Latest Results

Latest Results

H1 2022 Interim Results

5 August 2022



David Schwimmer, CEO said:

“LSEG has delivered a strong first half performance with continued revenue growth across our businesses. We are managing costs well and we continue to make progress on achievement of synergies.

"We provide solutions solving critical issues for our customers, with a high proportion of recurring subscription revenues and structurally growing transactional revenues that benefit from volatility. Our cash generation is allowing us to actively deploy capital across organic and inorganic investments, grow our dividend and commence a share buy-back programme, driving further value for our shareholders. We are successfully executing on our strategy, have good momentum going into the second half and our targets remain unchanged."



H1 2022 highlights – Execution on strategy driving strong financial performance

Note: Unless otherwise stated, variances refer to growth rates on a constant currency basis, with the comparator, H1 2021, on a pro-forma basis which also excludes the impact of a deferred revenue accounting adjustment11.

  • Strong progress in H1 across all divisions, and momentum continuing into H2

  • Continued delivery on revenue and cost synergies; all targets unchanged

  • Successfully executing on organic and inorganic investment opportunities to drive growth, build a more agile and efficient business and enhance our customer offering

  • Well positioned for the current environment; providing high value solutions for customers’ critical needs

  • Launching £750 million share buy-back over 12 months with the first tranche to commence immediately

  • Strong income growth across all divisions, with pro-forma total income (excluding recoveries) up 6.2%; up 7.0% adjusting for Ukraine and Russia conflict impact2

  • ASV growth metric on a like-for-like basis continues to improve, up 5.4% at the end of H1 (Q1: 4.9%); improved retention and new sales driving the increase

  • Pro-forma adjusted operating expense increase of 4.3% reflects lower phasing of costs in H1 2021; cost guidance for low-single digit growth in 2022 maintained despite inflationary backdrop

  • Adjusted EBITDA margin of 48.8%3; on track to deliver margin target of at least 50% by end of 20233Pro-forma AEPS up 21% to 167.4p

  • Pro-forma AEPS up 21% to 167.4p

  • Robust cash generation in H1 and completion of two acquisitions – GDC and MayStreet; Quantile and TORA expected to complete in H2

  • Leverage is inside our 1-2x target range within 18 months of the Refinitiv acquisition

  • Interim dividend up 27% to 31.7 pence per share

This release contains revenues, costs, earnings and key performance indicators (KPIs) for the six months ended 30 June 2022 (H1). H1 2022 is compared against H1 2021 on both a statutory and pro-forma basis. Pro-forma figures assume that the acquisition of Refinitiv took place on 1 January 2021. Revenues and costs associated with the BETA divestment have been classed as discontinued and are excluded from all periods. Revenues and costs associated with the Borsa Italiana group divestment, which completed in H1 2021, are also excluded. Constant currency variance is calculated on the basis of consistent FX rates applied across the current and prior year period. For more information on accounting treatments and approach to FX please refer to the “Accounting and modelling notes” section below. Within the financial information and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes.

1The deferred revenue impact is a one-time, non-cash, negative revenue impact resulting from the accounting treatment of deferred revenue within Refinitiv’s accounts which have been re-evaluated upon acquisition by LSEG under purchase price accounting rules. This reduced H1 2021 revenue by £23m, mainly in Data & Analytics with a smaller impact in the FX business within Capital Markets. There is no material impact in 2022. More details can be found in the “Accounting and modelling notes” section

2Growth rates excluding the Ukraine / Russia conflict impact have been calculated by excluding income in the region and from sanctioned customers and related business from both periods

3This margin figure has been adjusted to remove a non-cash FX-related balance sheet adjustment which is a £59m credit within adjusted operating expenses in H1 2022. This is explained further in the ‘Year-on-year pro-forma financial performance’ and ‘Embedded Derivatives’ sections. Adjusted EBITDA margin is adjusted EBITDA divided by Total Income (excl. Recoveries).



H1 2022 results analyst and investor conference call

The Group hosted a virtual-only webcast and conference call for its H1 Interim Results for analysts and institutional shareholders on 5 August at 09:00am (UK time). On the call was David Schwimmer (Chief Executive Officer), Anna Manz (Chief Financial Officer) and Paul Froud (Group Head of Investor Relations). View a replay of the webcast below.

  

 

H1 2022 Interim Results - Summary

Continuing operations

H1 2022

£m

Pro-forma

H1 20211

£m

Variance2

%

 

Constant Currency Variance3

%

Constant Currency Variance

(excl. deferred revenue adjustment) 3,4

%

Data & Analytics

2,354 

2,164 

8.8% 

 

5.0% 

4.0% 

Capital Markets

720 

616 

16.9% 

 

13.0% 

12.9% 

Post Trade

483 

446 

8.3% 

 

8.5% 

8.5% 

Other

12 

14 

(14.3%)

 

(14.2%)

(14.2%)

Total income (excl. recoveries)

3,569 

3,240 

10.2% 

 

6.9% 

6.2% 

Recoveries

166 

178 

(6.7%)

 

2.9%  

1.8%  

Total income (incl. recoveries)

3,735 

3,419 

9.2% 

 

6.7% 

6.0% 

 

 

 

 

 

 

 

Cost of sales

(504)

(452)

11.5% 

 

6.6% 

6.6% 

Gross profit 

3,231 

2,967 

8.9% 

 

6.7% 

5.9% 

 

 

 

 

 

 

 

Adjusted operating expenses before depreciation, amortisation and impairment 5

(1,433)

(1,397)

2.6% 

 

4.3% 

4.3% 

Income from equity investments

-  

11 

- 

 

- 

- 

Share of profit / (loss) after tax of associates

1 

(2)

- 

 

- 

- 

Adjusted earnings before interest, tax, depreciation, amortisation and impairment 5

1,799 

1,579 

13.9% 

 

8.4% 

6.8% 

Adjusted EBITDA Margin 6

50.4% 

48.7% 

 

 

 

 

 

 

 

 

 

 

 

Adjusted depreciation, amortisation and impairment 5

(391)

(347)

12.7% 

 

16.3% 

16.3% 

Adjusted operating profit 5

1,408 

1,233 

14.2% 

 

6.2% 

4.3% 

 

 

 

 

 

 

 

Adjusted net finance expense 5

(81)

(124)

(34.7%)

 

 

 

Adjusted profit before tax 5

1,327 

1,108 

19.8% 

 

 

 

 

 

 

 

 

 

 

Adjusted tax 5

(262)

(233)

12.4% 

 

 

 

Adjusted profit for the period 5

1,065 

874 

21.9% 

 

 

 

 

 

 

 

 

 

 

Adjusted profit attributable to:

 

 

 

 

 

 

Equity holders

934 

767 

21.8% 

 

 

 

Non-controlling interest

131 

107 

22.4% 

 

 

 

 

 

 

 

 

 

 

Continuing adjusted basic earnings per share (p)

167.4 

138.0 

21.3% 

 

 

 

 

Weighted average shares (m)

558 

556 

 

 

 

 

Variances are provided on a pro-forma and constant currency basis. Unless stated otherwise, commentary below is provided on the constant currency variance (excluding the deferred revenue adjustment) to provide insight into performance on a comparable basis. Revenues and costs associated with the BETA divestment have been classified as discontinued and are excluded from all periods. Revenues and costs associated with the Borsa Italiana group divestment, which completed in H1 2021, are also excluded.

1The H1 2021 comparator is pro-forma and assumes that the acquisition of Refinitiv took place on 1 January 2021

2Variance is the difference between current and prior year periods using FX rates prevalent at each time, therefore any changes in the FX rates are reflected in the variance percentage alongside business performance

3Constant currency variance shows underlying financial performance, excluding currency impacts, by comparing the current and prior period at consistent exchange rates

4Excludes the deferred revenue adjustment further explained in the “Accounting and modelling notes” section

5Before non-underlying items

6Adjusted EBITDA margin is adjusted EBITDA divided by Total Income (excl. Recoveries)