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FTSE 100: London Stock Exchange launches £750m share buyback

London Stock Exchange sign in the City of London
The London Stock Exchange Group said it was boosted by stronger revenue growth and cost management as it pointed to 'good momentum' going into the second half of the year. Photo: Press Association

The London Stock Exchange Group (LSEG.L) found favour with investors on Friday after it announced a £750m ($910m) share buyback.

The 300-year-old financial markets and data group is set to return the cash to shareholders over the next year thanks to a 73% surge in first-half profits to £803m.

There was also strong income growth across all divisions, with pro-forma total income, excluding recoveries, up 6.2% on the same period last year.

LSEG said it was boosted by stronger revenue growth and cost management as it pointed to "good momentum" going into the second half of the year.

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It added that profitability was also firm as it stayed on track with costs and savings targets from the near-£20bn takeover of Refinitiv in 2020.

Its acquisition of Refinitiv has transformed the company into a group where financial market data and analytics are larger than all its other business lines combined. This has put it up against firms such as data leader Bloomberg and S&P Global.

“LSEG has delivered a strong first-half performance with continued revenue growth across our businesses,” David Schwimmer, chief executive, said.

“We are managing costs well and we continue to make progress on achievement of synergies.

“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.”

LSEG is also set to pay an interim dividend of 31.7p per share, up 27% on the same period last year.

Shares rose as much as 4% on the day on the back of the news, before retreating slightly.

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“A small beat and we are reassured by the unchanged cost outlook commentary," analysts from Citi said in a note.

Meanwhile, Charlie Huggins, head of equities at Wealth Club, said: “Around three quarters of LSEG’s revenue is recurring, and the products and services it provides tend to be mission-critical to customers. This makes it a pretty resilient business, as these results highlight.

“High inflation is less of a problem for LSEG than for most businesses, thanks to good pricing power which results in consistently solid margins.

“The business model is also highly scalable and capital light. This limits the need to take on more staff in order to grow, while on-going cost savings from the Refinitiv merger provide an additional efficiency lever to pull.”

But he added: “However, it’s too early for LSE to declare victory. Transformational acquisitions like this are always easier to plot on PowerPoint than they are to pull off in practice.”

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