LONDON STOCK EXCHANGE GROUP PLC ANNUAL

Capital management

Capital risk Risk description Risk management approach Capital risk relates to the Group’s ability to The Group, which consists of both regulated and unregulated entities, is profitable and strongly cash meet regulatory capital requirements and generative. It can manage its capital structure (which consists of equity and debt capital) and react to minimum internal investment returns. changes in economic conditions by varying returns to shareholders, issuing new shares or increasing or There is a risk that the Group’s entities may reducing borrowings. The Board reviews dividend policy and funding capacity on a regular basis and the not maintain, or have access to, sufficient Group maintains comfortable levels of debt facility headroom. A high-level summary of the Group’s capital structure is presented below: high-quality capital to meet their regulatory, or other obligations. This could result in a loss 2023 2022 of regulatory approvals and/or the imposition Book value of capital £m £m of financial sanctions. Total shareholders’ funds 23,807 25,996 The main capital risks faced by the Group are: Group borrowings excluding lease liabilities 9,063 8,151 — An increased regulatory capital requirement of its regulated companies The Group maintains a Capital Management Policy, the execution of which is overseen by the Group’s — Negative yields on its investments Financial, Investment and Capital Committee. The Group seeks to allocate capital in order to maintain a strong balance sheet, meet regulatory requirements, drive growth and offer suitable returns to shareholders. — An inability to raise debt or equity Regulated entities within the Group monitor compliance with policy and the capital requirements set by their financing as a result of its own poor financial respective regulatory authorities. performance, or poor financing conditions Regulatory and operational capital represents: — Amounts held as cash and cash equivalents and investments in financial assets by regulated entities to satisfy their local regulatory capital requirements — Letters of credit issued by the Group to customers and suppliers The Group’s total regulatory and operational capital is shown below: 2023 2022 Regulatory and operational capital £m £m Total regulatory and operational capital 1,348 1,427 Amount included in cash and cash equivalents 1,329 1,219 1 Includes investments in financial