Half-year Report

London Stock Exchange Group PLC

03 August 2023

 

London Stock Exchange Group plc

Interim results for six months ended 30 June 2023

Delivering on our growth potential: strong H1 performance; 2023 revenue growth expected to be towards the upper end of 6-8% guidance

David Schwimmer, CEO said:

"LSEG delivered strong, broad-based growth in the first half. Data & Analytics is growing faster than it has for many years, with the ongoing improvements to our offering and strengthened customer relationships increasingly reflected in financial performance. Post Trade once again demonstrated the critical role it plays in helping customers manage risk in uncertain markets, delivering outstanding growth. Our Capital Markets businesses also made progress, despite a very strong prior period. LSEG's resilient business model and the quality of our earnings, diversified by customer, geography, product and asset class, position us well for further growth in the second half and beyond.

"Through our multi-year investment programme we are delivering better solutions and higher customer satisfaction, and building a faster-growing, more scalable business. We are progressing well with the implementation phase of our transformational strategic partnership with Microsoft, with customers beginning to see the benefits from next year."

Six months ending 30 June, reported	2023 £m	2022 £m	Variance %		Constant currency variance %		Organic variance %
Total income (excl. recoveries)	3,990	3,569	11.8%		7.9%		6.5%
Recoveries1	189	166	13.9%		4.4%		4.4%
Total income (incl. recoveries)	4,179	3,735	11.9%		7.8%		6.4%
Adjusted2
EBITDA	1,872	1,799	4.1%		5.8%		6.4%
EBITDA margin	46.9%	50.4%
Operating profit	1,418	1,408	0.7%		4.1%		5.0%
Adjusted earnings per share	160.9	167.4	(3.9%)
Reported
Operating profit	729	897	(18.7%)
Profit before tax	662	803	(17.6%)
Basic earnings per share	77.2	98.0	(21.2%)
Dividends per share	35.7	31.7	12.6%

Financial highlights

(All growth rates relate to H1 and are expressed on a constant currency basis unless otherwise stated)

·	Total income (excl. recoveries) up 7.9%; up 11.8% on a reported basis
·	Accelerating growth in Q2: Total income (excl. recoveries) up 8.4% vs Q2 2022
·	Broad-based growth: Data & Analytics +7.6%, Capital Markets +1.5%, Post Trade +19.2%
·	Strong subscription revenue: organic annual subscription value (ASV) up 6.9% at June 2023, consolidating the significant improvements made over the last two years
·	Good profitability: adjusted EBITDA up 5.8%. EBITDA and margin impacted by non-cash FX-related balance sheet adjustments. On track to deliver full year adjusted EBITDA margin around 48%3 excluding these items
·	Basic EPS -21.2% on a reported basis; adjusted EPS -3.9% to 160.9 pence, impacted by non-cash FX items and higher effective tax rate
·	Updated leverage target of 1.5-2.5x operating net debt to adjusted EBITDA (previously 1.0-2.0x) reflecting diversified and recurring nature of the Group's revenues; day-to-day leverage expected around the middle of this range (H1 2023: 1.8x); no credit rating impact anticipated

Strategic progress and outlook

·	Full year constant currency growth in total income (excl. recoveries) now expected to be towards the upper end of the +6-8% guidance range
·	Other 2023 targets reiterated: adjusted EBITDA margin c.48%3, business-as-usual capex c.£750 million4
·	Connecting our businesses: £107 million runrate revenue synergy delivery at end of H1; FXall/Tradeweb solution for EM debt now live
·	Investing in our products: Acadia acquisition reinforces our leading position in Post Trade solutions; new FX Matching platform to launch in H2
·	Harnessing the power of AI technologies: AI embedded in many products, incl. new Advanced Dealing solution for FX; partnering with customers as they deploy AI technologies
·	Strong start to Microsoft partnership: good progress on product development, Design Partner Programme set up
·	Significant shareholder returns: interim dividend +12.6% to 35.7p, £400 million returned via buyback in H1; up to £750 million directed buyback expected by April 2024

This release contains revenues, costs, earnings and key performance indicators (KPIs) for the six months ended 30 June 2023. Revenues and costs associated with the BETA divestment were classified as discontinued and excluded from the prior period. 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 mainly relate to fees for third-party content, such as exchange data, that is distributed directly to customers.

²The 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.

³ Based on GBP:USD of 1.21 and GBP:EUR of 1.14, excluding Acadia and non-cash balance sheet FX movements.

⁴ Excludes ROU assets.

H1 Interim results investor and analyst presentation, webcast and conference call:

David Schwimmer (Chief Executive Officer) and Anna Manz (Chief Financial Officer) will host a webcast presentation on LSEG's 2023 interim results for analysts and institutional shareholders today at 10:00am (UK time). This will be followed by the opportunity to ask questions via the conference call line.

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

Webcast:
https://www.lsegissuerservices.com/spark/LondonStockExchangeGroup/events/98bb9940-98cb-4c42-b7b4-20dd8a2f70f8

Conference call:
https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=6796597&linkSecurityString=11538923c9

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

The interim results for the six months ended June 2023 have been submitted in full unedited text to the Financial Conduct Authority's National Storage Mechanism and will be available shortly for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

The results are also available in full on the corporate website at https://www.lseg.com/en/investor-relations/financial-results/2023-h1-interim-results.

Capital Markets event

We are hosting a Capital Markets event in London on 16 (afternoon/evening) and 17 November 2023. The event will combine plenary presentations, which will be webcast, and a day of break-out sessions enabling investors and analysts to engage in-depth with management across a wide range of LSEG's businesses. We strongly encourage in-person attendance. Please register your interest with the Investor Relations team at [e-mail].

Contacts: London Stock Exchange Group plc

Media:

Lucie Holloway / Rhiannon Davies
[phone]

[e-mail] 

Investor relations:

Peregrine Riviere / Chris Turner
[e-mail]

Additional information can be found at www.lseg.com

 

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