Trading Update
21 October 2022
David Schwimmer, CEO said:
“We have delivered another strong quarter, with good growth across all businesses. The consistency of delivery in recent quarters demonstrates the strength of our business model, generating quality recurring revenues from a range of services that are highly valued by our customers.
"Our strategy is working, delivering growth and increasing efficiency. We are investing organically for growth and completed the acquisition of TORA during the quarter to strengthen our offering in Trading & Banking. We are also making good progress on returning surplus capital to shareholders through our share buyback programme.
"With sustained execution, a broad base of businesses and leading market positions, we remain well positioned."
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Q3 2022 highlights – Broad based growth, sustained execution
Note: Unless otherwise stated, variances refer to growth rates relative to Q3 2021 on a constant currency basis.
Strong growth continues across all divisions: total income excluding recoveries up 16.2% on a reported basis, to £1,905m. Up 5.9% on a constant currency basis, and up 7.0% adjusting for Ukraine and Russia conflict impact1
High-quality recurring revenue: like-for-like ASV growth continues to improve, up 5.8% in Q3 (up 280 basis points since Refinitiv acquisition in Q1 2021); driven by new sales and improved retention
Continued good progress on integration: revenue and cost synergies in line with targets
Active capital management:
– TORA acquisition completed, enhancing Trading & Banking Solutions in Data & Analytics; provisional clearance achieved for Quantile acquisition, expected to complete in Q4
– Share buyback: £235 million returned in Q3 as part of our active 12 month, £750 million share buyback programme
Well-positioned for further growth: strong progress, no change to guidance or targets
This release contains revenues, cost of sales and key performance indicators (KPIs) for the three months ended 30 September 2022 (Q3), certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Throughout this document, revenues and cost of sales associated with the BETA divestment, completed on 1 July 2022, and the Borsa Italiana divestment, completed in H1 2021, have been classed as discontinued and are excluded from all periods. To reflect underlying performance, all constant currency variances compare the current and prior period at consistent exchange rates. For more information on accounting treatments and approach to FX please refer to the “Accounting and modelling notes” section below.
1Growth rates excluding the Ukraine / Russia conflict impact exclude income in the region and from sanctioned customers and related business from both periods
Q3 2022 investor and analyst conference call
LSEG hosted a conference call for its Q3 Trading Update for analysts and investors on 21 October at 09:00am (UK time). On the call was David Schwimmer (Chief Executive Officer), Anna Manz (Chief Financial Officer) and Peregrine Riviere (Group Head of Investor Relations). View a replay of the webcast below.
Good morning and welcome tothe London Stock Exchange Group third quarter update,hosted by David Schwimmer, CEO and Anna Manz, CFO.Anna will make some brief introductory remarks aboutour performance and will then open up to Q&A.There are two ways to ask a question.You can share one in writing by followingthe instructions on the webcast page.Alternatively, you can ask a question overthe phone using the number provided in today's release.And with that, let me hand over to Anna.Thank you. And good morning.Let me start by welcoming Peregrine,a new Head of Investor Relationson his first set of results.He brings a breadth of experience to our team.And I know he's really looking forward tomeeting all of you if he hasn't already.It's been another quarter ofstrong performance and broad-based growth.We're making good progress to achieveour targets and there's no change to any of our guidance.Our strategy is working, and the consistency of deliveryin recent quarters demonstratesthe strength of our business model.We're generating quality recurring revenuesfrom a range of services thatare valued by our customers.As Peregrine said, I'm going to pick out some ofthe highlights and then we'll getstraight into your questions.So firstly, on growth.It's a strong and consistent story withconstant currency income up 7%once we've adjusted for the impact of the Russia-Ukraine conflict, exactly inline with what we achieved in the first half.Although, the makeup ofthat growth was slightly different.And this talks to the strength ofour business model across market conditions.Again, excluding the Russia-Ukraine impact, Data and Analytics grew 5.4%.In Trading and Banking,we delivered our third consecutive quarterof positive underlying growth,reflecting the progress that we've made inunderstanding our customers and servicing them better.Workspace rollout continues well.And in the quarter,Workspace for FX moved from beta test into full rollout.Our Enterprise Data businesscontinues to deliver strong growth.We recently became the first international vendorof real-time data for the Beijing Stock Exchange.And it's this breadth of data thatunderpins our leading position in real-time.We continue to gain sharein pricing and reference servicestoo, in part by leveragingthe combination with FTSE Russell.We've maintained good growth inour Investment Solutions business.Adjusting for the one-time impact last year,index subscriptions group atthe same high single-digit growth rateseen in recent quarters.Our asset-based revenues were broadly flat,despite a 14% market decline in asset values.Success here is built on innovation,and that continued inthe third quarter with the launch ofa fixed income version of the Russell 3000 index,the world's first bond indexto mirror an equity benchmark.We also continue to innovate in ESG and we're on track tolaunch over a hundred new ESG index products this year.As you know, revenue indata and analytics is not just about growth,it's about quality and visibility too.We're making great progress onASV with underlying growth accelerating to 5.8%,a further improvement in the quarter,and up nearly three percentage pointsfrom the time of acquisition.This acceleration has been driven bythe investments we're making toimprove our product offerings,with stronger sales and better retention.We're executing better across the board,focusing on what data our customersneed and how they want to consume it,then ensuring we do it in a streamlined,resilient and efficient way.There's still a lot of opportunity here.Moving to capital markets,this grew 9% in Q3,a slight slowdown from the first half,reflecting lower market activity in the quarter.The largest driver was Tradeweb,which saw another quarter ofdouble-digit growth driven by market share gainsand the electronification ofthe fixed income marketsyou've heard me talk about before.Elsewhere, we continue to drive change and innovate.In Q3, we movedour equity market surveillance tools to the Cloud.And just last week,the LSE launched its voluntary carbon market,which will help projects that mitigate climate change toaccess capital. In Post Trade,we saw growing demand in the quarter as we help customersmanage their risk in an uncertain market environment.Our platform continues to attract new users,adding our first clearing memberfrom Singapore in the quarter.Cash collateral at LCHreached an all time high in September,driving net Treasury income up 31%.Let's turn briefly to the Refinitiv integration,where we remain firmly ontrack to meet our synergy targets.To give you a flavour,we've launched 16 synergy-relatedproducts in the quarter,including new fixed income analytics and enterprise data,and rolling out new index tools via our desktop products.We've consolidated our officesin Singapore and Hong Kong,taking the number of propertiesexited since completion to 33.And we're on target to migrate or decommissionover 250 applications in 2022,more than 25% ahead of our original target.Turning to capital allocation,we continue to be active.We're investing organically,making good progress on initiatives such asour FX matching platform, withcustomers now able to build API connectivity.On M&A, the acquisition of TORA in the third quarter,adds execution andorder management capability tomeet the demand from our trading users.And, competition authorities have provisionally clearedour acquisition of the Quantilecapital optimisation business,which we expect to close shortly.And finally, we've recently completedthe first tranche of the 750 million share buyback.The next tranche due to start in December.So, to pull all of that together, our strongQ3 performance is the result ofsustained execution of our longer-term strategy.We're making progress on all fronts,and at the same time, there's stillmore we can and will do.We continue to invest and we remain well-positioned forfurther growth, with no change to our guidance or targets.A reflection of the strength ofour business model across market conditions.Before we finish, I want totake a moment to recognise Paul Froud.He'll be leaving LSEG after20 years as our Head of Investor Relations.In that time, the group has seenits market cap grow from a billion to almost 40.And Paul has weathered everythingthat that journey has entailed.He's a consummate professional and all of you onthis call will have benefited from his vast knowledge.On a personal note, Paul,I've really enjoyed and valuedyour friendship and your dry sense of humour.And we're all going to miss you. And with that,David and I are happy to takeyour questions. Back to Peregrine.We have a coupleof written questions through already,so we'll take those first.The first one is around growth."How confident are you in your abilityto continue to grow in the current environment?And should we expect to see a slowdown insome areas given some customer pressures?"Thanks Peregrine. And before I jump in on the question,I also just want to make a comment on Paul Froud.Great appreciation for his 20 yearsof work service with LSEG.I've personally enjoyed working with him and Paul,we wish you all the best.So, thank you. So, Peregrine, to your question.We're really very wellpositioned for an environment like this.And you can see that inthe strong performance thatwe are talking about this morning.As we've talked about before,our business model is verywell diversified across asset classes,across products, customers, geographies, currencies.We do have about 70% recurringrevenue across the business.And then the 30% or so ofthe business that is transactional,tends to benefit from the volatilityand the uncertainty in an environment like thisand whether we see that inLCH, Tradeweb, our FX business.So another point I should justtouch on is that times like this with the volatility,the uncertainty in the market highlightthe value of our products andour solutions to our customers.So it's also worth mentioning.that while this market is very, very difficult for, for some,some of our customers are also seeingactual benefits in this environment,such as the banks,they're seeing the higher interest spreads.So I'll just finish by pointing you toour ASV growth, which has risen40 basis points or so this quarter, it's now at 5.8%,really shows the continuinggrowth momentum in our business.Right, thank you.Then another written question on pricing."Given the moves that some of your competitors have made,can you give us some indication of your plans, yourprice increases in D&A next year?"Anna, you want to take that one?Sure.So, we take price on the biggest chunk of our business,which is the subscription business in data andanalytics on January the 1st every year.And our approach there is it's nota blanket increase because we've got different customerson slightly different terms anddifferent products we treat in different ways.When we take price,we take price in the context ofour medium-term customer relationships.So it's really important that we'reconsistently growing those relationships.Historically, our price increase has beenabout 2%, and this year in the context of both inflationbut also the significant investment that we'veput in to improve our products over the last couple of years,we expect to take a little bitmore than we've taken previously.And I would say, just going back tothat ASV point that David just made,I think we're really well-placed,in that we've made significant investment in our productsand in our customer relationships overthe last 18 months since close,and you really see that showing up inour strong ASV performance,so we're going into this price increase cyclewell-placed.Thank you. We currently have no more written questions,so I'd like to hand over tothe operator for questions over the phone, please.If you would like to ask a question,please signal by pressing starone on your telephone keypad.As a reminder, participants can continueto submit questions in written format.Otherwise the webcast page by clickingthe Ask a Question button or via email tothe LSEG Investor Relations teamat ir@lseg.com.We will pause for a moment to assemble the team.We will take our first question from Michael Wernerof UBS. Please go ahead.Thank you for the opportunity to ask questions. On the,in your data and analytics division,can you explain the increase in the cost of sales?I think on a constant currency basisis around 9%, about twice what we saw in terms of revenue,so I was just wondering if there'sanything one-off in there,if there's anything related to acquisitions.And then secondly, just to kindof get a little bit more colour about the pricing.Can you just, you providedsome information about average pricingand data and analytics as a whole,can you maybe focus that withinthe Trading and Bankingsolutions business in terms of what you expect,in terms of price increases next year.And ultimately, when should we expect or how do youexpect that to flow through the P&L on the revenue side?And is this something that on Jan 1,we should expect, higher pricingto start coming through or is thissomething that gets staggeredthroughout the year? Thank you very much.Thanks, Michael. Anna you want to take those?Yeah, sure. So, on the D&A cost of sales, one ofthe big impact that's coming through thatyou're observing is the impact of the M&A,which has about 150 bps,a little bit more impact.Beyond that, we've gotvarious other moving pieces in there,but nothing specifically one-off in nature,a little bit lumpy as wesee our cost of sales come through,but that's how I think about it.Nothing unusual or concerning.With respect to pricing.we take pricing across the whole subsbusiness on January 1and that includes Trading and Banking.So you should see thatstart to flow through from the beginning ofthe year. In terms of the amount of price increase,the comments that I've made about our subs asa whole also apply to Trading and Banking.So historically we've taken, on arealised basis, about 2%. We'll be seeing,as I say, a little bit more in 2023,and you'll see that flow throughthe ASV metric as at the endof the year in thatthe ASV metric reflects the combination of pricing,gross sales, and retention.The next question is fromPhilip Middleton of Bank of America.Please go ahead.Good morning. And first of all,as one of the few people who's been around longer than Paul,I would also like to thank him for all he's done.It's true.Secondly, I know is a revenue update,revenue focused up there,but you have talked about your guidance.And obviously inflation is a valid topic at the moment.So, could you say a little bit moreabout how you're thinking aboutcost inflation and how you may, how that maymanifest over the next few years asyou roll through your integration process?Sure, Philip. Thank you.I'll turn it over to Anna in a second.But it is just worth pointing outthat in an inflationary environment like this,we actually see benefits acrossa number of different parts of the business.And so I touched on that a minute or two ago interms of some of the uncertaintydriven by the inflationary environment,we're certainly seeing the benefits ofthat in the tradingbusinesses, particularly around interest rate swaps,particularly around some of the government bonds,and then of course also in FX.So some positive elementsto an environment like this for us,but Anna, over to you.Sure. So. Absolutely, we haveeffectively reiterated everything wesaid at the half year today.So, I remain very confidentabout our 5 to 7% revenue growth target,and I remain very confident that we will exit2023 with an EBITDA margin of greater than 50%.So specifically with respect to cost,our guidance for 2022was low single-digit organic cost growth,and we are in good shapeon that and are reiterating that.We're confident to do that because we are well-practicedat looking for efficienciesin our cost base and driving synergies.Whilst we are continuing to invest in all the areaswe've already described to you in line with plan,we can manage the over-arching situationto be confident of that low single-digit growth.I haven't been specific about2023 just because it's a little bit tooearly, beyond saying that we're veryconfident of delivery of that margin target.And through a combination of price and cost,we know where we'll end up,exactly what the moving parts are at this point in time,we're not going to get into.Thanks, that's very helpful.Thanks Phil. The next one is from Arnaud Giblatof BNPP. Please go ahead.Good morning. I have two questions, please.Firstly, could you talk about the NTI?I mean, that's benefited bya significant increase in collateral.I'm just wondering with volatility continuingperhaps high levels ofcollateral are likely to stay for a few courses,but where do you see that settlingout in the longer-term?My second question is related to capital allocation.I was wondering if you could share any further thoughtsin terms of the possibility of a directed buy-back next year andwhat the timings could be around that. Thank you.Thanks.Arnaud. Anna, you want to touch on NTI?And then I'll talk about directed buyback possibilities.Sure. I'm smiling as I touch on NTI because I realise thatevery time I say that NTI willprobably decline in the subsequent quarter,I've been wrong so far becausemarket volatility has continued to be unexpectedly high.So what I would say around NTI witha really big caveat that I don't have a crystal ball.Q3 has been record levelof volatility and therefore cash collateral,which has driven the veryhigh NTI numbers that you see.Will that continue?It's likely to come down, exactly how fast and whenI'm not sure, and certainlywe have started Q4continuing with high levels of cash collateral.So that's a long way of me sayingQ3 was more volatile than the first half,will we see that level of volatility in thenext quarter, I'm not sure,but I should think you'd be fairly safe forthe level of volatilities we saw in the first half.Just to remind you what drives NTI,predominantly, it's the quantumof cash collateral that's the driver.Because a big chunk of our NTI is fee-basedrather than margin-based, which is slightlydifferent from some of our competitors.And Arnaud to your question on directed buyback.So this is a,an available tool in the toolkit in the world of UK PLCs.But one point that we have touched on before,in order to make use of it,we would need shareholder authorisation.And so, and we have not asked for that in the past.So you should not be surprised to see us asking for thatas part of our AGM process in the spring.So hopefully that answers your question.All right.If I may have a quick follow up,Just on NTI its fee-based, with rates going upand clients generally payinghigher margins thanother market option companies,I'm just wondering if there's perhapsan opportunity here for, for some pricing increase?We're certainly aware ofthe different business modelsat some of our competitors.I would say that we have a medium-term very,I'll say medium-term perspectivewith respect to our customer relationships.And we value those relationships.So as Anna mentioned,there's a lot of thoughtful work going onin terms of what the right pricing is going forward.But nothing to comment onaround that specifically right now.Thank you.The next question is from Haley Tam of Credit Suisse.Please go ahead. Morning. Thank you very much fortaking my questions.I want to ask a couple of follow-ups really.Firstly, congratulations on the continued improvementin the ASV growth.Given the comments you've madeabout a little bit more price increase this yearand the continued rollout of synergy-related products,should we expect this rate ofimprovement to accelerate in 2023?And do you actually have a specific targetASV growth rate in mind?And then the second question,actually on Tradeweb,are you able to give us a simple splitof maybe the nine-month revenue growth,which has come from market share and electronification?So we can get a handle on what that might be,excluding any volatility-related benefits.Thank you.Thank you.Do you want to touch on the first questionand then I'm happy totake the, I'm happy not to answer the Tradeweb question if I can put it that way.Sure.So on ASV, I'm not going togive you a target, I'm afraid.But what I would say is this,as we've said, looking forward to 2023 we expectour pricing to be a littlebit higher than the levels we've taken previously,and that will flow through to ASVand fairly immediately because of course,that will be reflected in our bookof business as of the first of January.Now, otherwise, what you're going to see us do is,is more of the same.So in a subs subscription revenue business,it's about consistently improvingour customer relationships andour product offering to be consistentlyselling more and retaining our customers better.And you've seen thatvery steady trajectory quarter-on-quarter,you'll see continued improvement,maybe not quite as fast as we've delivered inthe early periods because we've kindof tackled some of the low-hanging fruit.But you should continue to see that quarter-on-quarterfocus on continuing todrive those customer relationships.Thanks Anna. And then on the Tradeweb question,nothing that we're in a position to sayabout market share gains relativeto continuing electronification of the sector.I'll refer you tothe Tradeweb team's owndisclosure and feel free toraise any questions like that with them.What I would say is that we're very pleased with howthe Tradeweb business continues to perform.Very strong underlying dynamics there.And also pleased to see how the executive team thereis developing further, a very smooth transitionfrom Lee to Billy, Tom Pluta coming in there,Sara doing a great job, so very happywith, with Tradeweb on a go forward basis.Thank you.Thank you.Next one is from Ian White of Autonomous Research. Please go ahead.Hi, morning.Thanks for thanks for taking my questions.I Just a few follow-ups from my side, please.First up could I just ask for an update on the progresson the Workspace rolloutand also the data platform migration.How is that progressing, please?And how has it helped you so far tolaunch new products more rapidly, for exampleas I understand, that was a limitation thatthe Refinitiv business hadfaced prior to the acquisition.How far through that processare we at this stage, please?Secondly, could I just ask for a bit more colour on the,your thoughts on the outlook for the fixed income businesses,especially in lightof more difficult market liquidity conditions.How confident can we bethat the sort of strong volumes that we're seeing inOTC rates and atTradeweb will actually persist in light,in light of sort of evidence ofdecreasing market depth and wider spreads, for example,over the next six months.And just lastly, on NTI,I hear what you're saying around collateral.The yields are a bit lower this quarter itseems, just wanted to check ifyou're doing anything different there,or if that's just simply the outputof market conditions and the rate rises that we've seen.Thank you.Thank you. I'll touchon the first two and then Anna if you want to,want to touch on the NTI yields.So as Anna mentioned,the Workspace rollout continues to go well,significant product difference inthis quarter is that we moved fromthe beta version of Workspace for FX tradingto thee now regular commercial version.And that's going well.The rollout continues to gowell is as we mentioned at the half-year,we were a little bit ahead ofschedule there and pleased with how that was going.We still do have a few more, I'llsay a couple more years ahead of us in termsof the continued rollout.By the end of this year,we expect to have at least beta versions ofthe remaining Workspace productscoming out into the market,so looking forward to that. Data platform,we continue to make progress.Probably nothing specific to mention there,but in terms of products,we're adding content to Workspace.We've acquired TORA in this quarter.Looking to integrate that into the broader business.We've made a number ofother products available through Workspace,whether that relates to our fixed income analytics,whether it relates to someinteresting things we're doing ina beta testing manner with our index product, et cetera.So good progress there and we lookforward to continuing to push forward on those fronts.Your question on the outlookfor the fixed income business.Really hard for us to predict the futureon this one. I would say,and we've said this in the past.Uncertainty around interest rates,uncertainty around inflation tendsto be good for these businesses.And we still seeplenty of uncertainty in this environment.So, and to be clear,as we've mentioned in the past, for us,it's not about the directionality of rates,but it's about the movement and the uncertaintythat leads our customers to do a lot of repositioning.So that's really about as specific as we can be on that.And then Anna over to you on NTI yields.Yeah, they are a little bit lower.No, we haven't, we're not doing anything differently.That's just a reflection of the market environment.That's great. Thank you.Thank you.The next one is from Kyle Voigt of KBWPlease go ahead.Hi. Good morning. Also just a follow up forme on the cost of sales question earlier.Can you just remind us where the bulk ofthat line is coming from?I know OTC clearing andFTSE Russell are two large drivers,as well as some past paths on the recoveries.But is there anything else to note interms of outsize drivers of that line?And when we're thinking aboutthe medium-term growth of that cost of sales line,is there any reason why the growththere should be higher than the growth that wesee in LCH OTC clearing or FTSE Russell, for example. Thank you.Sure.So, the big drivers of the cost of sales line,are the ones that you've called out.So the revenue share inLCH, transaction volumesBut the one that you didn't call outis the news agreements, andthe Reuters News agreement sitsin that line in Data and Analytics.So those are the big drivers. In termsof the pace of growth ofthose drivers, you're absolutely right thatwe shouldn't see growth in the cost of sales line aheadof the revenue line in things like LCH,however, the nature ofthe revenue share agreementmeans that it's a little bit lumpy.So in any given quarter it can be a little bit distorted,but over a 12-month basis,higher revenue is going to drive higher cost of sales,but we'll get outsized benefit onthe value of the revenue and the niceleverage down the P&L.Understood, thank you.Thanks, Kyle.The next one is from Russell Quelchof Redburn. Please go ahead.Good morning.Just a couple of questions.Firstly, one relating tothe operating performance in Investment Solutions.Can you provide some colour on howyou delivered flat year-on-yearat the face revenue growth ina period where markets fell.Wondering if that is the resultof flows into new products.And secondly, just stepping away fromthe operational performance of the business.Just wanted to ask regarding the timing ofa potential placing of the Blackstone stake, am I rightto suggest that even though the lockup expires in Jan,that they're actually unable to place stockuntil after the full year results in March,as they're insiders? And can I alsoclarify, are Blackstone able to sell when you're,when you're doing your buyback in the open market? ThanksThank you. Anna, why don't you takethe first question and I'll answer the second.Yeah, so, you're absolutely right.Our AUM growth has been flat ina in a market where we've seen declines.So couple of factors there.Firstly, we have some caps and collars aroundour AUM structures sothat we don't see the full benefit on the upside,but we're also protected on the downside, and separately.Secondly, to your point,we've outperformed the market because we have seensome quite significant inflows inthe period and that has offset in part the market movement.And we're pleased with the progress we're makingon actually rolling out new productsand the inflows that we're getting with it.Thanks Anna, and to your question on Blackstone and timing.We're not in a position tocomment on anything specific aroundtiming other than the first trancheof the lockup expires at the end of January.And then beyond that, there's really an element ofthis that's up to Blackstone. On your second,second part of that question,with respect to the buyback,they are able toparticipate proportionately in the buyback.Just to put some numbers around that,the buyback that we have completedin the first tranche wasabout 230 million or so.And so they have about a third of our, of our stake.So you should assumethat they participated about a third of that.So.Okay, yeah sorry, Can I just pull out from those two then?Anna, can you just give a bit more detail as to whereparticularly new productrollout has come and where the flows have come.And David, can I just clarify?So Blackstone aren't able to sell until March becausethey're insiders giventheir position on the board, is that right?So we're seeing some quite nice inflowsacross the board actually acrossour customer base and across,across the new product that we're launching.So I wouldn't point it to any one specific area.And I quite like that,in that broad-based performance is good.So yeah. Nothing specifically to call outthat's driving that beyond,we're launching a lot more productthan we have done historically.I think we've talked about that before.I think we've actually said that the pace at which we'rerolling out new products this yearis we've already rolled out atthe half-year kinda more than we hadin the last prior years.And we're saying that what's comingwith that is that slowly we'reseeing the the assets follow it effectively.Your second question. It's true thatBlackstone is an insider given the position on the board.And so you can take the conclusions from that interms of timing with respectto our full year results in early March.But we're not going to get into a practice of beingdrawn on specific timingaround what Blackstone is gonna be doing.Yeah. Good.Thanks and yeah appreciate that. Thank you.The next one is from Enrico Bolzoni of JP Morgan.Please go ahead.Hi. Good morning.Actually, my question has been asked, so thank you I'm going to passOkay.The next one is from Ben Bathurst of RBC CM.Please go ahead.Morning all I've got three questions, if I may.Firstly, on Post Tradejust to follow up on the collateral level,could you perhaps give an indication of whatthe level was as you exited the quarter, becauseI think €151 billion was the average for Q3.And then secondly, on geographical split.Thanks for the colour on the Beijing deal.In H1 you showed Ithink 15% of income coming from Asia.I wondered if you could just shareroughly what proportion ofthat comes from China as it stands.Thank you.Gonna take this? Yeah. So on the Post Trade collateral level,I don't have the exact number off the top of my head,but I want to say it was in the region of 120,so down from 150,but we'll come back to you precisely on that.And then on the second question,we don't break out revenue by particular country,so nothing to add on the specifics around China.Okay, thank you.The next one is from Johannes Thormann of HSBC.Please go ahead.Hi thanks.Good morning.Johannes Thormanfrom HSBC. Just a follow-up questionon your cost direction.We have previously seen inthe half-year results that costof sales has been going up.But like in the low teensnow accelerating into the high 20s,but you were able to mitigate the other orthe overall cost increase to basically being flat.Is this also happening in this quarter?We don't see the cost thatthe currency mix will also help,or what else behind it?How you can mitigate this big gapin the dollar more. Thank you.Yes. So when we talk about cost of sales,we're talking about cost ofsales on a constant currency basis.And you're absolutely right,48% of our cost overall is exposed to the dollar.And so we do seesignificant currency-driven volatilityon the cost of sales line and also on the cost line.But I guess the important piece is,more of our revenue,so 57% of our revenue is exposed to the dollar.So in the current environmentalthough costs are going up,our revenue is going up even faster.Just to talk about cost ofsales for a moment and maybe tohelp you with why it appears to have accelerated in Q3.So firstly, in the first half, year-on-year,we were seeing better revenue growth and thathas driven our cost of sales, on,and I'm talking now on a constant currency basis.If your question is,why have we seen cost of sales then accelerate inthe third quarter versus that first half of the year.Really, it's two things.One is the fact that we've seensuch a strong performance inSwapClear because of the very,very volatile market conditions.And you've seen that flow throughboth the strong performancein SwapClear, but also the NTI line.And of course we have a revenue share.And so that revenue shareis reflected in the cost of sales.But you've seen the upside in revenue.And the other reason you've seen cost ofsales go up this quarter isbecause we're starting tosee the impact of the new acquisitions.And so that has, their cost ofsales effectively is starting to show up this quarter.Okay.Understood.Thank you very much.And thank you to Paul for all his help,much appreciated,thank you.Thanks Johannes.Thank you.There are no further questions onthe conference line at the moment,I will now hand the presentation back to Peregrine Riviere,Group Head of Investor Relations.Thank you very much.We actually have no more written questions submitted,so we can end the call here.Thank you very much for joining andwe look forward to seeing you soon.Thank you all.Thank you.