- Part 2: For the preceding part double click ID:nRSC8640Na
- - - - (50) (50) - (50)
Deferred tax effect of share-based payments - - - - - (1,168) (1,168) - (1,168)
Dividend paid - - - - - (117,697) (117,697) - (117,697)
At 31 December 2014 1,897 8 12 (16,687) 13,671 189,426 188,327 843 189,170
At 1 July 2015 1,897 8 12 (13,018) 12,704 234,963 236,566 501 237,067
Total comprehensive income - - - - - 86,711 86,711 185 86,896
Employee Benefit Trust:
Shares sold during the period - - - 8,272 - - 8,272 - 8,272
Shares acquired in the period - - - - - - - - -
EBT share sale - - - - (747) - (747) - (747)
Employee share option scheme:
Share-based payments expense - - - - - 1,124 1,124 - 1,124
Current tax effect of share-based payments - - - - - 2,446 2,446 - 2,446
Deferred tax effect of share-based payments - - - - - 1,015 1,015 - 1,015
Dividend paid - - - - - (121,365) (121,365) - (121,365)
At 31 December 2015 1,897 8 12 (4,746) 11,957 204,894 214,022 686 214,708
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 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
Hargreaves Lansdown Plc 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.
Condensed Consolidated Balance Sheet
Note Unauditedat 31 December2015 £'000 Unauditedat 31 December2014 £'000 Audited at 30 June 2015 £'000
ASSETS:
Non-current assets
Goodwill 1,333 1,333 1,333
Other intangible assets 4,946 3,544 4,614
Property, plant and equipment 12,506 12,311 11,990
Deferred tax assets 6,833 5,751 6,118
25,618 22,939 24,055
Current assets
Trade and other receivables 14 308,233 260,307 411,705
Cash and cash equivalents 15 181,716 153,915 216,753
Investments 13 727 582 909
Current tax assets - 29 -
490,676 414,833 629,367
Total assets 516,294 437,772 653,422
LIABILITIES:
Current liabilities
Trade and other payables 16 282,876 226,485 397,262
Provisions - 104 -
Current tax liabilities 18,478 21,773 18,861
301,354 248,362 416,123
Net current assets 189,322 166,471 213,244
Non-current liabilities
Provisions 232 240 232
Total liabilities 301,586 248,602 416,356
Net assets 214,708 189,170 237,067
EQUITY
Share capital 17 1,897 1,897 1,897
Share premium account 8 8 8
Capital redemption reserve 12 12 12
Shares held by Employee Benefit Trust reserve (4,746) (16,687) (13,018)
EBT reserve 11,957 13,671 12,704
Retained earnings 204,894 189,426 234,963
Total equity, attributable to the owners of the parent 214,022 188,327 236,566
Non-controlling interest 686 843 501
Total equity 214,708 189,170 237,067
The condensed consolidated financial statements of Hargreaves Lansdown plc,
registered number 02122142, were approved by the board of directors on 2
February 2016, signed on its behalf and authorised for issue by:
Ian Gorham
Chief Executive
Condensed Consolidated Statement of Cash Flows
Note Unaudited6 months ended 31 December2015 £'000 Unaudited6 months ended 31 December2014 £'000 Audited Year to 30 June 2015 £'000
Net cash from operating activities
Cash generated from operations 18 100,546 93,614 212,991
Income tax paid (18,850) (20,230) (41,603)
Net cash generated from operating activities 81,696 73,384 171,388
Investing activities
Interest received 242 520 896
Dividends received from investments 27 - 91
Proceeds on disposal of investments 182 292 -
Purchase of property, plant and equipment (2,242) (1,286) (2,590)
Purchase of intangible assets (1,101) (1,129) (2,887)
Purchase of non-controlling-interest in subsidiary - (1,067) (1,067)
Purchase of available-for-sale investments - - (35)
Net cash used in investing activities (2,892) (2,670) (5,592)
Financing activities
Purchase of own shares in EBT - (2,000) (2,000)
Proceeds on sale of own shares in EBT 7,524 1,660 4,362
Dividends paid to owners of the parent (121,365) (117,697) (152,071)
Dividends paid to non-controlling interests - - (572)
Net cash used in financing activities (113,841) (118,037) (150,281)
Net (decrease)/increase in cash and cash equivalents (35,037) (47,323) 15,515
Cash and cash equivalents at beginning of period 216,753 201,238 201,238
Cash and cash equivalents at end of period 15 181,716 153,915 216,753
Notes to the Condensed Consolidated Financial Statements
1. Basis of preparation
The Interim Financial Statements for the six months to 31 December 2015 have
been prepared using accounting policies in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union and in
accordance with the International Accounting Standard (IAS) 34 Interim
Financial Reporting and theDisclosure Rules and Transparency Rules of the
United Kingdom's Financial Conduct Authority. The Interim Financial
Statements have been prepared on the historical cost basis, except for the
revaluation of certain financial instruments, and are presented in pounds
sterling which is the currency of the primary economic environment in which
the Group operates. Having reassessed the principal risks, the directors
considered it appropriate to adopt the going concern basis in preparing the
Interim financial statements.
The financial information contained in these Interim Financial Statements does
not constitute statutory accounts within the meaning of Section 434 of the
Companies Act 2006. However, the information has been reviewed by the
company's auditor, PricewaterhouseCoopers LLP, and their report appears
earlier in this document. The financial information for the year ended 30
June 2015 has been derived from the audited financial statements of Hargreaves
Lansdown plc for that year, which have been reported on by
PricewaterhouseCoopers LLP and delivered to the Registrar of Companies.
Copies are available on-line at www.hl.co.uk. The auditor's report on those
accounts was not qualified, did not include a reference to any matters to
which the auditor drew attention by the way of emphasis without qualifying the
report and did not contain statements under section 498 (2) or (3) of the
Companies Act 2006.
The same accounting policies, methods of computation and presentation have
been followed in the preparation of the Interim Financial Statements for the
six months ended 31 December 2015 as were applied in the Audited Annual
Financial Statements for the year ended 30 June 2015.
2. Seasonality of operations
A high proportion of the Group's revenue is derived from the value of assets
under administration or management in either the Vantage Service or the
Portfolio Management Service (PMS). The values of these assets are influenced
predominantly by new business volumes, the stock market and client
withdrawals. Of these factors, new business within Vantage tends to be
seasonal with greater inflows in the second half of the financial year between
January and June. This can be attributed to the timing of the UK tax year-end
and the fact that many individuals review their investments around this time.
The receipt of new business into PMS is less seasonal than this as a result of
being distributed through our Financial Advisers. In this instance, the inflow
of business is also influenced by the timing of when advisers meet with
clients.
As new business only accounts for a small proportion of asset values and
because of other revenue streams and market effects, overall Group net revenue
is less seasonal than new business inflows. In the year ended 30 June 2015,
51% of revenue was earned during the second half of the year.
3. Segment information
The Group is organised into three business segments, namely the Vantage
division, the Discretionary and Managed 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 Executive Committee.
The 'Vantage' division represents all activities relating to our direct to
private investor platform.
The 'Discretionary and 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, CFDs 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 31 December 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,
balances and investments in group subsidiaries required on consolidation.
PMS platform is provided for Vantage products hence platform fees charged by
PMS is included under the Vantage segment.
3. Segment information (continued)
Vantage Discretionary and Managed Third Party/Other Services Group Consolidation Adjustment Consolidated
£'000 £'000 £'000 £'000 £'000 £'000
6 months ended 31 December 2015
Revenue from external customers 161,135 29,197 10,410 - - 200,742
Commission payable (41,878) (27) (36) - - (41,941)
Inter-segment revenue - - - - - -
Total segment net revenue 119,257 29,170 10,374 - - 158,801
Depreciation and amortisation 1,984 185 326 - - 2,495
Interest revenue - - - 269 - 269
Other gains - - - - - -
Reportable segment profit before tax 81,494 22,924 4,092 (400) - 108,110
Reportable segment assets 294,377 18,948 12,143 214,231 (23,405) 516,294
Reportable segment liabilities (265,877) (18,550) (356) (36,987) 20,184 (301,586)
Net segment assets 28,500 398 11,787 177,244 (3,221) 214,708
6 months ended 31 December 2014
Revenue from external customers 161,289 24,511 11,447 - - 197,247
Commission payable (53,106) - (39) - - (53,145)
Inter-segment revenue - - - - - -
Total segment net revenue 108,183 24,511 11,408 - - 144,102
Depreciation and amortisation 1,669 174 224 - - 2,067
Interest revenue - - - 520 - 520
Other gains - - - - - -
Reportable segment profit before tax 76,489 18,543 6,729 113 - 101,874
Reportable segment assets 238,302 13,367 17,680 183,027 (14,604) 437,772
Reportable segment liabilities (155,981) (10,508) (12,908) (40,737) (28,468) (248,602)
Net segment assets 82,321 2,859 4,772 142,290 (43,072) 189,170
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. Material events after interim period-end
After the interim balance sheet date, an ordinary interim dividend of 7.8
pence per share (H1 2015: interim dividend 7.3p) amounting to a total dividend
of £36.9 million (2015: £34.4m) was declared by the plc Directors. These
financial statements do not reflect this dividend payable.
There have been no other material events after the end of the interim period.
5. Changes in capital expenditure and capital commitments since the
last annual balance sheet date
Capital expenditure
During the six months ended 31 December 2015, the Group acquired property,
plant, equipment and software assets with a cost of £3.3 million (H1 2015:
£2.4m, year to 30 June 2015: £5.5m).
Capital commitment
At the balance sheet date, the Group had capital commitments of £0.8 million
(31 December 2014: £nil, 30 June 2015: £1.6m).
6. Principal risks and uncertainties
The principal risks and uncertainties which could impact the Group for the
remainder of the financial year are those detailed on pages 26 to 27 of the
Group's Annual Report and Financial Statements 2015, a copy of which is
available on the Group's website www.hl.co.uk. These remain the principal
risks and uncertainties for the second half of this financial year and beyond;
the key ones of which are listed below and they are regularly considered by
the Board.
Operational risks
· Cybercrime, fraud or security breaches in respect of the Group's
information, data, software or information technology systems.
· Business continuity event.
· Changing markets and increased competition.
Financial risks
· Risk of a decline in earnings due to a decline in interest rates or
regulatory changes affecting interest income.
· Fluctuations in the capital markets adversely affecting trading
activity and /or the value of the Group's assets under administration.
The Group is exposed to interest rate risk, the risk of sustaining losses from
adverse movements in interest bearing assets. These assets comprise cash and
cash equivalents. At 31 December 2015 the value of such assets on the Group
balance sheet was £182 million (at 31 December 2014: £154m). A 50bps (0.5%)
move in interest rates, in isolation, would therefore, not have a material
impact on the Group balance sheet or results. This exposure is continually
monitored to ensure that the Group is maximizing its interest earning
potential within accepted liquidity and credit constraints. The Group has no
external borrowings and as such is not exposed to interest rate or refinancing
risk on borrowings.
As a source of revenue is based on the value of client cash under
administration, the Group also has an indirect exposure to interest rate risk
on cash balances held for clients. These balances are disclosed in Note 15 and
are not on the Group balance sheet.
7. Staff numbers
Unaudited6 months ended 31 December2015 No. Unaudited6 months ended 31 December2014 No. Audited Year to 30 June 2015 No.
Average number of employees of the Group
(including executive directors) 964 881 910
8. Revenue
Revenue represents income 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:
8. Revenue (continued)
Unaudited6 months ended 31 December2015 £'000 Unaudited6 months ended 31 December2014 £'000 Audited Year to 30 June 2015 £'000
Recurring income 168,416 164,253 329,900
Transactional income 29,453 29,844 58,816
Other income 2,873 3,150 6,421
Total operating revenue from services 200,742 197,247 395,137
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.
9. Investment revenues Unaudited6 months ended 31 December2015 £'000 Unaudited6 months ended 31 December2014 £'000 Audited Year to 30 June 2015 £'000
Interest on bank deposits 242 520 896
Dividends from equity investment 27 - 91
269 520 987
10. Tax Unaudited6 months ended 31 December2015 £'000 Unaudited6 months ended 31 December2014 £'000 Audited Year to 30 June 2015 £'000
The tax charge for the period is based on the prevailing effective rate of tax for the year to 30 June 2016 of 20% (30 June 2015: 20.75%).
Current tax - on profit for the period 21,269 21,904 41,749
Current tax - adjustments in respect of prior years (356) - -
Deferred tax 72 (161) 41
Deferred tax - adjustments in respect of prior years 229 (8) (1)
21,214 21,735 41,789
In addition to the amount charged to the income statement, certain tax amounts
have been charged / (credited) directly to equity as follows:
Unaudited6 months ended 31 December2015 £'000 Unaudited 6 months ended 31 December2014 £'000 Audited Year to 30 June 2015 £'000
Deferred tax relating to share-based payments (1,015) 1,168 592
Current tax relating to share-based payments (2,446) 50 (1,305)
(3,461) 1,218 (713)
11. Dividends paid
Unaudited6 months ended 31 December2015 £'000 Unaudited 6 months ended 31 December2014 £'000 Audited Year to 30 June 2015 £'000
Amounts recognised as distributions to equity holders in the period:
2015 Final dividend of 14.30p per share 67,515 - -
2015 Special dividend of 11.40p per share 53,850 - -
2015 Interim dividend of 7.30p per share - - 34,374
2014 Final dividend of 15.39p per share - 72,449 72,449
2014 Special dividend of 9.61p per share - 45,248 45,248
Total 121,365 117,697 152,071
The Hargreaves Lansdown Employee Benefit Trust (the "EBT"), which held the
following number of ordinary shares in Hargreaves Lansdown plc at the date
shown, has agreed
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