London Stock Exchange : Annual financial report for LSEG Netherlands BV

Independent auditor's report

To: the shareholder and the board of directors of LSEG Netherlands B.V.

Our opinion

We have audited the financial statements for the first financial year ended 31 December 2021 of LSEG Netherlands B.V. based in Amsterdam.

In our opinion the accompanying financial statements give a true and fair view of the financial position of LSEG Netherlands B.V. as at 31 December 2021 and of its result for the first financial year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.

The financial statements comprise:

• • The balance sheet as at 31 December 2021

• • The income statement for the period from 26 November 2020 to 31 December 2021

• • The notes comprising a summary of the accounting policies and other explanatory information

Basis for our opinion

We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing.

Our responsibilities under those standards are further described in the Our responsibilities for the audit of the financial statements section of our report.

We are independent of LSEG Netherlands B.V. (the company) in accordance with the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information in support of our opinion

We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The following information in support of our opinion and any findings were addressed in this context, and we do not provide a separate opinion or conclusion on these matters.

Our understanding of the business

LSEG Netherlands B.V. is incorporated as a wholly-owned subsidiary of the London Stock Exchange Group plc (the group) to assist the group in raising funds and on-lending the proceeds to one or more companies within the group. The group has guaranteed the due and punctual payment of all sums from time to time payable by the company in respect of the notes issued. The group is a global financial markets infrastructure and data provider. The main income of LSEG Netherlands B.V. is the interest income on other receivables from a group company. Interest risks are not hedged nor completely offset. The company's ability to pay interest and repay principal in respect of its borrowings and other liabilities, depends upon the financial condition and liquidity of the group company.

We paid specific attention in our audit to a number of areas driven by the operations of the company and our risk assessment.

We start by determining materiality and identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error in order to design audit procedures responsive to those risks and to obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Materiality

Materiality	EUR 7.4 million
Benchmark applied	0.5% of total assets as at 31 December 2021
Explanation	We determined materiality based on our understanding of the company's business and our perception of the financial information needs of users of the financial statements. We considered that total assets reflects the source of income and repayments to the holders of the bonds issued by the company

We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons.

We agreed with the board of directors that misstatements in excess of EUR 375 thousand, which are identified during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.

Teaming and use of specialists

We ensured that the audit team included the appropriate skills and competences which are needed for the audit of a listed finance company. We made use of specialists in the area of income taxes including transfer pricing.

Our focus on fraud and non-compliance with laws and regulations Our responsibility

Although we are not responsible for preventing fraud or non-compliance and we cannot be expected to detect non-compliance with all laws and regulations, it is our responsibility to obtain reasonable assurance that the financial statements, taken as a whole, are free from material misstatement, whether caused by fraud or error.

Our audit response related to fraud risks

We identify and assess the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding of the company and its environment and the components of the system of internal control, including the risk assessment process and the board of directors' process for responding to the risks of fraud and monitoring the system of internal control, as well as the outcomes.

We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment. We evaluated the design and the implementation of internal controls designed to mitigate fraud risks.

As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery and corruption. We evaluated whether these factors indicate that a risk of material misstatement due to fraud is present.

We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures and evaluated whether any findings were indicative of fraud or non-compliance.

As in all of our audits, we addressed the risks related to management override of controls. We have used data analysis to identify and address high-risk journal entries. We evaluated the business rationale of transactions with related parties and whether these were accounted for at arm's length and in accordance with transfer pricing documentation. We have also performed procedures among others to evaluate key accounting estimates for management bias that may represent a risk of material misstatement due to fraud, in particular relating to important judgment areas and significant accounting estimates, including the impairment assessment on other receivables from a group company, as disclosed in the section "Impairment of financial assets" in the notes to the financial statements. We refer to our audit response in the key audit matter "Valuation of other receivables from a group company".

We considered available information and made enquiries of relevant members of the board of directors as well as the auditor of the group.

The consideration of the potential risk of management override of controls or other inappropriate influence over the financial reporting process, enquiries and assessment of other available information did not lead to specific indications for fraud or suspected fraud potentially materially impacting the view of the financial statements.

Our audit response related to risks of non-compliance with laws and regulations

We assessed factors related to the risks of non-compliance with laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general industry experience, through discussions with the board of directors, reading minutes and performing substantive tests of details of classes of transactions, account balances or disclosures.

We have been informed by the board of directors that there was no correspondence with regulatory authorities, enquired with the auditor of the group and remained alert to any indication of (suspected) non-compliance throughout the audit. Finally we obtained written representations that all known instances of non-compliance with laws and regulations have been disclosed to us.

Our audit response related to going concern

As disclosed in section Going concern of the notes to the financial statements, the board of directors made a specific assessment of the company's ability to continue as a going concern and to continue its operations for at least the next twelve months.

We discussed and evaluated the specific assessment with the board of directors exercising professional judgment and maintaining professional skepticism. We considered whether the board of directors' going concern assessment, based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, contains all events or conditions that may cast significant doubt on the company's ability to continue as a going concern, including considerations relating to the financial position of the group in cooperation with the group auditor. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion.

Based on our procedures performed, we did not identify serious doubts on the company's ability to continue as a going concern for the next twelve months. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause a company to cease to continue as a going concern.

Our key audit matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements. We have communicated the key audit matter to the board of directors. The key audit matter is not a comprehensive reflection of all matters discussed.

Valuation of other receivables from a group company
Risk	The company is exposed to the risk that the group company, London Stock Exchange Group Holdings (Italy) Ltd., defaults on meeting its obligations. As the loan to the group company represents the most significant portion of the company's assets, any impairment may have a material impact on the company's financial position and result. Assessing whether there is any objective evidence that a financial asset is impaired, and, if any such evidence exists, determining the size of the impairment loss, requires significant judgment. We also consider the potential risk of management override of controls or other inappropriate influence over the financial reporting process. As such, we identified valuation of the other receivables from a group company as key audit matter. We refer to section "Impairment of financial assets" in the notes to the financial statements, where the board of directors has disclosed the accounting policies and procedures in respect of the impairment loss assessment on the other receivables from a group company. As disclosed in note 1 "Current assets", the board of directors did not identify any objective indicator triggering that the other receivables from a group company might be impaired.
Our audit approach	Our audit procedures included, amongst others, evaluating the appropriateness of the company's accounting policy relating to the impairment of financial assets in accordance with Part 9 of the Book 2 of the Dutch Civil Code and the criteria used to determine that there is objective evidence of an impairment loss and whether these have been applied consistently. We also evaluated the design of internal controls of the processes underlying the identification and assessment of objective evidence for impairment as part of the financial statement closing process.

Valuation of other receivables from a group company
Furthermore, we challenged the board of directors' assessment based on, amongst others, our analysis of the financial position of the group company and the group and by identification of indicators of non-recoverability of loan issued to the group company. This includes an assessment on the fair value developments of the notes issued and whether the group company met its financial obligations towards the company throughout the financial year and up to the date of our report, as well by inspecting publicity observable data and by enquiring the auditor of the group. Also, we took the impact of events subsequent to 31 December 2021 into account. Finally, we evaluated the related disclosures in the financial statements in accordance with Part 9 of Book 2 of the Dutch Civil Code.
Key observations	Based on our procedures performed, we concur with the board of directors' assessment that there is no objective evidence as at 31 December 2021 that other receivables from a group company are impaired and that the related disclosures are adequate and appropriate in accordance with Part 9 of the Book 2 of the Dutch Civil Code.

Report on other legal and regulatory requirements

Engagement

We were engaged by the shareholder as auditor of LSEG Netherlands B.V. on 21 April 2022, as of the audit of the first financial year ended 31 December 2021.

Responsibilities of the board of directors for the financial statements

The board of directors is responsible for the preparation and fair presentation of the financial statements in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the board of directors is responsible for such internal control as the board of directors determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, the board of directors is responsible for assessing the company's ability to continue as a going concern. Based on the financial reporting framework mentioned, the board of directors should prepare the financial statements using the going concern basis of accounting unless the board of directors either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. The board of directors should disclose events and circumstances that may cast significant doubt on the company's ability to continue as a going concern in the financial statements.

Our responsibilities for the audit of the financial statements

Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.

Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit.