A leading financial markets infrastructure and data provider London Stock Exchange Group plc Annual Report 2020 Our purpose Driving financial stability, empowering economies and enabling customers to create sustainable growth. Our vision As a leading financial markets infrastructure and data provider, we want to shape the future of our industry to serve our customers and markets better. Further information on London Stock Exchange Group can be found at: www.lseg.com London Stock Exchange Group plc 10 Paternoster Square London EC4M 7LS Telephone: +44 (0)20 7797 1000 Registered in England and Wales No. 5369106 ABOUT LSEG PLC CONTENTS LSEG (London Stock Exchange Group) is Strategic Report more than a diversified global financial Sign-off for the Strategic Report is provided in markets infrastructure and data business. the Directors’ Report on page 124. We are dedicated, open-access partners with a commitment to excellence in delivering the Chair’s statement 2 services our customers expect from us. With Chief Executive Officer’s statement 4 extensive experience, deep knowledge and What we do – our business model 8 worldwide presence across financial markets, Overview of Group activities 12 we enable businesses and economies around Our strategy 14 the world to fund innovation, manage risk and Market trends and our response 16 create jobs. It’s how we’ve contributed to Principal risks and uncertainties 24 supporting the financial stability and growth Executive Management Team 40 of communities and economies globally for more than 300 years. Strategic Report: 2020 Review Highlights 43 LOOKING FORWARD Financial Review 44 Supporting Sustainable Growth 54 In January 2021, LSEG completed the Board engagement with stakeholders 68 acquisition of Refinitiv, which transforms the Compliance with section 172(1) 70 size, scale and range of our business activities. In the first section of the Strategic Report of Governance this Annual Report (pages 2–41), we provide Board of Directors 73 information on LSEG in its new form with a Corporate governance 76 focus on what this means for the shape of the Complying with provisions of the Code 84 Group going forward. The second section of Report of the Nomination Committee 88 the Strategic Report (pages 42–71) provides Report of the Audit Committee 91 commentary on the Group’s financial Report of the Risk Committee 96 performance in 2020, and relates to the Directors’ Remuneration Report 98 financial statements and notes in the Group Directors’ Report 120 Financial Statements section of this Statement of Directors’ responsibilities 125 Annual Report. Independent Auditor’s Report 126 Group Financial Statements Consolidated Income Statement 135 Balance Sheet 137 Cash Flow 139 Changes in Equity 140 Notes to financial statements 142 Shareholder Information Glossary 198 IR and Financial Calendar 201 Chair’s statement Don Robert Chair Overview LSEG’s role as a systemically important business was again demonstrated in 2020 as financial markets and the wider global economy faced the significant challenges of the Covid-19 pandemic and macro-economic uncertainty. Throughout, LSEG’s role as a our businesses have focused on operational resilience, delivering continuity of service to our customers, maintaining orderly markets and systemically important managing market risk. The Group has continued to perform well with total income up 6% to £2.4 billion and adjusted earnings per share up 5%. business was again We maintain a strong financial position with good cash generation supporting investment and product development and have proposed a final demonstrated in 2020 dividend of 51.7 pence per share, representing a total dividend of 75.0 pence per share, up 7%. Refinitiv We successfully completed the acquisition of Refinitiv in January 2021. It is a transformational transaction, strategically and financially, and positions the Group for long-term sustainable growth. Refinitiv brings highly complementary capabilities in data, analytics and capital markets. We share a commitment to an Open Access philosophy, working in partnership with our customers, and this will remain a fundamental pillar of our business strategy. 2 London Stock Exchange Group plc Annual Report 31 December 2020 Chair’s statement Strategic Report Following the completion of the Refinitiv transaction, Martin Brand, Erin Brown and Douglas 6% Steenland have joined the LSEG plc Board as As a global company, we take Growth in total income Non-Executive Directors. They have also been appointed to LSEG plc’s Nomination Committee. our responsibility to supporting In November, Anna Manz joined the Group as Chief the transition to a more Financial Officer and a member of the Board. sustainable economy seriously 209.7 Culture The Board, along with the Executive Committee, pence seeks to promote a culture of Group-wide 6% of the market capitalisation of all global listed Adjusted earnings collaboration and customer focus. LSEG has companies. LSEG offers companies and investors per share, up 5% made good progress this year on these efforts, a comprehensive green and sustainable product which you can read more about on page 57. offering providing access to capital and world- The Board continues to engage directly with class data and analytics. In September, FTSE employees, with candid feedback provided to Russell launched its enhanced Green Revenues Directors through a series of informal meetings 2.0 Data Model, a powerful tool that investors can 75.0 as well as more formal interaction. The Group has use to quantify a company’s contribution to the also strengthened its commitment to diversity green economy in a single percentage of revenue pence and inclusion, initiating six dedicated workstreams, figure. A high degree of overlap with the incoming Total dividend for each headed by an Executive Committee member, EU Taxonomy will also allow asset managers to 2020, up 7% focused on making LSEG a more inclusive and demonstrate the proportion of a fund that racially diverse organisation. contributes to the green economy. Sustainability As a listed company, LSEG is also carefully LSEG is committed to supporting the communities considering the climate risks and opportunities in which we operate around the world, partnering facing our own business. LSEG was one of the with global and local charitable organisations. first companies in the financial services sector Responding to the impact of Covid-19, LSEG and to commit to a long-term science-based carbon the LSEG Foundation donated £3.3 million in reduction target, committing to a 40% reduction In October, shareholders approved the sale of 2020 for emergency relief support and longer- in our carbon emissions by 2030. In 2020, our the Borsa Italiana Group to Euronext, in order term recovery efforts. In May, LSEG joined the Environmental Management Group continued to facilitate regulatory approval of the Refinitiv National Business Response Network as a to make good progress against our sustainability transaction. Upon closing, in the first half of 2021, founding partner, making a £1 million investment. targets to improve environmental efficiency year LSEG is expected to receive proceeds in cash The National Business Response Network was on year, resulting in a 9% reduction in total (before deductions of applicable taxes and other launched in April by Business in the Community market-based emissions compared to 2019. transaction related costs) of €4.325 billion plus (BITC) and The Prince’s Responsible Business Full details can be found later in this report on an additional amount reflecting cash generation Network. The work of BITC is closely aligned with page 64. to completion. It is LSEG’s intention to use the the Group’s longstanding commitment to supporting net proceeds from the Transaction to repay SMEs, which are critical to the UK economy. Summary indebtedness related to the Refinitiv Transaction Despite the challenges faced by the pandemic and for general corporate purposes. The Borsa In November, the LSEG Foundation celebrated and macro-economic and political uncertainty, Italiana Group has played an important part in its 10th anniversary. Since its launch in 2010, the LSEG has delivered another good financial LSEG’s development and we are confident that, Foundation has donated over £11 million to help performance. LSEG holds a privileged position at under Euronext’s ownership, it will continue to empower people and enrich communities in the the heart of financial markets and the successful succeed and contribute to the Italian economy locations where we operate. The Group also completion of the Refinitiv transaction will enable and to European capital markets. encourages colleagues to support charitable the Group to further capitalise on the digital initiatives, offering two paid volunteering days transformation of financial markets infrastructure. Governance per year. Since the scheme launched in 2017, The Board seeks to operate to high governance employees across our locations have donated On behalf of the Board, I would like to and ethical standards. Further detail is available in over 7,000 hours and, despite the challenges thank our employees for their dedication and the Board’s Governance report starting on page of remote working, have continued to fundraise professionalism during what has been a very 76. In preparation for the proposed divestment of and support charities virtually in 2020. demanding and challenging year. I look forward the Borsa Italiana Group to Euronext, Raffaele to working with the Board and the Executive Jerusalmi and Andrea Sironi stepped down from As a global company, we take our responsibility Committee to continue to develop our global the Board in November. Ruth Wandhöfer and to supporting the transition to a more sustainable business in partnership with our customers. Marshall Bailey also stepped down from the Board economy seriously. The debate among issuers, in March and September respectively, and David investors, regulators, policy makers and wider Don Robert Warren retired as CFO in November. On behalf society is quickly evolving and LSEG remains well Chair of the Board, I would like to thank them for the positioned to engage on and lead this discussion.