REG - Hargreaves Lansdown - Final Results <Origin Href="QuoteRef">HRGV.L</Origin> <Origin Href="QuoteRef">ZBO.L</Origin> - Part 2
09/09/2015 07:00
- Part 2: For the preceding part double click ID:nRSI4541Ya
157,249 162,734
Attributable to:
Equity shareholders of the parent Company 156,664 162,091
Non-controlling interest 585 643
157,249 162,734
Earnings per shareBasic earnings per share (pence) 7 33.2 34.5
Diluted earnings per share (pence) 7 33.1 34.2
The results relate entirely to continuing operations.
Consolidated Statement of Comprehensive Income
Year ended 30 June2015(Unaudited)£'000 Year ended 30 June2014(Audited)£'000
Profit for the financial year 157,249 162,734
Total comprehensive income for the financial year 157,249 162,734
Attributable to:-
Owners of the parent 156,664 162,091
Non-controlling interest 585 643
157,249 162,734
Consolidated Statement of Changes in Equity
Attributable to the owners of the parent
Share capital Share premium account Capital redemption reserve Shares held by EBT reserve EBT reserve Retained earnings Total Non-controlling interest Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 July 2013 (audited) 1,897 8 12 (21,457) 13,648 202,514 196,622 523 197,145
Total comprehensive income - - - - - 162,091 162,091 643 162,734
Employee Benefit Trust:-
Shares sold in the year - - - 10,123 - - 10,123 - 10,123
Shares acquired in the year - - - (4,887) - - (4,887) - (4,887)
EBT share sale - - - - (103) - (103) - (103)
Employee share option scheme:-
Share-based payments expense - - - - - 2,016 2,016 - 2,016
Current tax effect of share-based payments - - - - - 3,848 3,848 - 3,848
Deferred tax effect of share-based payments - - - - - 56 56 - 56
Dividend paid (Note 6) - - - - - (142,013) (142,013) (575) (142,588)
At 30 June 2014 (audited) 1,897 8 12 (16,221) 13,545 228,512 227,753 591 228,344
Total comprehensive income - - - - - 156,664 156,664 585 157,249
Change to non-controlling interest - - - - - (964) (964) (103) (1,067)
Employee Benefit Trust:-
Shares sold in the year - - - 5,203 - - 5,203 - 5,203
Shares acquired in the year - - - (2,000) - - (2,000) - (2,000)
EBT share sale - - - - (841) - (841) - (841)
Employee share option scheme:-
Share-based payments expense - - - - - 2,109 2,109 - 2,109
Current tax effect of share-based payments - - - - - 1,305 1,305 - 1,305
Deferred tax effect of share-based payments - - - - - (592) (592) - (592)
Dividend paid (Note 6) - - - - - (152,071) (152,071) (572) (152,643)
At 30 June 2015 (unaudited) 1,897 8 12 (13,018) 12,704 234,963 236,566 501 237,067
The share premium account represents the difference between the issue price
and the nominal value of shares issued.
The capital redemption reserve relates to the repurchase and cancellation of
the Company's own shares.
The Shares held by the Employee Benefit Trust ("the EBT") reserve represents
the cost of shares in Hargreaves Lansdown plc purchased in the market and held
by the Hargreaves Lansdown plc Employee Benefit Trust to satisfy options under
the Group's share option schemes.
The EBT reserve represents the cumulative gain on disposal of investments held
by the Hargreaves Lansdown EBT. The reserve is not distributable by the
Company as the assets and liabilities of the EBT are subject to management by
the Trustees in accordance with the EBT trust deed.
Non-controlling interests in the net assets of consolidated subsidiaries are
identified separately from the Group's equity therein. Non-controlling
interests consist of the minority's proportion of the net fair value of the
assets and liabilities acquired at the date of the original business
combination and the non-controlling interest's change in equity since that
date. The non-controlling interest represents a 22% shareholding in Library
Information Services Limited, a subsidiary of the Company.
Consolidated Statement of Financial Position
Note At 30 June2015(Unaudited)£'000 At 30 June2014 (Audited)£'000
ASSETS
Non-current assets
Goodwill 1,333 1,333
Other intangible assets 4,614 2,828
Property, plant and equipment 11,990 12,679
Deferred tax assets 11 6,118 6,750
24,055 23,590
Current assets
Trade and other receivables 9 411,705 303,863
Cash and cash equivalents 10 216,753 201,238
Investments 8 909 874
Current tax assets - 29
629,367 506,004
Total assets 653,422 529,594
LIABILITIES
Current liabilities
Trade and other payables 12 397,262 280,922
Provisions - 32
Current tax liabilities 18,861 20,049
416,123 301,003
Net current assets 213,244 205,001
Non-current liabilities
Provisions 232 247
Total liabilities 416,356 301,250
Net assets 237,067 228,344
EQUITY
Share capital 13 1,897 1,897
Share premium account 8 8
Investment revaluation reserve - -
Capital redemption reserve 12 12
Shares held by Employee Benefit Trust reserve (13,018) (16,221)
EBT reserve 12,704 13,545
Retained earnings 234,963 228,512
Total equity, attributable to the owners of the parent 236,556 227,753
Non-controlling interest 501 591
Total equity 237,067 228,344
Consolidated Statement of Cash Flows
Note Year ended 30 June2015(Unaudited) £,000 Year ended 30 June2014 (Audited) £,000
Cash generated from operations 14 212,991 213,741
Income tax paid (41,603) (46,720)
Net cash generated from operating activities 171,388 167,021
Investing activities
Interest received 896 1,646
Dividends received from investments 91 122
Purchases of property, plant and equipment (2,590) (5,018)
Purchase of intangible assets (2,887) (2,569)
Purchase of non-controlling interest in subsidiary (1,067) -
Purchase of available-for-sale investments (35) (262)
Net cash used in investing activities (5,592) (6,081)
Financing activities
Purchase of own shares in EBT (2,000) (4,887)
Proceeds on sale of own shares in EBT 4,362 10,019
Dividends paid to owners of the parent (152,071) (142,013)
Dividends paid to non-controlling interests (572) (575)
Net cash used in financing activities (150,281) (137,456)
Net increase in cash and cash equivalents 15,515 23,484
Cash and cash equivalents at beginning of year 201,238 177,754
Cash and cash equivalents at end of year 10 216,753 201,238
Notes to the Financial Statements
1. General information
Hargreaves Lansdown plc (the "Company") and ultimate parent of the Group is a
company incorporated and domiciled in the United Kingdom under the Companies
Act 2006 whose shares are publicly traded on the London Stock Exchange. The
address of the registered office is One College Square South, Anchor Road,
Bristol, BS1 5HL, United Kingdom. The nature of the Group's operations and its
principal activities are set out in the Business Review.
These financial statements are presented in pounds sterling which is the
currency of the primary economic environment in which the Group operates and
are rounded to the nearest thousand.
The consolidated financial statements contained in this preliminary
announcement do not constitute statutory accounts as defined in Section 434 of
the Companies Act 2006. The financial statements are extracted from the 2015
Group financial statements which have yet to be signed and have not yet been
delivered to the Registrar of Companies. The audit of the statutory accounts
for the year ended 30 June 2015 is not yet complete. These accounts will be
finalised on the basis of the financial information presented by the directors
in this preliminary announcement and will be delivered to the Registrar of
Companies following the company's annual general meeting. The financial
information included in this preliminary announcement has been based on the
Company's financial statements which are prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted for use in the
EU. The principal accounting policies are set out in the Group's 2014
statutory accounts.
The report of the auditors on the financial statements for the year ended 30
June 2014, which were prepared in accordance with IFRS as adopted for use in
the EU, was unqualified, did not draw attention to any matters by way of
emphasis without qualifying their report and did not contain a statement under
section 498 (2) or 498 (3) of the Companies Act 2006. The financial
statements for the financial year ended 30 June 2014 have been delivered to
Companies House.
2. Revenue
Revenue represents commission receivable from financial services provided to
clients, interest income on client money and management fees charged to
clients. It relates to services provided in the UK and is stated net of value
added tax. An analysis of the Group's revenue is as follows:
Revenue from services: Year ended 30 June2015 £'000 Year ended 30 June2014 £'000
Recurring income 329,900 287,293
Transactional income 58,816 65,118
Other income 6,421 5,982
Total revenue 395,137 358,393
Recurring income principally comprises renewal income, management fees,
platform fees and interest income on client money. Transactional income
principally comprises commission earned from stockbroking transactions. Other
income principally represents the amount of fees receivable from the provision
of funds data services and research through Library Information Services Ltd
to external parties.
Following the implementation of the Retail Distribution Review ("RDR") on 1
March 2014, total revenue earned from investment funds held by clients
significantly increased as a new platform fee was introduced. At the same time
commission income is being received from the fund management groups on funds
purchased by clients before the RDR implementation date. Where we still
receive commission on these pre RDR or "legacy funds" the vast majority is now
passed back to our clients in the form of a significantly higher loyalty bonus
which is shown within commission payable in the income statement.
3.
Segment information
The Group is organised into three business segments, namely the Vantage
Division, the Discretionary Division and the Third Party/Other Services
Division. This is based upon the Group's internal organisation and management
structure and is the primary way in which the Chief Operating Decision Maker
(CODM) is provided with financial information. The CODM has been identified as
the Board of Executive Directors.
The 'Vantage' division represents all activities relating to our direct to
private investor platform.
The 'Discretionary/Managed' division is focused on the provision of managed
services such as our Portfolio Management Service (PMS) and range of
Multi-Manager funds.
The 'Third Party/Other Services' division includes activities relating to the
broking of third party investments and pensions, certificated share dealing
and other niche services such as currency, CFD's and spread betting. In this
division, clients' investments are not administered within the Group.
The 'Group' segment contains items that are shared by the Group as a whole and
cannot be reasonably allocated to other operating segments.
Segment expenses are those that are directly attributable to a segment
together with the relevant portion of other expenses that can reasonably be
allocated to the segment. Gains or losses on the disposal of
available-for-sale investments, investment income, interest payable and tax
are not allocated by segment.
Segment assets and liabilities include items that are directly attributable to
a segment plus an allocation on a reasonable basis of shared items. Corporate
assets and liabilities are not included in business segments and are thus
unallocated. At 30 June 2015 and 2014, these comprise cash and cash
equivalents, short-term investments, tax-related and other assets or
liabilities.
Consolidation adjustments relate to the elimination of inter-segment revenues
at arm's length prices, balances and investments in group subsidiaries
required on consolidation.
Vantage Discretionary Third Party/Other Services Group Consolidation Adjustment Consolidated
£'000 £'000 £'000 £'000 £'000 £'000
Year ended 30 June 2015
Revenue from external customers 320,849 52,451 21,837 - - 395,137
Commission payable (100,879) (15) (55) - - (100,949)
Total segment revenue 219,970 52,436 21,782 - - 294,188
Depreciation and amortisation 3,537 355 488 - - 4,380
Investment revenue - - - 987 - 987
Other gains and losses - - - - - -
Reportable segment profit before tax 147,463 39,855 11,516 204 - 199,038
Reportable segment assets 398,52 35,022 13,159 249,380 (42,722) 653,421
Reportable segment liabilities (387,092) (24,966) (409) (44,458) 40,571 (416,354)
Net segment assets 11,490 10,056 12,750 204,922 (2,151) 237,067
Year ended 30 June 2014
Revenue from external customers 287,219 45,103 26,071 - - 358,393
Commission payable (66,299) (159) (68) - - (66,526)
Inter-segment revenue - 4,799 - - (4,799) -
Total segment revenue 220,920 49,743 26,003 - (4, 799) 291,876
Depreciation and amortisation 1,853 279 368 - - 2,500
Investment revenue - - - 1,768 - 1,768
Other losses - - - (3) - (3)
Reportable segment profit before tax 160,565 31,946 16,210 1,065 - 209,786
Reportable segment assets 264,894 27,631 16,720 237,673 (17,324) 529,594
Reportable segment liabilities (243,230) (13,200) (13,249) (46,744) 15,173 (301,250)
Net segment assets 21,664 14,431 3,471 190,929 (2,151) 228,344
Information about products/services
The Group's operating segments are business units that provide different
products and services. The breakdown of revenue from external customers for
each type of service is therefore the same as the segmental analysis above.
Information about geographical area
All business activities are located within the UK.
Information about major customers
The Group does not rely on any individual customer.
4. Investment revenue
Year ended 30 June2015 £'000 Year ended 30 June2014 £'000
Interest on bank deposits 896 1,646
Dividends from equity investment 91 122
987 1,768
5. Tax
Year ended 30 June2015 £'000 Year ended 30 June2014 £'000
Current tax: on profits for the year 41,749 46,723
Current tax: adjustments in respect of prior years - 35
Deferred tax (Note 11) 41 235
Deferred tax: adjustments in respect of prior years (1) 59
41,789 47,052
Corporation tax is calculated at 20.75% of the estimated assessable profit for
the year to 30 June 2015 (2014: 22.5%).
In addition to the amount charged to the income statement, certain tax amounts
have been charged or (credited) directly to equity as follows:
Year ended 30 June2015 £'000 Year ended 30 June2014 £'000
Deferred tax relating to share based payments 592 (56)
Current tax relating to share-based payments (1,305) (3,848)
(713) (3,904)
Factors affecting tax charge for the year
It is expected that the ongoing effective tax rate will remain at a rate
approximating to the standard UK corporation tax rate in the medium term. The
standard UK corporation tax rate was reduced to 20% (from 21%) on 1 April 2015
and accordingly the Group's profits for this accounting period are taxed at an
effective rate of 20.75%. Deferred tax has been recognised at 20%, being the
rate substantially enacted at the balance sheet date. A deferred tax asset in
respect of future share option deductions has been recognised based on the
Company's share price as at 30 June 2015.
Factors affecting future tax charge
Any increase or decrease to the Company's share price will impact the amount
of tax deduction available in future years on the value of shares acquired by
staff under share incentive schemes. The Finance Act 2013 received Royal
Assent on 17 July 2013 and will reduce the standard rate of UK corporation tax
to 20% from 1 April 2015.
The charge for the year can be reconciled to the profit per the income
statement as follow:
Year ended 30 June2015 £'000 Year ended 30 June2014 £'000
Profit before tax from continuing operations 199,038 209,786
Tax 41,302 47,205
- at the UK corporation tax rate of: 20.75% 22.50%
Items (allowable) / not allowable for tax 424 (396)
Effect of adjustments relating to prior years (1) 94
Impact of the changes in tax rate 64 149
Tax expense for the year 41,788 47,052
Effective tax rate 21.0% 22.4%
6. Dividends
Year ended 30 June2015 £'000 Year ended 30 June2014 £'000
Amounts recognised as distributions to equity holders in the period:
2014 Second interim dividend of 15.39p (2013: 14.38p) per share 72,449 67,355
2014 Special dividend of 9.61p (2013: 8.91p) per share 45,248 41,734
2015 First interim dividend of 7.3p (2014: 7.0p) per share 34,374 32,924
Total dividends paid during the year 152,071 142,013
After the balance sheet date, the directors declared a second interim (final)
ordinary dividend of 14.30 pence per share and a special dividend of 11.40
pence per share payable on 30 September 2015 to shareholders on the register
on 18 September 2015. Dividends are required to be recognised in the
financial statements when paid, and accordingly the declared dividend amounts
are not recognised in these financial statements, but will be included in the
2016 financial statements as follows:
£'000
2015 Second interim dividend of 14.30p (2014: 15.39p) per share 67,457
2015 Special dividend of 11.40p (2014: 9.61p) per share 53,803
Under an arrangement dated 30 June 1997 the Hargreaves Lansdown Employee
Benefit Trust, which held the following number of ordinary shares in
Hargreaves Lansdown plc at the date shown, has agreed to waive all dividends.
Year ended 30 June2015 Year ended 30 June2014
Number of shares held by the Hargreaves Lansdown Employee Benefit Trust 2,726,361 3,547,124
Representing % of called-up share capital 0.57% 0.75%
7. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary
shares in free issue during the period, including ordinary shares held in the
EBT reserve which have vested unconditionally with employees.
Diluted earnings per share is calculated adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares.
The weighted average number of anti-dilutive share options and awards excluded
from the calculation of diluted earnings per share was 1,010,928 at 30 June
2015 (2014: 179,414).
Year ended 30 June 2015 Year ended 30 June 2014
£'000 £'000
Earnings (all from continuing operations):
Earnings for the purposes of basic and diluted EPS - net profit attributable to equity holders of parent company 156,664 162,091
Number of shares:
Weighted average number of ordinary shares for the purposes of diluted EPS 473,716,102 474,365,495
Weighted average number of shares held by HL EBT which have not vested unconditionally with employees (2,068,619) (4,109,730)
Weighted average number of ordinary shares for the purposes of basic EPS 471,647,483 470,255,765
Earnings per share: Pence Pence
Basic EPS 33.2 34.5
Diluted EPS 33.1 34.2
8. Investments
Year ended 30 June 2015 Year ended 30 June 2014
£'000 £'000
At beginning of year 874 613
Purchases 35 261
At end of year 909 874
Comprising:
Current asset investment - UK listed securities valued at quoted market price 645 610
Current asset investment - Unlisted securities valued at cost 264 264
£645,000 (2014: £610,000) of investments are classified as held at fair value
through profit and loss and £264,000 (2014: £264,000) are classified as
available-for-sale. Available-for-sale investments have been included at fair
value where a fair value can be reliably calculated, with the revaluation
gains and losses reflected in the investment revaluation reserve as shown in
the Consolidated Statement of Changes in Equity, until sale when the
cumulative gain or loss is transferred to the income statement. If a fair
value cannot be reliably calculated by reference to a quoted market price or
other method of valuation, available-for-sale investments are included at
cost, with a fair value adjustment recognised upon disposal of the
investment.
9. Trade and other receivables
At 30 June2015 £'000 At 30 June2014 £'000
Financial assets:
Trade receivables 380,803 262,257
Other receivables 1,460 6,039
382,263 268,296
Non-financial assets:
Prepayments and other accrued income 29,442 35,567
411,705 303,863
Trade and other receivables are measured at initial recognition at fair value.
Appropriate allowances for estimated irrecoverable amounts are recognised in
profit or loss when there is objective evidence that the asset is impaired.
In accordance with market practice and IFRS, certain balances with clients,
Stock Exchange member firms and other counterparties totalling £363.2 million
(2014: £242.9 million) are included in trade receivables. These balances are
presented net where there is a legal right of offset and the ability and
intention to settle net. The gross amount of trade receivables is £457.1
million and the gross amount offset in the balance sheet with trade payables
is £93.9 million. Other than counterparty balances trade receivables primarily
consist of fees and amounts owed by clients and renewal commission owed by
fund management groups.
10. Cash and cash equivalents
At 30 June2015 £'000 At 30 June2014 £'000
Restricted cash - balances held by EBT 7,602 4,471
Group cash and cash equivalent balances 209,151 196,767
216,753 201,238
Cash and cash equivalents comprise cash on hand and demand deposits held by
the Group that are readily convertible to a known amount of cash. The carrying
amount of these assets is approximately equal to their fair value.
At 30 June 2015 segregated deposit amounts held by the Group on behalf of
clients in accordance with the client money rules of the Financial Conduct
Authority amounted to £5,499 million (2014: £4,109 million). The client
retains the beneficial interest in these deposits and accordingly they are not
included in the balance sheet of the Group.
11. Deferred tax
The following are the major deferred tax assets recognised and movements
thereon during the current and prior reporting years. Deferred tax has been
recognised at 20%, being the rate in force at the balance sheet date.
Accelerated tax depreciation Share-based payments Other deductible temporary differences Total
£'000 £'000 £'000 £'000
Group
At 1 July 2013 447 5,173 1,368 6,988
(Charge)/Credit to income (302) 11 (3) (294)
Credit to equity - 56 - 56
At 30 June 2014 145 5,240 1,365 6,750
Credit/(charge) to income 80 83 (203) (40)
Charge to equity - (592) - (592)
At 30 June 2015 225 4,731 1,162 6,118
12. Trade and other payables
At 30 June2015 £'000 At 30 June2014 £'000
Financial liabilities:
Trade payables 362,808 242,153
Social security and other taxes 9,692 11,488
Other payables 12,176 16,385
384,676 270,026
Non-financial liabilities:
Accruals and deferred income 12,586 10,896
397,262 280,922
In accordance with market practice and IFRS, certain balances with clients,
Stock Exchange member firms and other counterparties totalling £361.9 million
(2014: £241.1 million) are included in trade payables. As stated in note 9
above, where we have a legal right of offset and the ability and intention to
settle net, trade payable balances have been presented net. The gross amount
of trade payables is £455.8 million and the gross amount offset in the balance
sheet with trade receivables is £93.9 million.
Other payables principally comprise amounts owed to clients as a loyalty bonus
and to staff as a bonus. Accruals and deferred income principally comprise
amounts outstanding for trade purchases and revenue received but not yet
earned on group pension schemes where an on-going service is still being
provided.
13. Share capital
At 30 June2015 £'000 At 30 June2014 £'000
Authorised:
525,000,000 ordinary shares of 0.4p each 2,100 2,100
Issued and fully paid:
Ordinary shares of 0.4p each 1,897 1,897
Shares Shares
Issued and fully paid:
Number of ordinary shares of 0.4p each 474,318,625 474,318,625
The Company has one class of ordinary shares which carry no right to fixed
income.
14. Note to the consolidated statement of cash flows
Year ended 30 June2015 £'000 Year ended 30 June2014 £'000
Profit for the year after tax 157,249 162,734
Adjustments for:
Investment revenues (987) (1,768)
Income tax expense 41,789 47,052
Depreciation of plant and equipment 3,279 2,074
Amortisation of intangible assets 1,101 426
Loss on disposal - 3
Share-based payment expense 2,109 2,016
Decrease in provisions (47) (125)
Operating cash flows before movements in working capital 204,493 212,412
Increase in receivables (107,842) (19,648)
Increase in payables 116,340 20,977
Cash generated from operations 212,991 213,741
15. Going concern
The Group maintains on-going forecasts that indicate continued profitability
in the 2016 financial year. Stress test scenarios are undertaken, the
outcomes of which show that the Group has adequate capital resources for the
foreseeable future even in adverse economic conditions. The Group's business
is highly cash generative with a low working capital requirement; indeed, the
forecast cash flows show that the Group will remain highly liquid in the
forthcoming financial year. The Directors therefore believe that the Group is
well placed to manage its business risks successfully despite the current
uncertain economic outlook. After making enquiries, the Directors'
expectation is that the Group will have adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they continue
to adopt the going concern basis in preparing this preliminary results
statement.
This information is provided by RNS
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