Hargreaves Lansdown reports 13.5 pp ROIC decline from 101% to 87.5% in 2015 and 3.8% EBITDA decline
09 Sep 2015 • About Hargreaves Lansdown (
$HL.) • By InTwits
Hargreaves Lansdown reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hargreaves Lansdown is a fast growth stock: FY2015 revenue growth was 10.3%, 5 year revenue CAGR was 20.0% at FY2015 ROIC 87.5%
- Hargreaves Lansdown has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%. At the same time it's in pair with industry average of 18.0%.
- CAPEX is quite volatile: 2.6 in FY2015, 5.0 in FY2014, 5.3 in FY2013, 1.00 in FY2012, 1.6 in FY2011
- The company has highly profitable business model: ROIC is at 87.5%
- It operates with high leverage: Net Debt/EBITDA is -1.1x while industry average is -1.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hargreaves Lansdown ($HL.) key annual financial indicators
| mln. £ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 207.9 | 238.7 | 292.4 | 358.4 | 395.1 | 10.3% |
| SG&A | 83.5 | 83.4 | 100.5 | 11.3 | 12.7 | 13.2% |
| EBITDA | 126.8 | 153.0 | 194.2 | 210.5 | 202.4 | -3.8% |
| Net Income | 91.8 | 113.0 | 148.4 | 162.1 | 156.7 | -3.3% |
Balance Sheet
|
|---|
| Cash | 122.0 | 157.7 | 197.6 | 201.2 | 216.8 | 7.7% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 1.6 | 1.0 | 5.3 | 5.0 | 2.6 | -48.4% |
Ratios
|
|---|
| Revenue growth | 30.8% | 14.8% | 22.5% | 22.6% | 10.3% | |
| EBITDA growth | 44.4% | 20.7% | 26.9% | 8.4% | -3.8% | |
| EBITDA Margin | 61.0% | 64.1% | 66.4% | 58.7% | 51.2% | -7.5% |
| Net Income Margin | 44.2% | 47.3% | 50.7% | 45.2% | 39.6% | -5.6% |
| SG&A, % of revenue | 40.1% | 34.9% | 34.4% | 3.1% | 3.2% | 0.1% |
| CAPEX, % of revenue | 0.8% | 0.4% | 1.8% | 1.4% | 0.7% | -0.7% |
| ROIC | 133.9% | 108.7% | 111.7% | 101.0% | 87.5% | -13.5% |
| ROE | 93.3% | 78.5% | 83.9% | 76.4% | 67.5% | -8.9% |
| Net Debt/EBITDA | -1.0x | -1.0x | -1.0x | -1.0x | -1.1x | -0.1x |
Revenue and profitability
The company's Revenue jumped on 10.3% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 7.5 pp from 58.7% to 51.2% in FY2015.
SG&A as a % of Revenue showed almost no change in FY2015.
Net Income marign decreased on 5.6 pp from 45.2% to 39.6% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 0.66%. CAPEX/Revenue showed almost no change from FY2012 to FY2015. It's average CAPEX/Revenue for the last three years was 1.3%.
Return on investment
The company operates at high and attractive ROIC (87.53%) and ROE (67.48%). ROIC dropped on 13.5 pp from 101% to 87.5% in FY2015. ROE decreased on 8.9 pp from 76.4% to 67.5% in FY2015.
Leverage (Debt)
The company has no debt. Cash increased on 7.7% in FY2015.
Appendix 1: Peers in Financial Services
Below we provide Hargreaves Lansdown benchmarking against other companies in Financial Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| First Property Group ($FPO) | | 31.4% | 13.9% | 69.7% | 2.6% |
| Fairpoint Group ($FRP) | -12.0% | 32.7% | -17.5% | 35.1% | |
| Commercial Bank Of Qatar(The) ($CBQS) | 5.9% | 5.7% | 19.3% | 26.1% | |
| Manx Financial Group ($MFX) | 28.6% | 5.6% | 33.3% | 22.0% | |
| Stm Group ($STM) | -6.9% | 18.7% | 15.6% | 18.9% | |
| |
|---|
| Median (29 companies) | 3.7% | 5.2% | 11.3% | 3.1% | 3.0% |
|---|
| Hargreaves Lansdown ($HL.) | | 14.8% | 22.5% | 22.6% | 10.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Record ($REC) | 99.6% | 98.8% | 98.8% | 99.6% | 99.3% |
| Panmure Gordon & Co ($PMR) | 93.9% | 95.2% | 95.0% | 95.3% | |
| Schroders ($SDRC) | 75.8% | 76.9% | 76.2% | 77.7% | |
| London Capital Group Hldgs ($LCG) | 64.7% | 64.2% | 70.5% | 73.6% | |
| Walker Crips Group ($WCW) | 74.5% | 71.8% | 58.0% | 68.2% | 66.7% |
| |
|---|
| Median (15 companies) | 56.8% | 56.8% | 53.3% | 53.0% | 65.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Livermore Investments Group Ltd ($LIV) | 92.1% | 84.9% | 64.8% | 78.8% | |
| Real Estate Credit Investments Pcc ($RECP) | | 58.6% | 89.3% | 77.0% | 80.3% |
| Efg Hermes Hldgs ($EFGD) | 67.0% | 66.0% | 61.4% | 63.1% | |
| Manx Financial Group ($MFX) | 24.2% | 39.8% | 49.2% | 56.5% | |
| First Property Group ($FPO) | 45.5% | 44.8% | 37.6% | 40.2% | 42.9% |
| |
|---|
| Median (25 companies) | 15.5% | 13.3% | 16.3% | 14.5% | 15.4% |
|---|
| Hargreaves Lansdown ($HL.) | 61.0% | 64.1% | 66.4% | 58.7% | 51.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Daishin Securities Co ($DSS) | 2.8% | 6.0% | 24.7% | 15.0% | |
| Efg Hermes Hldgs ($EFGD) | 4.9% | 5.6% | 4.4% | 6.0% | |
| Fulcrum Utility Services Ld ($FCRM) | | 5.4% | 5.0% | 3.7% | 0.1% |
| London Capital Group Hldgs ($LCG) | 5.7% | 1.8% | 0.2% | 3.4% | |
| Guinness Peat Group ($GPG) | 3.7% | 2.6% | 0.6% | 2.9% | |
| |
|---|
| Median (28 companies) | 1.1% | 1.3% | 1.1% | 1.3% | 0.6% |
|---|
| Hargreaves Lansdown ($HL.) | 0.8% | 0.4% | 1.8% | 1.4% | 0.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Manx Financial Group ($MFX) | -1.2% | 8.0% | 19.7% | 29.7% | |
| Record ($REC) | 44.4% | 23.8% | 19.6% | 20.2% | 20.2% |
| S & U ($46IE) | | 17.6% | 19.1% | 19.7% | 13.9% |
| Fairpoint Group ($FRP) | -2.1% | 18.6% | 9.0% | 19.4% | |
| Impax Asset Management Group ($IPX) | 12.5% | -13.7% | 17.2% | 18.7% | |
| |
|---|
| Median (29 companies) | 5.4% | 5.4% | 6.0% | 8.6% | 7.1% |
|---|
| Hargreaves Lansdown ($HL.) | 133.9% | 108.7% | 111.7% | 101.0% | 87.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Private & Commercial Finance Group ($PCF) | 16.0x | 12.8x | 14.3x | 13.9x | 12.9x |
| Daishin Securities Co ($DSS) | 0.8x | 1.5x | 2.4x | 10.7x | |
| First Property Group ($FPO) | 5.6x | 3.6x | 3.0x | 5.6x | 12.3x |
| Livermore Investments Group Ltd ($LIV) | 4.9x | 3.8x | 4.6x | 3.4x | |
| S & U ($46IE) | | 1.4x | 1.3x | 1.7x | 3.1x |
| |
|---|
| Median (25 companies) | -1.6x | -1.1x | -1.3x | -2.1x | -0.3x |
|---|
| Hargreaves Lansdown ($HL.) | -1.0x | -1.0x | -1.0x | -1.0x | -1.1x |
