Hargreaves Lansdown Net Income surged on 12.9% in 2016 while Revenue decreased slightly on 1.7%
07 Sep 2016 • About Hargreaves Lansdown (
$HL.) • By InTwits
Hargreaves Lansdown reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hargreaves Lansdown has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%.
- The company has highly profitable business model: ROIC is at 90.0%
- It operates with high leverage: Net Debt/EBITDA is -0.9x while industry average is -4.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hargreaves Lansdown ($HL.) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 238.7 | 292.4 | 358.4 | 395.1 | 388.3 | -1.7% |
| SG&A | 83.4 | 100.5 | 11.3 | 12.7 | 11.2 | -11.9% |
| EBITDA | 153.0 | 194.2 | 210.5 | 202.4 | 223.5 | 10.4% |
| Net Income | 113.0 | 148.4 | 162.1 | 156.7 | 176.9 | 12.9% |
Balance Sheet
|
|---|
| Cash | 157.7 | 197.6 | 201.2 | 216.8 | 211.4 | -2.5% |
| 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 | 1.0 | 5.3 | 5.0 | 2.6 | 2.5 | -2.2% |
Ratios
|
|---|
| Revenue growth | 14.8% | 22.5% | 22.6% | 10.3% | -1.7% | |
| EBITDA growth | 20.7% | 26.9% | 8.4% | -3.8% | 10.4% | |
| EBITDA Margin | 64.1% | 66.4% | 58.7% | 51.2% | 57.5% | 6.3% |
| Net Income Margin | 47.3% | 50.7% | 45.2% | 39.6% | 45.6% | 5.9% |
| SG&A, % of revenue | 34.9% | 34.4% | 3.1% | 3.2% | 2.9% | -0.3% |
| CAPEX, % of revenue | 0.4% | 1.8% | 1.4% | 0.7% | 0.7% | -0.0% |
| ROIC | 108.7% | 111.7% | 101.0% | 87.5% | 90.0% | 2.5% |
| ROE | 78.5% | 83.9% | 76.4% | 67.5% | 72.2% | 4.7% |
| Net Debt/EBITDA | -1.0x | -1.0x | -1.0x | -1.1x | -0.9x | 0.1x |
Revenue and profitability
Hargreaves Lansdown's Revenue decreased slightly on 1.7% in FY2016. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 6.3 pp from 51.2% to 57.5% in FY2016.
SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign increased on 5.9 pp from 39.6% to 45.6% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Hargreaves Lansdown's CAPEX/Revenue was 0.65% in FY2016. The company's CAPEX/Revenue decreased slightly on 1.2 pp from 1.8% in FY2013 to 0.65% in FY2016. For the last three years the average CAPEX/Revenue was 0.90%.
Return on investment
The company operates at high and attractive ROIC (89.98%) and ROE (72.16%). ROIC increased on 2.5 pp from 87.5% to 90.0% in FY2016. ROE increased on 4.7 pp from 67.5% to 72.2% in FY2016.
Leverage (Debt)
The company has no debt. Cash decreased on 2.5% in FY2016.
Appendix 1: Peers in Financial Services
Below you can find Hargreaves Lansdown benchmarking vs. other companies in Financial Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Volvere ($VLE) | -47.1% | 149.8% | -23.2% | 124.9% | |
| Real Estate Credit Investments Pcc ($RECP) | | 335.8% | -59.6% | 47.3% | -29.8% |
| Fairpoint Group ($FRP) | 32.7% | -17.5% | 35.1% | 41.2% | |
| Afh Financial Group ($AFHP) | | 49.9% | 39.3% | 39.5% | |
| Manx Financial Group ($MFX) | 5.6% | 33.3% | 22.0% | 28.2% | |
| |
|---|
| Median (30 companies) | 5.6% | 12.6% | 4.7% | 2.7% | 4.1% |
|---|
| Hargreaves Lansdown ($HL.) | | 22.5% | 22.6% | 10.3% | -1.7% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Record ($REC) | 98.8% | 98.8% | 99.6% | 99.3% | 99.0% |
| Panmure Gordon & Co ($PMR) | 95.2% | 95.0% | 95.3% | 95.2% | |
| First Property Group ($FPO) | 86.0% | 69.5% | 67.9% | 83.0% | 80.6% |
| Schroders ($SDRC) | 76.9% | 76.2% | 77.7% | 78.3% | |
| London Capital Group Hldgs ($LCG) | 64.2% | 70.5% | 73.6% | 67.9% | |
| |
|---|
| Median (16 companies) | 54.3% | 52.7% | 52.2% | 52.5% | 63.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Livermore Investments Group Ltd ($LIV) | 84.9% | 64.8% | 78.8% | 83.5% | |
| Real Estate Credit Investments Pcc ($RECP) | 58.6% | 89.3% | 77.0% | 80.3% | 79.3% |
| Manx Financial Group ($MFX) | 39.8% | 49.2% | 56.5% | 58.8% | |
| Daishin Securities Co ($DSS) | 53.8% | 51.5% | 38.8% | 49.2% | |
| S & U ($46IE) | 25.5% | 27.9% | 30.6% | 47.2% | 48.0% |
| |
|---|
| Median (28 companies) | 11.7% | 15.6% | 14.4% | 15.9% | 16.6% |
|---|
| Hargreaves Lansdown ($HL.) | 64.1% | 66.4% | 58.7% | 51.2% | 57.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| London Capital Group Hldgs ($LCG) | 1.8% | 0.2% | 3.4% | 7.7% | |
| Daishin Securities Co ($DSS) | 6.0% | 24.7% | 15.0% | 6.5% | |
| Commercial Bank Of Qatar(The) ($CBQS) | 6.0% | 3.8% | 2.8% | 3.9% | |
| Nmbz Hldgs ($NMB) | 6.1% | 3.0% | 2.1% | 3.8% | |
| Afh Financial Group ($AFHP) | 1.6% | 1.5% | 0.7% | 3.8% | |
| |
|---|
| Median (29 companies) | 1.4% | 1.3% | 1.3% | 1.2% | 1.1% |
|---|
| Hargreaves Lansdown ($HL.) | 0.4% | 1.8% | 1.4% | 0.7% | 0.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Manx Financial Group ($MFX) | 8.0% | 19.7% | 29.7% | 40.2% | |
| Record ($REC) | 23.8% | 19.6% | 20.2% | 20.2% | 18.5% |
| Impax Asset Management Group ($IPX) | -13.7% | 17.2% | 18.7% | 16.1% | |
| Lighthouse Group ($LGT) | 7.2% | -3.9% | 8.6% | 14.6% | |
| S & U ($46IE) | 17.6% | 19.1% | 19.7% | 13.9% | 14.5% |
| |
|---|
| Median (30 companies) | 5.2% | 6.0% | 8.9% | 7.3% | 8.1% |
|---|
| Hargreaves Lansdown ($HL.) | 108.7% | 111.7% | 101.0% | 87.5% | 90.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Private & Commercial Finance Group ($PCF) | 12.8x | 14.3x | 13.9x | 12.9x | 10.6x |
| First Property Group ($FPO) | 3.6x | 3.0x | 5.6x | 12.3x | 9.4x |
| Canaccord Genuity Group Inc ($CF.) | | | | 10.2x | |
| Daishin Securities Co ($DSS) | 1.5x | 2.4x | 10.7x | 8.0x | |
| S & U ($46IE) | 1.4x | 1.3x | 1.7x | 3.1x | 0.5x |
| |
|---|
| Median (25 companies) | -1.2x | -1.7x | -2.3x | -0.5x | 0.1x |
|---|
| Hargreaves Lansdown ($HL.) | -1.0x | -1.0x | -1.0x | -1.1x | -0.9x |
