Good morning, everyone. Let's get started. On Slide 3, LSEG has delivered a strong first half performance, with continued revenue growth across our businesses. Simply put, our strategy is working. We're making great progress in realizing the benefits of the integration, and we are making it easier for our customers to work with us across different parts of the trading life cycle. Customers who know us in one part of their business are seeing the benefits of working with us more broadly, and there is plenty more opportunity ahead. When I say our strategy is working, the numbers we are delivering back that up. As you can see on Slide 4, we continue to hit all of our financial targets. Total income grew 7% or over 10% on a headline basis. We're on track to meet our EBITDA margin.
We have realized GBP 44 million of run rate revenue synergies in the first half, and we continue to deliver ahead of plan on cost synergies. I've talked in the past about the great cash flow generation of this business. That strong cash generation is allowing us to deploy capital across organic and inorganic investments, grow our dividend by 27% in the first half, and confirm the start of a GBP 750 million share buyback program, with the first tranche to begin immediately. Turning to Slide 5. There's a lot of uncertainty in the markets about the current macro environment, including inflation, rising rates, recession risk, and geopolitical challenges. Given that uncertainty, I do want to spend a minute talking about how well-positioned LSEG is to navigate an environment like this.
First, we are highly diversified across geography and products, with over 40,000 customers in 190 countries. Second, we provide critical services to our customers. Many of our products or offerings sit deep within customer workflows, and over 70% of our revenues are recurring. I would suggest that our customers need us even more in an environment like this, as we provide the data and services they need to help them navigate the uncertainty. Third, interest rate volatility is driving growth in our transactional businesses, such as Tradeweb and SwapClear. Last few points, we have multiple levers to manage costs with our people spread geographically and a strong track record of managing technology spend. As I have said, we remain highly cash generative with strong credit ratings and a balance sheet-light business model. Turning to Slide 6.
The combination of our strategy and our business model makes LSEG a very compelling proposition. We have highly recurring subscription revenues diversified across customers, products, activities, and geographies, and we have strong customer retention. We're driving higher growth in a number of our businesses, and we are investing for further growth while building a more agile, scalable, and efficient business, particularly in data and analytics. Let me pause there and hand over to Anna to provide more details on our strong first half. I'll then give more color on how we are benefiting from the growing linkages among our businesses. Anna, over to you.
Thanks, David, and good morning. Starting on Slide 8, as David said, we've had another strong half, with 7% growth in total income. All of our divisions are performing well, with progress continuing into the second half. We're seeing a growing contribution from revenue synergies and cost synergies are ahead of expectations, and that firmly puts us on track to deliver our 5%-7% revenue target and our margin guidance of at least 50% on an exit basis at the end of next year. Cash generation continues to be robust, supporting both investment and shareholder returns, b ut the message is clear, we're both investing and improving execution, and we're making good progress on building a sustainably stronger business that delivers high-quality, broad-based growth. I'll share more detail on this over the next few slides.
I'm going to focus on constant currency performance, excluding the actions we've taken around the Ukraine-Russia conflict, as this gives you the best view of the underlying strength of our business. As you've heard, we're well-positioned for the current environment, and you can see that on Slide 9. All of our divisions grew strongly. I'll unpack the 5% growth in data and analytics in a moment. Capital Markets revenues grew over 13%, with new trading functions and services driving double-digit growth at both Tradeweb and FXall. Post Trade was up 9%, with continued growth in repos and record volumes in interest rate swaps. We saw an impact from the Ukraine-Russia conflict. In the full year, it's still expected to be around GBP 60 million, which is roughly one point of revenue growth. We saw some benefit from FX moves in the half.
Let's turn to the strong performance in data and analytics on Slide 10. Over 90% of our data and analytics revenues are from recurring subscriptions, and these continue to accelerate, growing 5.1% in the first half. Price growth is broadly consistent over the period shown, so the acceleration reflects the improvement we've delivered in sales, both retention and new sales. The balance of our data and analytics revenues are transactional. The growth here was lower in the first half due to the market environment and the timing of acquisitions in the prior year. We expect the second half to be similar. Coming back to the 90+% of subscription revenues, the best lead indicator for these is ASV growth. You can see how this continues to accelerate on Slide 11. I love this slide. It's the visual representation of a lot of hard work.
Price growth has been consistent over the period, and so the acceleration you see is driven by better retention of our customers, combined with incremental sales to both new and existing customers. We've achieved this by focusing on our performance culture, using data to drive customer-centric execution. To bring that to life, we've used data to describe who is using our products and how, and are aligning our sales force to that with clear goals and incentives. We're shifting from product sales to selling customer solutions. For all of our bigger customers, we have a single lead to work strategically with them. We're relatively early in this journey and there is much more we can do, which David will get into later. Turning to Slide 12, you can see we're making good progress against our revenue synergies.
We ended the first half with GBP 44 million of run rate synergies, driven by using the Refinitiv enterprise data in our index products, by the strong demand for that enterprise data from our index customers, and by purchases of Yield Book analytics by our data and analytics customers. We expect to be at the top end of our GBP 40 million-GBP 60 million range for the year, and are on track to deliver our total target of GBP 225 million. Now, let's look at cost margins on Slide 13. We had a good margin performance in the first half, 48.8%, and we're on track to deliver our low single digit organic cost guidance for the year. We're executing well on our cost synergy program and are increasing our full year guidance to a cumulative delivery of GBP 250 million run rate savings.
That's over 60% of our GBP 400 million target. Looking to 2023, we're continuing to make investments to drive future growth. While we're not immune from the inflationary environment, we're well-practiced at managing our cost base, and we're on track to meet our target margin of at least 50% on an exit basis next year. Slide 14 shows our first half operating expenses in a little bit more detail. Aside from FX moves, there's three elements of our cost growth in the first half: growth in ongoing operating costs, the investments we're making to accelerate growth in our business, and the benefit from cost synergies in the period. You should continue to expect low single-digit organic cost growth for the full year. Slide 15 shows the improvement in our EBITDA margin.
We delivered a first half EBITDA margin of 48.8%, a further improvement on our 2021 performance. We've done this while continuing to invest in our business. We're practiced at managing our cost base and have levers to pull, and the increasing strength of our customer relationships positions us well to manage our pricing. We're confident in delivering our exit 2023 margin target of at least 50%. Let me talk you through some of those cost levers on Slide 16. We're making the business simpler, more agile for our customers, and easier for our people, and in doing so, we're driving cost efficiency. Our global footprint gives us flexibility in where we locate our people. More than 65% of new hires this year have been made in lower cost locations.
As we build a scalable tech platform, we're systematically tackling every aspect of our cost base. We're consolidating our low latency data products onto a single efficient platform, and we're increasing the efficiency of our cloud estate, with our new standard efficiency metrics that are identifying areas of improvement application by application. We continue to deliver well against our GBP 400 million synergy program, and we expect to have reached GBP 250 million of those run rate benefits by the end of the year. While it's not possible to predict the inflationary environment in 2023, we are able to mitigate the impact on our cost base. Let's turn to CapEx on Slide 17. This is the same slide I showed you a year ago, but we're 12 months further along in delivery and we're making good progress.
We've broadened the cloud distribution of our data and analytics services, meeting our customers where they want to be and providing more datasets, faster data processing, and more efficient storage and greater flexibility of analytics. We've started moving servers onto our software-defined network and will be halfway done by the end of the year. This is a big step forward towards cost savings. We're making great progress in modernizing and digitizing our data ingestion, rolling out new intelligent filtering and tagging tools, and increasing the automation of our data sourcing. Our new FX matching platform is being tested by some of our customers ahead of full launch towards the end of next year. We're also making good progress on the rollout of Workspace, which David will cover in more detail later.
We expect to generate over GBP 1 billion of post-dividend free cash flow this year, plus proceeds from the sale of Beta in July. As Slide 18 shows, this will be second-half weighted due to the phasing of our dividend investments and variable comp. We're putting the cash we generate to work consistent with our capital management framework as you can see on Slide 19. We're actively managing our capital to create value. I've already talked about some of the CapEx investments we're making to accelerate the business and increase scalability. We're also pursuing inorganic growth where it meets our strategic and financial criteria. We closed two acquisitions in the first half. We're increasing shareholder returns. Our interim dividend is up 27%. Today, we announced the start of a share buyback, which I will get into in a minute.
Slide 20 shows the progress we've made in deleveraging our business in the last 18 months. Our growth and cash generation naturally reduce leverage over time, and we've disposed of non-core assets. Leverage is within our target range, and consistent with our framework, we're now in a position to return surplus capital to shareholders via a GBP 750 million buyback. This will take around 12 months to complete. I don't intend to go through Slide 21 on full year guidance, but it gives you the specifics you need for your models. One thing I would draw your attention to is that we expect a slightly lower tax rate this year between 21% and 22%. To end where I started on Slide 22, I'm really pleased with our performance this half. We've seen high-quality, broad-based growth, which should continue into the second half.
Our run rate on both revenue and cost synergies is ahead at the half-year stage, and we are firmly on track to deliver our 5%-7% revenue target, and our margin guidance is unchanged. Our cash generation continues to be robust, supporting investment and returns. Most importantly, we are making great progress in building a faster-growing, more agile and efficient business. Now let me hand back to David.
Thank you, Anna. Turning to Slide 24. I'm going to spend the next few minutes on how we're improving our strong current positioning through better execution and investment and the benefits we're seeing from the ongoing integration. We are a critical partner to our customers around the world, including almost all top global banks and the vast majority of the world's top asset managers. We have strong leadership positions across the financial markets value chain. Crucially, our open approach is a model that our customers prefer as we partner with them to deliver the solutions that they need. Turning to Slide 25. This is the virtuous circle I've talked about before. Data providing the insight that drives trading executions, and those executions generating new data, and so on. It's more than that.
Customers who have known and trusted us for decades in our markets businesses are now, in many cases, very receptive to the benefits we can bring to them through our data and analytics offerings. We are also serving our data customers better, improving our content and capabilities. Slide 26 sets out our three strategic objectives, integrating our business, driving growth, and building an efficient and scalable platform. We are executing on this strategy, and this strategy is working. Let me break that out in more detail, starting on Slide 27. Our focus on improving the customer experience and bringing rigor to how we run the business day in and day out enables us to partner more closely with our customers. We're simplifying our offering in data and analytics, distilling more than 240 individual products down into nine customer solutions centered on core industry themes.
We've also brought our sales functions together with better-aligned incentives, and our customer service teams have a greater focus. Within our large customer segment, this has led to improved product retention, up over 350 basis points since 2020. Turning to Slide 28. I want to give you a great example of LSEG's unique positioning and how it helps us serve our customers better. There are important bank capital rules known as FRTB, or Fundamental Review of the Trading Book, that will be implemented over the next couple of years under Basel III. FRTB creates challenges for banks looking to manage their capital efficiently. To oversimplify, the better the quality of the data the banks have on the positions in their trading books, the less capital they will have to hold against those positions.
We've worked with our customers to develop a valuable new FRTB solution that aggregates proprietary data from Tradeweb, Yield Book, and SwapClear. We're the only provider bringing together this range of data, and our ability to deliver the solution to customers in a flexible way is a key differentiator. Let me give another great example of what we're doing to create a more seamless customer workflow on Slide 29. In June, we announced that FXall and Tradeweb are collaborating to link trading workflows in emerging markets bonds and emerging markets currency swaps. This will allow market participants to buy or sell emerging market bonds and hedge their currency exposure on the same system simultaneously with efficient straight-through processing. This is a powerful example of the opportunities LSEG and Tradeweb have to create value for financial market participants. We're also investing for the future to build more efficient, scalable platforms.
Turning to Slide 30. In May, we announced plans to launch a new non-deliverable forward, or NDF, matching venue in Singapore to support strong demand from the Asian market. This represents the first phase of LSEG's plans to implement NDF and spot matching based in Asia. I should add that the integration of clearing into the design of NDF matching will also enable easier access to the full book of liquidity in the venue for all participants. The venue will be open for integration testing later this year, with a full production launch in mid 2023, and is the first stage of LSEG re-platforming our FX venues to our world-class trading technology. Turning to Slide 31. We're making excellent progress on the rollout of Workspace, our next-generation desktop solution. We are ahead of plan with over 50% of users now migrated.
The beta version of Workspace for FX trading launched at the end of last year, and all remaining user types will be live or in beta form by the end of this year. While there's still plenty more to do, Workspace is a part of the turnaround we are seeing in trading and banking, which is now growing for the first time in years. Importantly, customer satisfaction with Workspace is up more than 10% compared to prior offerings based on search functionality, ease of use, and value for money. Turning to Slide 32. We also continue to create shareholder value through strategic acquisitions. We completed the acquisitions of GDC, which globalizes our digital identity and fraud prevention capabilities, and MayStreet, which expands our enterprise data offering into ultra-low latency services. We're beginning to see the benefits of these transactions.
For example, MayStreet has already onboarded eight new customers since the acquisition was announced in May. We expect to close on our acquisition of TORA shortly, while Quantile should complete by the end of the year, subject to regulatory approval. Each of these is a relatively small acquisition, but by combining their capabilities with our connectivity to and relationships with customers all over the world, we can create substantial incremental value. You should expect us to continue to make strategic investments to strengthen our customer offering. In conclusion, on Slide 33, we have delivered a strong first half performance, and LSEG is well-positioned. We're continuing to invest in growth to build a more agile, scalable, and efficient business. We generate a lot of cash with a strong balance sheet and an active approach to capital allocation, including the announcement of a GBP 750 million share buyback.
Our strategy is working. I'm pleased by the great progress we're making and excited by the opportunities ahead. With that, I'll open it up for your questions. While the questions come through, let's hear from some people across our business.
We continue with the great progress we made in 2021 on our transformation and integration journey. We've launched 24 new products this year, bringing a total of 70 since day one, and we've continued to consolidate our offices, four more this year, bringing a total of 27. We're really pleased with our progress.
Our approach to our customers is straightforward: understand their needs, understand their strategies, and bring our best talent, services, and offerings to solve their most complex challenges. This focus on our customer is what has been driving our outperformance in terms of our overall customer retention, as well as our growing pipeline of new opportunities.
Over the first six months of this year, I'm delighted that we've continued to deliver positive revenue growth and increased momentum in the turnaround of our trading and banking business. We've also made strong progress with our Workspace program, with over 50% of our users successfully migrated, including some of our first trading customers. The great news is that we continue to hear positive feedback, our customers especially liking the improved search, ease of use, and overall flexibility that Workspace provides.
In the first half of 2022, RepoClear is very pleased to report very strong performance. In that first half, we also continued to partner, especially with the launch of the enriched value at risk model, which applies to the RepoClear Euro segment. This model is designed to help members face what's going to be a very uncertain market, but it is already bringing significant financial benefits through the reduction of initial margins for balanced portfolios. This is breathing space for the members.
FXall and Tradeweb are collaborating to develop hedging solutions that allow emerging market products to be traded more efficiently. This is a great example of how we can help our clients by looking across asset classes to deliver the best solutions to meet their needs. We are delighted to be working closely with LSEG, and we are excited by the opportunities ahead.
Right. Now to the Q&A section of the presentation. Just as a reminder, again, if you've got a question you'd like to submit in writing, please use it through the webcast service. Please don't message me directly. I can't pick that up. You can also dial in or use the phone lines and put your question in person. I can see that we've got some written questions already submitted, and we're going to go to those in a moment, and then we will get to the people on the phone lines. With that, let's start off. The first question I can see is coming up on costs, and it is: you are restating the low single-digit guidance for 2022 despite the higher inflation you've been commenting on. Is that right? Can you also comment on the guidance for costs in 2023?
Thanks, Paul. Yes, we've restated our 2022 guidance for low single-digit cost growth. That is because while we do experience some inflationary pressures, you can see that we're very well- practiced at managing the efficiency of our cost base to offset that. 2022 guidance unchanged. With respect to 2023, I'm not going to give you a precise answer because, of course, it's hard to know what inflation we will see as we get towards 2023. I can tell you what I am confident of. I'm absolutely confident of the 5%-7% revenue growth, and I'm absolutely confident that we'll hit our exit run rate 2023 margin of greater than 50%.
That's because the investments that we've been making in our customers, the customer experience and product, means I think we're well positioned around price. Also because you can see that we're very well- practiced at managing our cost base and using efficiency to offset inflation, and you should expect us to continue to do that.
Thanks, Anna. Next question is on Workspace. The question here is: the rollout of Workspace seems to be going better or maybe faster than you thought originally. What does this acceleration mean to the overall timeline for the migration and the turning off of the technology?
Thanks, Paul. As I mentioned in the presentation and as we just heard from Dean Berry, our head of trading and banking, the rollout of Workspace is going very well. In fact, it is a bit ahead of schedule. We're now about 50% through the migration. At the end of last year, we launched the beta version of Workspace for FX trading. By the end of this year, we should have all user types for Workspace either launched or in beta testing. Specifically, that means we should see in beta versions by the end of this year, Workspace for commodities, equities, and fixed income trading. Looking forward to that.
In terms of banking, we've also seen really good progress there in the migration of customers for banking, and we've seen very good feedback. Dean touched on this as well, where we've seen customer ratings moving up over 10% in terms of functionality, usability, and value for money. Great to see that. Now, we've always said that this was going to be a multi-year journey. We still have thousands of users to migrate, and we have to work with our customers to make sure that that works on their timeframe. Plenty of work yet to do here, but very pleased with how the rollout is going so far.
The last point I should just make is that we've seen the higher growth in DNA, and we've seen the turnaround in trading and banking, without a material benefit from revenue from the Workspace rollout. Real confidence both in terms of the growth in DNA, the trading and banking turnaround, and we'll continue focusing on the continued progress with Workspace.
Thanks, David. Next couple of questions, ones we had chance to crawl through the detail of the release. I think this is for Anna. First of those is: on the cost of sales, we saw an increase in Q2 versus Q1, so what was the driver behind that, and what level should we be modeling for the second half of the year? I'll throw it on to you first.
Sure. The thing that moves around in cost of sales is, of course, the revenue share associated with SwapClear. Of course, as you see SwapClear performance improves, you see that flow through the revenue share. It is quite lumpy, as are the prior comparators, which is why you see the movement in Q2. In terms of guidance, what I would do is I'd take the full first half rather than Q2 and use the first half as something to think about for the second half.
The second question is, on the balance sheet, we saw a negative working capital movement in the first half, and what's the confidence that this will improve in the second half?
Sure. Yes, two factors here. Firstly, FX moves, of course, impact working capital. Then secondly, the nature of our sales cycle means that we always have higher working capital at the end of the first half versus the full year. I t's phasing and timing, and you should expect to see this normalize towards the full year.
Okay, thanks. There's a couple more we'll go to now on the written submissions, and then we'll open up the phone lines. The next question is: since the closing of the Refinitiv acquisition, how much have you invested into Refinitiv to bring it to where the business should be, and how much more investment is going to be needed incrementally?
Sure. What we've guided on is CapEx, and we've guided to GBP 650 million-GBP 700 million for last year, this year, and looking forward to next year. Now, that is a complete business number, and I'm not going to break it out between legacy Refinitiv and legacy LSEG, because this is an integration and frankly a transformation. We're investing across the business as a whole to bring it together. I'm really pleased with the progress we're making on that investment. I spoke just now about how we're moving some of those CapEx projects forward and how we're starting to see some of those benefits flow through. I think you see that in our strong top-line performance today and also our strong ASV metric. Really good progress. I'm pleased with where we are.
Okay. I'm going to continue on a similar vein. Any data on Workspace in terms of the responses that you're getting? You mentioned that you've got some good response on the banking side from clients. Have you got any other feedback from Workspace users in other parts of the business? Secondly, on the synergy delivery. Let's do that one first, and then we'll go back to the synergy question.
Sure. As I mentioned, very strong feedback in a number of different areas. Just to break that out a little bit more. I touched on the 10%+ customer ratings with respect to banking. We're also seeing positive feedback in other areas, RPM research and portfolio managers. On Workspace for FX trading, as Dean touched on in his video clip there, good receptivity there. In wealth, it's actually been interesting. We've seen very strong receptivity in the Asian market, and a little weaker in the US market, and so that's something that we're focused on addressing. The wealth market tends to be a regional market, but again, very strong feedback there, very strong receptivity in Asia. Overall, really pleased with how Workspace migration is going. As I mentioned earlier, we're a little bit ahead of schedule, and look forward to continuing to deliver on that.
Okay. I'm going to go to a similar related question before I come back to the synergy question. Surprised to see the really good performance in the trading and banking. Great to see that. Is that due to the good reception of Workspace, or are we seeing other effects here as well?
As I mentioned earlier, we're not really seeing a material benefit yet from Workspace. That's just in terms of where we are in the phasing of the rollout. What we are seeing in terms of trading and banking is a much stronger alignment with our customers. We talked about this a little bit after the Q1, where we have gone through the process of really having a much better understanding of what our customers are using the product for, and then getting our sales team, our customer service team, and our product team aligned with those customers. That has helped to improve retention. We have also improved the product capability on Workspace and putting, for example, products like Yield Book and making that available on Workspace, and in trading and banking in Eikon.
That is also helping. Other areas where we expect to see future contributions are continued investment in the content, continued investment in the capability, continued rollout of Workspace, and then I should also mention TORA, our order and execution management system that we announced the acquisition of a few months ago. We have not yet closed on that, but look forward to closing on it very soon. When we integrate that into trading and banking's capabilities as well, we also expect to see that with an additive performance. Really positive trajectory and feeling good about it.
Okay. Let me just take the one question I was about to start, and we'll answer this one, and then we'll go open to the phone lines because I know some people have been for a bit, and then I've got a few more written ones to go to. The question is around synergies. Great that you're running ahead of plan. Would this suggest that there's now going to be upside to the 2025 targets, even if you're not actually doing a change today?
Yes, sure. As you know, we increased our GBP 350 million target to GBP 400 million at the year-end. We continue to be really focused on delivering these synergies as quickly and efficiently as possible, and I am thrilled with the progress we're making. We're not changing our targets today, so the 400 is good. You should expect that we continue to look at the efficiency of our cost base and what the opportunities are.
Okay. We're going to open up to the phone lines. I think we've got around about three people at the moment. If I open up the phone lines, and we go to the first questioner, please.
Thank you. Everyone, if you would like to ask a question, please signal by pressing star one on your telephone keypad. As a reminder, participants can continue to submit questions in written format, either via the webcast page by clicking the Ask a Question button or via email to the LSEG Investor Relations team at ir@lseg.com. The first question is coming from the line of Kyle Voigt, KBW. Please go ahead. Your line is open from now.
Hi. Good morning. Just a few questions for me. First question, you noted the Trading and Banking Solutions constant currency revenues grew by 0.7%, excluding the impact of the Russia-Ukraine conflict. H as that year-on-year organic growth metric, excluding the Russia-Ukraine conflict, trended positively from Q1 to Q2 of this year? I'm just trying to get a sense of the exit rate on that heading into the back half of the year. Second question is also related to Workspace. You noted customer satisfaction is up for those customers that have migrated b ut can you just speak a bit more about the pricing impact as the migrations happen?
I think there was some desire to move more of those contracts to enterprise licenses, but maybe just a progress update there, and on how the migration impacts revenues more broadly and from a pricing standpoint. Last question for me is around NTI. It's quite strong in the quarter. Sounds like that was mostly driven by collateral balances, and you're guiding this back lower in the second half. Just wondering if the guidance is due to expectations that the collateral will move lower, or was there also one-off benefits on the yield that won't be sustainable into the second half as well? Thank you very much.
Thanks, Kyle. Turn it over to Anna to take a few of those.
All right. Trading and banking. I'm really pleased to see this business in growth, and all of that effort that has gone into great execution is what is driving that acceleration. You should see that acceleration continue systematically as we roll out Workspace and as we continue to really, really focus on that customer execution and making sure that we're delivering for our customers. I think the way to think about it is consistent steady progress. Workspace and pricing. Firstly, I'm really pleased that we're halfway through our migration onto Workspace, and customer retention is only increasing, which just goes to show that we're executing on this really smoothly, and it's being well received by our customers. In terms of pricing impact, yes, we have talked about enterprise pricing. That's a different thing.
Where that is appropriate for our customer and they are buying a large range of products, and we think that it is the right thing for a really strategic medium-term relationship, then we're using enterprise pricing. With other customers, it remains appropriate to price in other ways. Net-net, I think the move to Workspace and the progress we're making in that business, I think positions us really well in strong strategic relationships with our customers, which as I said earlier, means that we can take price with the appropriate judgment around those medium-term strategic relationships. In terms of upselling, you'll see us continue to add new functionality. David talked about the introduction of Yield Book. Those are all opportunities to sell more product. NTI.
We do have very high collateral balances currently, but we would expect those to reduce as we move through the second half. The biggest driver of NTI is the collateral balance, and it's that reduction in collateral balances, which is why we're saying, expect it to tail off from here. I think really that that's the key thing for you to focus on.
Great. Thank you very much.
Thanks, Kyle. We'll go to the next question, please.
The next question is coming from the line of Michael Werner, UBS. Please go ahead.
Thank you very much. Thanks for the opportunity to ask some questions. The first one is costs in this half. In particular, the GBP 59 million benefit coming from FX to the cost base. I was just wondering as to , what happened this past quarter. I think you said that the impact from these derivative instruments have been lower in past periods. I was just wondering what happened, particularly in June, that sparked or triggered this GBP 59 million benefit. Ultimately, just to understand the mechanics behind this. Is this something where an FX derivative is embedded into a contract so that you have US dollar exposure instead of local currency exposure?
If you could just better explain that would be helpful. Then second, maybe a question more for David, but and you talked about, investments and M&A, and I'm just thinking about, in terms of the free cash flow you're generating and how that gets allocated between buybacks, M&A, and dividends. when you look at the M&A universe or the target universe, is this one where the deals that we have seen you do were opportunistic? Are they front-end loaded, and you feel like you're in a good position now? Or is this something where, if you had more access to capital, you would be more active in the M&A side? Any thoughts there? Thank you.
Thanks, Michael. I'll turn it over to Anna for the first question, and then I'm happy to take your second one.
Sure. Let me, on cost, let me just start with constant currency because really that is the underlying driver of our cost and the most important piece. There we are reiterating our full-year guidance of low single-digit cost growth and our constant currency cost growth in the first half is 4.3%. Now what you're calling out is we had a material FX impact on our cost performance in the half. We've called out GBP 59 million. I will do this very briefly, and what I would suggest is you pick up on the detail with IR, because otherwise I'm going to get into some very boring technical accounting. Really what's changed is we saw some very extreme FX movements in the period. That's what's different, and that's the only thing that's different.
It's the scale of the FX movement that has caused what is a non-cash balance sheet revaluation. The very brief explanation here is we have some legacy contracts that predate our ownership, and this is not something we're perpetuating going forward, which are in a different currency to the contracting entities, and that gives rise to effectively an FX-embedded derivative, which gets revalued at the balance sheet date. We've always had them. The only reason that they're particularly visible now and we've called them out to help you understand things is the sheer scale of the FX moves. Thank you.
Thanks, Anna. On your question on M&A and how we think about it. Our approach here has actually been pretty consistent. The M&A that we've announced over the past seven months or so is a pretty good indication. We look for opportunities that can be a strategic enabler or add a strategic capability to our business. We can plug them into our global distribution, into our global network of relationships and create a lot of incremental value. That's what we're seeing with GDC and MayStreet. That's what we expect to do with TORA and Quantile. I would say in all of these circumstances, we evaluate the strategic benefits and the strategic opportunity, as well as the financial returns and the financial benefit. We are very disciplined on both of those.
There are a number of opportunities that we have looked at and not done. I would say if you just take a step back, you put it in the broader context of the overall business, we'll continue to look for opportunities that can fit those criteria, those strategic criteria and those financial criteria. I would say that the business generates a lot of cash. We have reduced our leverage, raised our dividend, announced the buyback today, and funded the acquisitions. This is not a capital shortage in any sense of the phrase there. We have the capital, and then we will also be very thoughtful about what it makes sense to do. That's probably the best way to answer that, and you should expect us to continue to evaluate such opportunities.
Thank you, David.
Thanks, Mike. We'll take next two questions, and then we'll cut back to the written ones. Can you open up the line for the next caller? Thanks.
Absolutely. The next question is coming from the line of Andrew Coombs, Citi. Please go ahead. Your line is open.
Good morning. Two questions for me, please. Firstly, on the synergies, you're clearly running ahead of expectation for 2022. You haven't changed your guidance on cumulative synergies out to 2025. Does that mean there's just a faster achievement of what you'd already identified rather than identifying incremental synergy opportunities? Perhaps you could just provide a bit more color on exactly which of the synergies you've managed to achieve faster than expected. My second question was just on excess capital in that you're down to the 1.9 times leverage. The GBP 750 buyback is explicitly linked to the BETA+ divestment. I guess in usual course of business, you did have a s lide on this, but how do you weigh up the opportunity between buybacks, M&A, and so forth? Thank you.
Thanks, Andrew. Anna?
Do you want me to do? I'll do the first one.
Yes. I'll have [inaudible] on the second, yes.
Synergies. Yes, we are running ahead, about which I'm really pleased. What that talks to is great execution on the program. No, we've not changed our guidance out to 2025. If you remember, we changed it at the full year from GBP 350 to GBP 400, and GBP 400 remains the right number. It's coming from faster delivery of the programs that we already had in place. You should expect us to be continuing looking hard at our cost base to see whether there is further opportunity. What's driving it? We've consolidated 31 offices now across the globe. We're consolidating data centers, making really good progress there. We're now 60% of our data centers done. We've gone through every one of our procurement contracts.
We haven't done all of them yet, but we're making really good progress across that. Of course, the fourth lever is consolidating our organization and removing duplication across many of the functions as we do that. Those are the big levers driving synergies. They continue to be the big levers, and we're executing across them really well.
Thanks, Anna. Andrew, with respect to your question on capital, look, our approach here has been consistent, and we will continue to actively manage our capital allocation. The business generates a lot of capital. So far as we've talked about, we have very successfully reduced our leverage, we've raised our dividend, we've done the internal investment, the organic investment, and funded that, and we have funded the M&A as well. We are taking an active approach here. We have capital at this point that it certainly makes sense to return to our shareholders through the share buyback.
We'll continue to evaluate the situation as we go forward, and that includes all of these different aspects that I was just talking about in terms of the internal investment, the M&A opportunities, as well as potential shareholder return. Consistent approach, and we continue to manage it actively.
Thank you, Dave.
Thank you.
Thanks, Andrew. One more question on the phone lines and then back to the written ones. Next question.
All right. The following question is coming from the line of Philip Middleton, Bank of America. Please go ahead.
Yes. Good morning, and thanks for the call. You're still forecasting 5%-7% revenue growth. You've done 7% this half. Your ASV, which is supposedly a forward-looking indicator, is going up and up. You're bringing in more revenue synergies. You're talking very positively about new things that you hadn't even talked about when you constructed your original merger case, all of which is great, but it does leave you to ask, is 5%-7% still the right guidance?
Philip, thank you for the question. I'll echo what you were just saying in that we're very pleased with the performance, and we're very focused on continuing to execute, continuing to deliver. At this point, no change in our guidance, but there's also no shortage of ambition on this team. We look forward to continuing to execute, continuing to deliver on our targets, and if there's any additional communication, we'll certainly share that with the market. At this point, looking forward to continuing to deliver. Anna, anything you would add?
No.
Okay. Thank you.
Thanks, Philip.
Right. Back to the written questions. The first one of those is back to the share buybacks. GBP 750 million return is very welcome, a clear recycling of the BETA+ proceeds. Given the context of GBP 2 billion plus annual free cash flow, annual leverage in the band, back in the range, can we think about directed buybacks, particularly if the anchor shareholder that you have will start to sell down at the beginning of next year as a part of the original agreement?
Maybe I'll just answer the directed element of that, and then Anna can talk about the broader forward look. Directed buyback is a tool in the toolkit in the U.K. markets. You do need shareholder approval for that. We don't currently have that construct, but we could certainly put that tool in our toolkit going into next year. Overall, in terms of the forward look, Anna, you want to touch on that?
Yes. Look, I'm not going to make any commitments about ongoing share buybacks, and you shouldn't put anything in your model. What I would say, as David already has, is you will see us be very active in the management of the cash we generate in terms of investing in the business, M&A, and if we don't have a requirement for it to return it to shareholders.
Great. Okay. Two more questions on the written side. First of those, noted Anna's comments around the consistent pricing, so can you talk in more detail about the price increases that you have implemented, particularly in Data and Analytics in the first half, and what's the outlook on pricing in the second half?
We take price annually on our subscription revenues in Data and Analytics, and I would say historically, that's been low single digit price through the period that we've shown in the chart I showed to you earlier. Equally, we've been making significant investment in improving the product offering, improving the customer experience, and improving our execution. You can see the impact that is having in terms of our ASV metric, in terms of our subscription revenue sales, and we're building stronger relationships with our customers. Yes, I think that positions us to take price, an appropriate price for the current environment, but also appropriate price with judgment in the context of medium-term strategic customer relationships.
Okay. Change of tack. On Slide 29, you spoke about the linkages between Tradeweb and FXall on hedging solutions, and that's interesting. Can you talk more to any other future opportunities that are there to leverage the Tradeweb connectivity, the capabilities and the data?
Sure. Maybe it's worth just highlighting, to start off the answer here, that when we announced the transaction, the acquisition of Refinitiv, there were no synergies in our projections there associated with Tradeweb at all. As we have worked through our integration of the Refinitiv business, we have also been investing in our relationship with Tradeweb, getting to having the teams get to know each other better. As we have continued to develop that relationship, we're discovering a number of different areas where it can make sense for us to do things together that could create value for Tradeweb shareholders and LSEG shareholders.
I think the announcement that we did several weeks ago with respect to Tradeweb and FXall working together is a great example of that, bringing our two businesses together for the benefit of our customers. There are a number of other conversations that we're having where we will see if we can do other things, and that may be on the revenue side. That may also be on the cost side. Nothing further to announce at this point, but it's a strong relationship and growing stronger.
Right. We've got no more written questions, so we're going to go back to the phone lines and take the remaining questions we've got there. If I can go back to you, operator. There's no need to remind us about the process. If you can just open up the phone line to the next questioner. Thank you.
Absolutely. Thank you so much. The next question is coming from the line of Arnaud Giblat, BNP Exane. Please go ahead.
Yes, good morning. I just want to quick follow-up, firstly, on costs. You said you're running ahead on cost synergies, yet there's no change to cost guidance for 2022. Is the other piece of the puzzle here just inflation or is there something else going on? Does that have a bearing on... Is it mainly inflation whereby there's a bit more uncertainty as to what the cost growth might be in 2023? Previously, you had said a low single digit for 2023 as well, so I'm just wondering if it's just inflation that's happening here. Secondly, I was wondering on the rollout of Workspace. I think previously you talked about a 2024 target you're running ahead. Could you perhaps qualify that from a timeline perspective a bit more for us? Thank you.
Sure. Thanks, Arnaud. Anna, why don't you take the first question, then I'll answer the second one.
Yes. On synergies, yes, we have increased our synergy guidance for the full year. Of course, remember that is a run rate synergy number. Depending on the timing of the delivery of those synergies, you don't necessarily get the exact same benefit in terms of the in-year benefit. What are the moving parts of costs? I would say across the board, we've looked for further efficiencies as well as through synergies to offset inflation. I think this is really important, we are continuing to invest over five points of growth in cost in order to deliver three things or do three things really. Invest in the tech required to support growth. You're seeing investments go in there like incremental cloud investments to support some of the changes we're making.
You're seeing other areas of tech investment go in support of new products and some cyber investment. You're seeing investment in straight revenue growth in the context of additional sales people to deliver our synergies and other growth. You're seeing investment go in Tradeweb to support their very fast pace of growth. The way I'd look at it is actually it's a really nice shape of cost. We're investing in the things that we need to invest in to make our business stronger growing forward. We're managing our cost base hard in terms of running the business better and driving efficiencies, and we're driving those synergies. As I look forward to 2023, I'm not going to be precise on cost guidance in 2023 because it's hard to know what inflationary environment that we'll see.
I think, what I will say and what I think you should take confidence from in terms of seeing our 2022 performance is we're well-practiced at managing our cost base. There are areas of efficiency that we can drive, and you'll see us be very active in tackling those areas in order to mitigate the impact of inflation. The other point I'd just remind you of, I'm really confident that we will be in line with our target of at least 50% margin as we exit 2023.
Thanks, Anna. Arnaud, on your question on Workspace and timing going forward, as I mentioned earlier, we're very pleased with the progress we've made so far, and the migration about 50% through that. I also mentioned earlier, this is a multi-year process, and we still have thousands of users to work through, and that's working with many customers. In many cases, we have to work on the customer's timelines because our products are so embedded in their workflow. I'm not going to put any specific timeframe out there, at this point. I would say multi-year process, we're feeling good about the progress we've made, but plenty of work yet to do in terms of the timeframe and the customer migrations that we still have ahead of us.
Thank you.
Thanks.
Next question, please.
The next question is coming from the line of Ben Bathurst, RBC. Please go ahead.
Good morning, everyone. Thanks for taking my question. I have one on the market backdrop, if I may. Many of your buy and sell side customers have probably enjoyed stronger financial performance thinking over the period of covering the pandemic, during which time I guess you've also shown momentum. With your clients' revenues potentially falling and costs increasing now, I just wondered, are you noticing any recent evidence of a change in tone in discussions with them perhaps getting more resistant to price increases or even cutting back on services? Thanks.
Thanks for the question, Ben. T he short answer to your question is no. Just to put a little context around your question, I know there's this sense that we've had this fantastic environment for a number of years, and then now it's gotten really terrible all of a sudden. For many of our customers, it's been a really tough environment for many, many years. If you think about, for example, European banks in the context of zero or negative interest rates, that has been a very tough, challenging environment for them for several years. We have worked with those customers in a strong partnership manner to help them, in some cases, reduce their costs and do more with us. I just mention that too.
I think it's important to keep this environment in context, where for a number of our customers, actually as interest rates go up, it's actually a healthier, more attractive environment for their core businesses. Again, to come back to your original question in terms of are we seeing any negatives or any pullbacks from customers? No.
Thanks.
Thanks, Ben. Next question.
The next question is coming from Ian White, Autonomous Research. Please go ahead.
Hi. Morning. Thanks for doing the presentation. Just a few follow-ups from my side, please. First up on Post Trade and RepoClear and EquityClear. The release you've put out points to those businesses seeing limited benefits due to increased competition. Can you just say a bit more about that, please, in terms of what specifically you're seeing there and whether that is manifesting through reduced market share or downward pressure on pricing, please? That's question one.
Just secondly, also on Post Trade, can you just maybe help us a little bit to think about when we're looking at year-over-year growth in OTC derivatives and the NTI, how much of that is what you might think of as sustainable secular growth, and how much of it might be more cyclical and really a product of the very favorable interest rate environment in terms of the rate volatility, please? The final question, can you just perhaps provide a bit more color on what might be coming next in the wealth business to drive the group up towards the mid-single-digit revenue growth target there? My understanding is that the Workspace rollout might be a bit more advanced in wealth.
Just wondered if there were any specific milestones you were looking at there that might lead to a further step change in performance over the next 6-12 months. Thank you.
Okay. Thank you. I'll take your first couple questions, and then if you want to touch on wealth and how we've seen that trajectory go. We have seen actually, from a volumes perspective, very strong performance in RepoClear and EquityClear. Just to answer your question very specifically, there's been a very competitive environment, particularly around pricing, in equities. That's the answer there. Repos continue to perform very well, both from a volumes perspective, but also a pricing perspective. Your question on the OTC space and NTI secular growth versus the interest rate environment. Look, we've seen.
In that business, we saw very strong growth for a number of years in an environment when the interest rate markets and interest rate volatility was not particularly conducive to a lot of activity in terms of trading or positioning or hedging of interest rates. As we now see some of the interest rate uncertainty, that is helpful and that is conducive to incremental trading. I would say I wouldn't attribute it to this is solely a a market-driven growth in the business, because that business has continued to grow over a number of years. One other point I should just make is that in terms of new clients signing up for that business, we have seen more new clients signing up than any time since 2017, I believe.
That's a long way of saying that, yes, secular growth and cyclical benefits right now, given the interest rate uncertainty. Over to you on the wealth question.
Sure. On wealth, what you're seeing is steady improvements in performance, and that is coming through better execution, rollout of the wealth workspace, and better meeting our customer needs, really. In the quarter, I'd just remind you that wealth was impacted by the impact of Russia-Ukraine. If you take that out, we're already growing over 3% now for the half. We're getting into that mid-single digit range that we should be in, as we said we would. You'll see us continue to bring the focus there really to keep doing more of what we're doing.
That's great. Thank you.
Thank you.
Thanks. The next question, please.
The next question is coming from the line of Russell Quelch, Redburn. Please go ahead.
Yes, good morning. Thank you for having me on, and thank you for answering my question regarding pricing that I submitted in the written questions. I just wanted to make sure I understand your response correctly. Am I correct in thinking you may be able to do more than low single- digit price increases going forward, given the inflation backdrop and the improved product offerings? My second question is, I also noted your comments on levers in place to manage cost pressures going forward. I wonder if you can just talk to them in more detail, please. Thanks.
Sure. Obviously, in a highly inflationary environment, we will look at our pricing and make sure that it is appropriate for the environment. We won't just stick to our historic low single-digit. That said, you will see us exercise judgment around that, in that we've got medium-term strategic relationships with these customers. These are not deliver a product and go relationships. These are three , four, or five-year relationships where we're working with big strategic customers against their roadmap with our products. What you'll see is us absolutely price appropriately for the environment, but with judgment so that it feels balanced in the context of that strategic relationship. I think we're well-placed to do that. In terms of levers on cost, across the group, we are working to simplify.
We brought together two businesses, and neither of those businesses were particularly simple in terms of their underlying processes. There's quite a lot of opportunity for us to take legacy complex processes and simplify them, and make them much more highly automated, and take out multiple steps. That has a multiple benefit. It doesn't just take out cost, and it does take out cost, so that is a good thing, but it also makes us much more agile in responding to our customers. Frankly, it makes it easier to get things done for our people. One of the biggest drivers as I look forward at the cost base is around those end-to-end processes and how we consistently drive efficiency and remove some of these areas of complexity.
Great. Thank you.
Thank you.
Thanks. I think we've got one more question in the queue for the phone line, so we'll take that one, and then I've got one more written question to finish off with.
Absolutely. Our last audio question is coming from the line of Benjamin Goy, Deutsche Bank. Please go ahead.
Yes. Hi, good morning. I have one question left, and it's on customer retention. You mentioned it's 98%, which is obviously a strong level. I was just wondering, can you improve that even further slightly and to improve revenue growth, or is growth going forward much more driven by new clients, pricing and so on? Thank you very much.
Sure. That customer retention number is obviously about the retention of customers. Internally, we also measure product retention, which is a more granular measure and looks at the retention rates of each individual product. As we look at product retention, we definitely see areas where better execution and better customer understanding and improving our products can continue to drive retention up. Now, as we look forward, what does that mean in terms of our growth? It's going to come from new sales, new sales to existing customers, so that's increasing the offering that they're taking, new sales to new customers, and you see that in our real-time business, and elsewhere. It's also coming from improved product retention across the board. Of course, we've already talked about pricing. All of those are a very balanced set of levers, which makes me feel very comfortable about the broad base of our growth.
Understood. Thank you.
Thank you.
Thanks, Ben. That finishes the phone line. One more written question to finish off with. It's a slightly technical one. You talk about the GBP 59 million of FX impact on your operating expenses in the first half. Is there a particular sub-line of the OpEx where this hits? Then more broadly, with a number of adjustments that are being made, would it be fair to take that and any others as non-underlying costs?
Good questions. It's probably worth going through the technicalities of the GBP 59 million with IR offline, and I won't get into more detail on it here. It is an underlying cost. We try very hard to, in line with accounting standards, keep as much as possible in underlying while making it clear so that you can get your models right, because I think lots of stripping stuff out below the line can be confusing. No, it is an underlying cost because it relates to our ongoing business, but we've called it out to make it really clear for you so that you can adjust for it. It would be worth going through the detail with IR because I'm not going to go through the technical accounting now. If you've got questions about it, absolutely, they'll walk you through it.
Right. Thank you, Anna. Thank you, David. That brings us to the end of the Q&A session. As Anna just said, there's lots of technical questions for IR, and we'd be very happy to take those. We are going to be around obviously after this call to take more questions that you've got. Thank you very much for joining the call. Thank you very much for your listening and for your questions. We're going to finish there. We'll speak to you at some other point. Thank you very much.