TOP NEWS: London Stock Exchange Group profit up, hails Refinitiv buy

(Alliance News) - London Stock Exchange Group on Friday reported a higher annual profit as ...

Alliance News 5 March, 2021 | 8:35AM
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(Alliance News) - London Stock Exchange Group on Friday reported a higher annual profit as revenue crept up, and it hailed its "transformational" purchase of financial market data and infrastructure provider Refinitiv.

Shares in the trading and clearing operator and index calculator were down 6.5% at 137.86 pence in London in morning trading.

For 2020, LSEG posted total revenue of GBP2.12 billion for 2020, up 2.9% from GBP2.06 billion in 2019, and total income rose 6% to GBP2.44 billion from GBP2.31 billion. The figures were in-line with company-compiled consensus forecasts.

Capital Markets revenue was up 8% on a like-for-like basis. Post Trade revenue was up 7%, driven by clearing house LCH. Revenue at index provider FTSE Russell rose by 3%.

LSEG noted that more than GBP718 billion was raised on its fixed income markets, of which GBP75 billion was raised through Covid-19 response bonds.

LSEG reported pretax profit of GBP685 million in 2020, up 5.2% from GBP651 million in 2019.

The stock exchange operator declared a total dividend of 75.0p, up 7.1% from 70.0p paid out in 2019. This also was as expected. Analysts had predicted LSEG to up its payout for 2020 to 75.2p.

London Stock Exchange Group said it delivered a strong financial performance, saying revenue growth continues across its businesses, despite challenging market conditions

LSEG also hailed its "transformational" USD27 billion acquisition of Refinitiv saying it will ramp up its growth strategy and position as a leading global financial markets infrastructure and data provider by adding leading data, analytics and multi-asset class capital markets capabilities. The deal was announced in August 2019 and completed in January 2021.

Through its market data terminals and trading platforms, including FXAll and Tradweb, Refinitiv has over 40,000 customer institutions across 190 countries. The Refinitiv data platform has more than 150,000 data sources, as well as Reuters news.

Now that deal is completed, Refinitiv's former shareholders - Thomson Reuters and a consortium of investments funds affiliated with Blackstone Group - own about a 37% economic interest and a 29% voting interest in LSEG.

LSEG set out financial targets for the combined company in August 2019, which remain unchanged "except to reflect the divestment of Borsa Italiana and the consequent faster timescale to move back within the target leverage range."

These targets include a 5% to 7% compound annual growth rate over the first three years, and over GBP225 million of annual run rate revenue synergies phased over five years. LSEG also aims for more than GBP350 million of annual run rate cost synergies also over five years.

Other targets include a 50% adjusted earnings before interest, tax, depreciation, and amortisation figure, excluding recoveries, in the medium terms plus the reduction of leverage to within the 1 to 2 times target range within 24 months of completing the Refinitiv purchase in January. It further aims for more than 30% adjusted earning per share accretion after the first year, further increasing in years two and three.

"The group is well positioned for future growth despite an uncertain macro-economic and regulatory environment. The group will also continue to invest in new products and services as well as operational excellence and resiliency. I look forward to working with the executive team to deliver for our customers, shareholders and other stakeholders," said Chief Executive Officer David Schwimmer.

By Anna Farley; annafarley@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
London Stock Exchange Group PLC 7,700.00 GBX -2.53

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