London Stock Exchange Group Q1 2021 Trading Statement

Highlights

Note: Unless otherwise stated, variances refer to growth rates on a pro-forma constant currency basis, excluding the impact of a deferred revenue accounting adjustment¹, to provide the best view of underlying performance

· Q1 total income (excluding recoveries) up 3.9%, with good growth in Data & Analytics and Capital Markets; down 1.2% on a reported pro-forma basis (reflecting currency headwinds as USD declined 8% year on year versus GBP and the impact of the deferred revenue adjustment)

· Acquisition of Refinitiv successfully completed on 29 January 2021 and execution of integration plan well underway to deliver on strategic and financial benefits

· Approximately £40 million of cost synergies already realised on a run-rate basis and new products arising from the combination now launched

· Successfully conducted c.£5 billion bond issuance with longer-term financing structure now in place at a blended cost of 1.6%² across all LSEG debt

· Borsa Italiana Group divestment progressing well and expected to complete shortly in Q2

· Investor education events scheduled to give deeper insight into the new LSEG business; first event to be held on 2 July 2021 with an overview of Data and Analytics and deeper dives into Trading and Banking, Enterprise Data, and Customer and Third-Party Risk businesses; subsequent events to be announced to cover the remaining businesses

¹ The 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. The result of this accounting treatment is a £22m adjustment reducing revenue for Q1 2021. The vast majority impacts the Data & Analytics business with a smaller impact applied to the FX venues business within Capital Markets. There will be further immaterial impacts in subsequent periods within 2021. Further information is available in the “Accounting and modelling notes” section. Constant currency variance shows underlying financial performance, excluding currency impacts, by comparing the current and prior year period at consistent exchange rates.

² Reflects blended interest cost post divestment of Borsa Italiana Group

David Schwimmer, CEO said:

“LSEG has delivered good results in the first quarter, with strong underlying performance across all divisions. 

“Following the completion of the acquisition of Refinitiv, we are executing on our integration plans to deliver the long-term strategic and financial benefits of the transaction; we are making good progress on our synergies and have already realised £40 million of run-rate cost savings.  We have also begun to implement a number of programmes to deliver product enhancements and offer additional data and services for our customers as we execute on our growth ambitions.

“The successful re-financing of our bridge facilities with longer-term debt at the end of Q1, together with the reduction in leverage with the proceeds from the expected completion of the divestment of Borsa Italiana, puts LSEG in a strong financial position.  We look forward to further progress during the rest of 2021. “

Q1 2021 Summary – Pro-forma¹

Variances are provided against reported and constant currency results. Commentary is provided on the constant currency variance (excluding deferred revenue adjustment) to provide the best insight into underlying performance. Please refer to the Accounting and Modelling notes section for more information on relevant accounting adjustments.

¹ Pro-forma assumes that the acquisition of Refinitiv took place on 1 January 2021 for the current financial year and 1 January 2020 for the prior financial year comparator figure. Both figures exclude the financial contribution from the businesses contained within the Borsa Italiana divestment

² Q1 2020 comparator figure differs to the previous disclosure due to the treatment of FX and other adjustments. For more information please refer to the “Accounting and modelling notes” section

³ Reported variance is the difference between current and prior year periods using FX rates prevalent at each time, therefore any changes in the FX rates are also reflected in the variance percentage alongside business performance

⁴ Constant currency variance shows underlying financial performance, excluding currency impacts, by comparing the current and prior period at consistent exchange rates

⁵ The deferred revenue adjustment is explained in the “Accounting and modelling notes” section

Pro-forma¹ Q1 2021 Highlights

· Data & Analytics : revenues up 4.7%

· Trading and Banking Solutions down 0.2% – resilient overall performance with growth in Banking products offset by a continued reduction in Trading products; Trading rate of decline improved

· Enterprise Data Solutions up 3.1% – continued good customer demand for pricing and reference data (non real-time data) supported by our ongoing investment in the broad range and depth of data delivered via feeds

· Investment Solutions up 6.6% – reflects good growth in FTSE Russell with subscriptions up 8.0% and AUM-based revenues up 7.4%, with stronger equity markets driving record ETF levels. Positive early signs of cross-selling activity between FTSE Russell and Refinitiv data products as well as cost internalisation via a number of FTSE products using Refinitiv data

· Wealth Solutions up 4.0% – increase driven in part by revenue contribution from the Scivantage acquisition in H1 2020, with partial offset by lower Beta performance against strong comparator in Q1 2020 (associated with pandemic-related volatility)

· Customer and Third-Party Risk Solutions up 33.8% – double-digit organic growth in the core entity screening business reflecting growth in the corporate customer base and increased revenues from EMEA and Asia; and additional contribution from the Red Flag Group and GIACT acquisitions 

· Capital Markets : revenues up 6.4%

· Equities revenues down 1.6% – record levels of equity capital raising led to stronger primary markets revenue, offset by secondary markets revenue where volumes were lower than the strong prior year (associated with pandemic-related volatility)

· FX revenues down 6.3% – resulting from lower transaction volumes against strong prior year comparator (associated with pandemic-related volatility)

· Strong growth within Fixed Income, Derivatives and Other, up 12.8% – driven by strong performance at Tradeweb² which saw a record $1.1 trillion of total Average Daily Volume traded in the quarter, an increase of 18% driven by volume growth in US government bonds, Swaps / Swaptions and Repo transactions

· Post Trade³ : total income down 0.9%; revenues up 5.4% before Net Treasury Income

· OTC Derivatives revenue up 1.1% and client clearing volumes up 2% reflecting the continuing strength of the SwapClear service when compared to the elevated performance in Q1 2020 driven by Covid-19 related volatility. SwapClear was well positioned to benefit from increased market activity driven by the ongoing debate regarding potential reflation and central bank policy

· Securities & Reporting up 8.3% with strong growth in Euro denominated Repo volumes as customers were able to benefit from the Balance Sheet and Settlement netting efficiencies provided by the service. Equity volumes continued to perform strongly, up 3% on Q4 2020, although they were down on the high volumes from Q1 2020

· Non-Cash collateral revenues up 15.8% mainly driven by an increase in average non-cash collateral balances

· Net Treasury Income revenues down 16.2%, as expected, reflecting a strong prior year comparator; collateral balances and returns have now reverted to more normalised levels

¹ Pro-forma assumes that the acquisition of Refinitiv took place on 1 January 2021 for the current financial year and 1 January 2020 for the prior financial year comparator figure. Both figures exclude the financial contribution from the businesses contained within the Borsa Italiana divestment

² Tradeweb Q1 2021 results will be released on 29 April 2021 and will provide more detailed commentary on performance

³ In Q1 2021, the Post Trade division changed the presentation of its revenues to reflect the way the business is managed and is now split across OTC Derivatives, Securities & Reporting, Non-Cash Collateral and Net Treasury Income. Further detail on the businesses contained in these splits is detailed in the Post Trade section below

Statutory financials¹

¹ Statutory figures for Q1 2021 incorporate revenues from Refinitiv for February and March 2021. Revenues associated with the Borsa Italiana Group divestment are excluded from both periods

² Q1 2020 comparator figure refers to LSEG Q1 2020 results as reported, adjusted for the removal of the financial contribution of Borsa Italiana and provided on current presentation of the P&L