- Buyback and earnings top expectations

- Synergy guidance for 2022 raised

- Refinitiv acquisition benefits emerge

Shares in London Stock Exchange (LSEG) jumped 3% to £83.86 following the release of first half results which were modestly ahead of consensus estimates and a significantly larger than expected million share buyback..

Management also guided to the faster delivery of revenue and cost synergies, while there was evidence of good underlying cost control.

DATA DRIVEN

The Data and Analytics business continued to perform well, particularly the desktops and FTSE Russell businesses, with revenue of £2,354 million marginally ahead of consensus.

Trading and Banking, which includes the Eikon Premium desktop offering, delivered revenue of £770 million, an increase of 0.7% year on year at constant currency.

Recent investments made within the division appeared to be paying off as revenue accelerated towards the medium-term target of low single digit growth.

Capital markets revenue increased by an impressive 13% year-on year, although post-trade revenue was impacted by weaker over the counter derivatives income and came in a whisker below the consensus forecast at £362 million.

SYNERGY GUIDACE RAISED

Management now expect to deliver £100 million of cost synergies in 2022, bringing the targeted total to a £250 million run rate by the end of this year or around 60% of the total £400 million anticipated by the end of 2025.

Significantly, the group is also now targeting revenue synergies towards the top end of its £40 million-£60 million (run rate basis) by the end of 2022.

BENEFITS OF REFINITIV ACQUISITION

LSE Group has completely reconfigured its business model since 2007, de-emphasising traditional volume-driven activities and positioning itself as an information service business and clearing house for over the counter derivatives.

This new model exposes it to some of the strongest structural trends in the finance industry including exchange traded fund penetration, over the counter clearing, risk management initiatives and quantitative investing.

The acquisition of Refnitiv is transformational for the group, significantly lifting its exposure to information services, and by extension, to recurring fee based revenues.

EXPERT VIEW

Commenting on today’s results, Jefferies analyst Tom Mills said: 'Total income was modestly ahead of consensus, driven by a good performance in the Core Data and Analytics division, particularly the trading and banking and investment solutions.

'Total income growth was at the top end of the 5-7% 2020-2023 compound annual growth rate range’.

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Issue Date: 05 Aug 2022