Hargreaves Lansdown reports 16.0% revenue growth in FY2018 and 2.5 pp EBITDA Margin decline from 69.3% to 66.8%
07 Aug 2018 • About Hargreaves Lansdown (
$HL.) • By InTwits
Hargreaves Lansdown reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Hargreaves Lansdown has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.1%. At the same time it's in pair with industry average of 3.4%
- CAPEX is quite volatile: £7m in FY2018, £5m in FY2017, £3m in FY2016, £3m in FY2015, £5m in FY2014
- The company has highly profitable business model: ROIC is 82.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 16.0%. During FY2014-FY2018 Revenue growth bottomed in FY2016 at -1.7% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 23.8 pp from -6.7% to 17.0% in FY2018.
SG&A as a % of Revenue showed almost no change in FY2018.
Net Income margin decreased on 2.1 pp from 54.9% to 52.8% in FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.5% in FY2018. CAPEX/Revenue increased slightly on 0.80 pp from 0.66% in FY2015 to 1.5% in FY2018. It's average CAPEX/Revenue for the last three years was 1.1%. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2016 at 0.65% and was growing since that time.
Return on investment
The company operates at high and attractive ROIC (82.4%) and ROE (66.5%). ROIC dropped on 10.9 pp from 93.3% to 82.4% in FY2018. ROE decreased on 9.0 pp from 75.5% to 66.5% in FY2018.
Leverage (Debt)
The company has no debt. Cash surged on 53.9%.
Financial and operational results
FY ended 30 Jun 2018
Hargreaves Lansdown ($HL.) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 358.4 | 395.1 | 388.3 | 385.7 | 447.6 | 16.0% |
| SG&A | 11.3 | 12.7 | 11.2 | 14.3 | 16.3 | 14.0% |
| EBITDA | 210.5 | 202.4 | 223.5 | 267.2 | 298.9 | 11.9% |
| Net Income | 162.1 | 156.7 | 176.9 | 211.7 | 236.3 | 11.6% |
Balance Sheet
|
|---|
| Cash | 201.2 | 216.8 | 211.4 | 81.4 | 125.3 | 53.9% |
| 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 | 5.0 | 2.6 | 2.5 | 4.7 | 6.5 | 38.3% |
Ratios
|
|---|
| Revenue growth | 22.6% | 10.3% | -1.7% | -0.7% | 16.0% | |
| EBITDA growth | 8.4% | -3.8% | 10.4% | 19.6% | 11.9% | |
|
|---|
| EBITDA Margin | 58.7% | 51.2% | 57.5% | 69.3% | 66.8% | -2.5% |
| SG&A, % of revenue | 3.1% | 3.2% | 2.9% | 3.7% | 3.6% | -0.1% |
| Net Income Margin | 45.2% | 39.6% | 45.6% | 54.9% | 52.8% | -2.1% |
| CAPEX, % of revenue | 1.4% | 0.7% | 0.7% | 1.2% | 1.5% | 0.2% |
|
|---|
| ROIC | 101.0% | 87.5% | 90.0% | 93.3% | 82.4% | -10.9% |
| ROE | 76.4% | 67.5% | 72.2% | 75.5% | 66.5% | -9.0% |
| Net Debt/EBITDA | -1.0x | -1.1x | -0.9x | -0.3x | -0.4x | -0.1x |
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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Starvest ($SVE) | | -52.9% | -4.8% | 346.6% | |
| Henderson Group ($HGG) | 13.8% | 13.0% | -1.0% | 90.7% | |
| Arden Partners ($ARDN) | -21.3% | -31.0% | 6.8% | 78.9% | |
| Impax Asset Management Group ($IPX) | 10.3% | -3.1% | 6.8% | 55.2% | |
| Afh Financial Group ($AFHP) | 39.3% | 39.5% | 15.0% | 39.4% | |
| |
|---|
| Median (33 companies) | 5.4% | 2.7% | 6.8% | 12.9% | 16.3% |
|---|
| Hargreaves Lansdown ($HL.) | | 10.3% | -1.7% | -0.7% | 16.0% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Record ($REC) | 99.6% | 99.3% | 99.0% | 98.8% | 98.7% |
| London Capital Group Hldgs ($LCG) | 73.6% | 67.9% | 84.2% | 86.4% | |
| Schroders ($SDRC) | 77.7% | 78.3% | 79.9% | 80.0% | |
| First Property Group ($FPO) | 67.9% | 83.0% | 80.6% | 78.6% | 76.3% |
| Walker Crips Group ($WCW) | 68.2% | 66.7% | 67.7% | 69.8% | 67.2% |
| |
|---|
| Median (14 companies) | 51.3% | 52.5% | 59.3% | 51.4% | 67.2% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Real Estate Credit Investments Pcc ($RECP) | 77.0% | 80.3% | 79.3% | 79.5% | 81.8% |
| Plus500 Ltd ($PLUS) | 63.5% | 48.2% | 46.0% | 59.3% | |
| First Property Group ($FPO) | 40.2% | 42.9% | 52.2% | 57.4% | 52.9% |
| Livermore Investments Group Ltd ($LIV) | 78.8% | 83.5% | 71.9% | 56.8% | |
| Starvest ($SVE) | -136.5% | -2,683.1% | 63.4% | 56.4% | |
| |
|---|
| Median (30 companies) | 14.4% | 16.9% | 17.2% | 20.9% | 32.6% |
|---|
| Hargreaves Lansdown ($HL.) | 58.7% | 51.2% | 57.5% | 69.3% | 66.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Daishin Securities Co ($DSS) | 15.0% | 6.5% | 15.1% | 11.2% | |
| First Property Group ($FPO) | 0.3% | 0.1% | 6.4% | 8.5% | 9.4% |
| Schroders ($SDRC) | 1.5% | 1.9% | 3.0% | 6.9% | |
| Leeds Group ($LDSG) | 0.6% | 0.9% | 11.5% | 5.6% | |
| Record ($REC) | 0.1% | 0.6% | 0.1% | 3.8% | 1.0% |
| |
|---|
| Median (30 companies) | 0.7% | 1.0% | 1.0% | 1.0% | 1.2% |
|---|
| Hargreaves Lansdown ($HL.) | 1.4% | 0.7% | 0.7% | 1.2% | 1.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Plus500 Ltd ($PLUS) | 164.3% | 116.5% | 118.9% | 143.2% | |
| Fulcrum Utility Services Ld ($FCRM) | | | 347.2% | 103.4% | 29.9% |
| Guinness Peat Group ($GPG) | 10.0% | 13.7% | 23.8% | 28.8% | |
| Lighthouse Group ($LGT) | 8.6% | 14.6% | 25.7% | 26.6% | |
| Numis Corp ($NUM) | 20.7% | 22.3% | 25.2% | 26.3% | |
| |
|---|
| Median (34 companies) | 7.6% | 7.6% | 7.5% | 8.5% | 8.0% |
|---|
| Hargreaves Lansdown ($HL.) | 101.0% | 87.5% | 90.0% | 93.3% | 82.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Daishin Securities Co ($DSS) | 10.7x | 8.0x | 13.4x | 12.7x | |
| First Property Group ($FPO) | 5.6x | 12.3x | 9.4x | 7.6x | 7.7x |
| Leeds Group ($LDSG) | -0.5x | -0.3x | 1.4x | 2.6x | |
| S & U ($46IE) | 1.7x | 3.1x | 0.5x | 1.8x | 3.2x |
| Guinness Peat Group ($GPG) | -2.1x | -1.6x | -0.4x | 1.2x | |
| |
|---|
| Median (26 companies) | -2.3x | -1.2x | -1.4x | -1.6x | -1.2x |
|---|
| Hargreaves Lansdown ($HL.) | -1.0x | -1.1x | -0.9x | -0.3x | -0.4x |
