TIDMHL.
RNS Number : 2000X
Hargreaves Lansdown PLC
06 February 2013
Hargreaves Lansdown plc Group
Interim Report and
Condensed Consolidated Financial Statements
6 months ended 31 December 2012
Embargoed: for release at 0700h, 6 February 2013
Contents
Page
Highlights to 31 December 2012 2
Interim Management Report 3-7
Responsibility Statement 8
Independent Review Report to Hargreaves Lansdown
plc 9
Condensed Consolidated Income Statement 10
Condensed Consolidated Statement of Comprehensive
Income 11
Condensed Consolidated Statement of Changes in
Equity 12
Condensed Consolidated Balance Sheet 13
Condensed Consolidated Statement of Cash Flows 14
Notes to the Condensed Consolidated Financial
Statements 15-22
Directors, Company Secretary, Advisers and Shareholder
Information 23
The Interim Management Report contains forward-looking
statements which have been made in good faith based on the
information available to us at the time of the approval of this
report and should be treated with caution due to the inherent risks
and uncertainties, including both economic and business risk
factors some of which were set out in the 2012 Annual Report,
underlying such forward-looking information.
Unless otherwise stated, all figures below refer to the six
months ended 31 December 2012 ("H1 2013"). Comparative figures are
for the six months ended 31 December 2011 ("H1 2012"). Certain
figures contained in this document, including financial
information, have been subject to rounding adjustments.
Accordingly, in certain instances the sum of the numbers in a
column or a row in tables contained in this document may not
conform exactly to the total figure given for that column or
row.
Hargreaves Lansdown plc
Interim results for the six months ended 31 December 2012
"Hargreaves Lansdown's results demonstrate that a reputable
company can, even in this climate, add genuine benefit to the UK
economy and public, whilst paying its taxes in full. Focusing on
clients, Hargreaves Lansdown is helping UK retail investors to
build their personal wealth. Funds, shares and other investments
are a great way to save - more people should be encouraged to buy
them."
Ian Gorham, Chief Executive
Hargreaves Lansdown plc ("HL" or "the Group") today announces
interim results for the six month period ended 31 December
2012.
Highlights
-- Continued growth with record revenue (up 24% to GBP140.3m)
and record profit before tax (up 30% to GBP93.7m)
-- Total net business inflows for the 6 months of GBP1.65 billion, up 42% (H1 2012: GBP1.16bn)
-- Total assets under administration of GBP30.4 billion (up 30%
on 31 December 2011 and 16% on 30 June 2012)
-- Continued growth in active Vantage client numbers, now
446,000, an increase of 21,000 since 30 June 2012 (H1 2012:
16,000)
-- Total interim dividend up 24% to 6.3 pence per share (H1 2012: 5.1 pence)
Commenting on the results, Ian Gorham, Chief Executive said:
"In the six months to 31 December 2012 Hargreaves Lansdown again
achieved record revenue, profits and assets under administration
(AUA). Profits rose 30% and Assets Under Administration now stand
at over GBP30bn, up GBP7bn from just one year ago.
Despite continued economic uncertainty in the UK, Hargreaves
Lansdown has had the scale, financial strength and market presence
to continue to improve its position. Clients appreciate our
excellent value, service and informed comment. These results
reflect our commitment to clients, the financial security of our
business and our ability to provide ever more attractive ways of
saving money and investing through a Hargreaves Lansdown
account.
In turbulent times wise investors focus firstly on the security
of their assets and trustworthy service. As a listed company with a
30-year reputation and a strong balance sheet, Hargreaves Lansdown,
as the UK's no.1 Investment Supermarket, is uniquely placed to
deliver that security and service to the UK public.
The economic environment remains challenging, but we are pleased
that Hargreaves Lansdown continues from strength to strength.
I would like to thank all our employees for their valuable
contribution in the record achievement of the first six months and
for continually striving to deliver and improve our services. I
would also like to thank our clients for their continued support
and recommendation, for which we remain grateful and determined to
continue to repay their confidence."
Financial highlights Unaudited Unaudited Change Audited
6 months 6 months % year
ended 31 ended 31 to 30 June
December December 2012
2012 2011
=================================== ========== ========== ======= ============
Revenue GBP140.3m GBP112.9m +24% GBP238.7m
=================================== ========== ========== ======= ============
Proportion of recurring
revenue 81% 81% -. 81%
=================================== ========== ========== ======= ============
Profit before tax GBP93.7m GBP72.0m +30% GBP152.8m
=================================== ========== ========== ======= ============
+2.6
Operating profit margin 65.6% 63.0% pts 63.1%
=================================== ========== ========== ======= ============
Total assets under administration GBP30.4bn GBP23.4bn +30% GBP26.3bn
=================================== ========== ========== ======= ============
Diluted earnings per share 15.0p 11.3p +33% 24.1p
=================================== ========== ========== ======= ============
Interim dividend per share 6.3p 5.1p +24% 5.1p
=================================== ========== ========== ======= ============
Net business inflows GBP1.65bn GBP1.16bn +42% GBP3.2bn
About us:
The Hargreaves Lansdown Group (the "Group") is the UK's largest
direct to investor "Investment Supermarket". The Group provides the
UK investing public with access to a wide choice of investments and
benefits from high quality earnings derived from the value of
investments under administration or management, primarily through
its market leading Vantage service.
Success can be attributed to value pricing, innovative
marketing, excellent research and information. High retention of
clients is achieved through first class service. The company
employs a unique direct marketing model which is cost effective,
scalable and affords a good profit margin whilst still affording
clients access to low cost investing.
Unlike a traditional asset manager, the broad choice of
investments and products available through the Group and diversity
of services results in a high level of retention of assets. When
clients choose to reinvest into different asset classes or
products, our wide choice ranging from equity to cash management
facilities, ensures that client assets are usually retained.
Contacts:
Hargreaves Lansdown
+44 (0)117 988 9967
For media enquiries:
Ian Gorham, Chief Executive
Peter Hargreaves, Co-founder, Executive Director
For analyst enquiries:
Ian Gorham, Chief Executive
Tracey Taylor, Group Finance Director
James Found, Investor Relations
Analysts' presentation
Hargreaves Lansdown will be hosting an investor and analyst
presentation at 9.00am on 6(th) February 2013 following the release
of the results for the half year ended 31 December 2012. Access is
by invitation only. Slides accompanying the analyst presentation
will be available this morning at www.hl.co.uk/investor-relations
and an audio recording of the analyst presentation will be
available by close of day.
Chief Executive's Statement
Trading
I am pleased to report that for the six months to 31 December
2012 Hargreaves Lansdown can again announce record revenue and
profits. It is also a great credit to the unique quality,
popularity and value of our investing service that AUA have for the
first time passed GBP30 billion.
The first six months' trading of the current financial year has
seen continued growth of revenue, profits, and assets, with all
figures reaching record levels for the first half of the year.
We are also pleased to announce that, in addition to strong
increases in revenue and profit, the group added GBP1.65 billion of
net new assets for the six month period, a 42% increase on the
prior year comparative of GBP1.16 billion. AUA stand at GBP30.4
billion, up GBP7.0 billion (+30%) from December 2011. The increase
in net new clients for the first half of the year was 21,000
(2011:16,000), a 31% increase also exceeding our expectations.
Stock markets were also helpful (the FTSE All Share rose 7% in
the 6 months to 31 December 2012). Our fund sales were at a
significant favourable variance to the general UK market where
retail fund sales remained subdued. Although economic conditions
have been challenging for many, Hargreaves Lansdown has invested
substantially in the long term future and quality services to
clients. New features and improvements included our new SIPP
Loyalty bonus, further enhanced equity dealing functionality, the
first of our new iPad apps, new functions to encourage
consolidation of assets and continued progress in our workplace
services. Continual improvement of our business, strong marketing,
and increasing recognition of the merits of investing through our
Vantage service, has been key to our strong result.
Growth was experienced across all services. The continuing and
growing requirement for individuals to make their own provision for
pension saving, given the absence of final salary schemes and state
guarantees, was particularly evident. Vantage SIPP net new assets
for the six months were up 42% year on year. ISA growth was also
significant, up 38%. Further enhancements to equity trading
functionality allied to rising markets have boosted equity trading
volumes, which rose 10% to 761,000 in the first half (2011:
691,000).
Progress remains positive in our workplace investment service.
Corporate Vantage, has 64 schemes either live or being implemented.
Employee members have risen to 10,200 (2011: 3,569). Assets in
Corporate Vantage Schemes now stand at GBP222.4m, an increase of
67% in the last three months alone. This remains an important long
term initiative and given its success and continued excellent
client feedback we have recruited further resource to ensure we are
well placed for auto-enrolment which commenced in October 2012.
During a phased period to 2017 every UK employee will automatically
join a workplace scheme. This should add further client numbers to
existing schemes, and bring forward the need for employers to make
decisions over pension solutions.
We continue to invest in our digital strategy, adding
specialists to expand our client gathering capabilities through the
internet. We launched the Investment Times (our newsletter) for the
iPad, which enjoyed over 4,000 downloads of the Christmas edition.
The HL Live iPhone app remains hugely successful, with over 83,000
downloads. Other exciting new initiatives will continue to be
released before the financial year-end.
Our discretionary investment management business, PMS, has seen
an increase in revenue of 17 % compared to H1 2012. Net new PMS
business in the first half of the year was 94% higher than the
comparative six month period. Assets being managed in PMS now stand
at GBP1.8 billion (2011: GBP1.5 billion).
Costs
Cost control has remained tight thus absorbing the effect of our
investment in the future. Key to analysing costs is understanding
the effect of adding specialist resource to develop new
initiatives. At Hargreaves Lansdown business investment is mainly
reflected in additional staff costs rather than capital
expenditure. Staff numbers were 717 at 31 December 2012 (2011:
637). 62 of the new additions (78%) are accounted for by IT
development, Web, Pensions, Funds Library and Corporate Vantage
resource and thus committed to expanding the business and
delivering our long term initiatives. The underlying scalability of
the business continues, with our technology and efficiency ensuring
limited additional staff numbers were required to service asset
growth. Overall costs rose by 15% (2011: 9%) compared to a 30%
increase in assets. As a result, operating margin continues to
improve.
Regulation
Since the latest FSA Consultation Paper (CP12/12) was published
on 27 June 2012, which we addressed in our full year results and
the subsequent annual report, there have been no other significant
regulatory developments in the period. Our planning for any
potential changes as a result of the Retail Distribution Review
(RDR2) continues to ensure operational readiness well in advance of
any potential foreseeable changes.
Having fully modelled preferred pricing structures, we remain
confident in our position that all foreseeable changes can be
accommodated without a material effect to our profitability. As our
results show, we continue to see no negative impact on our
competitive position as a result of RDR or any other factor.
We note that (net) over 1,200 financial advisers left FSA
authorisation in the 18 months to 31 December 2012, over 4% of the
entire industry. We remain of the view that a general trend towards
DIY investing is likely to be beneficial to our cause, as people
discover the value and efficiency to be gained through
self-directed activity and a Hargreaves Lansdown account.
Commensurately, visits to our website hl.co.uk have risen 26% on
the comparative period for 2011.
Current trading and outlook
We are pleased with the six months under review, whilst
recognising that the second half of our trading year is perennially
the stronger half and key to our full year performance.
High taxes will encourage our clients to make maximum use of the
tax efficient investments that are available to them before the
April deadline; an area in which we specialise. This has been borne
out in previous years by healthy inflows of pension and ISA
contributions
Ahead of the seasonal build up around the tax year end, January
has seen a continuation of the strong second quarter's performance.
Reasons for this include new rules requiring all firms to allow
transfers as stock, aiding clients transferring to Hargreaves
Lansdown.
Our earnings have a direct relationship with the value of the
investments within our administration; therefore the level of world
stock markets has an effect on profits outside of our control. The
recent rallying of stock markets is a positive factor.
The difficulties faced by the UK banking sector resulted in
unusually high LIBOR rates last financial year and during the early
part of the current financial year. This boosted the interest
revenue earned on cash deposits. The last six months has seen the
government lending money to banks on cheap terms (the Funding for
Lending Scheme). This money was ostensibly to be used for lending
purposes, but it resulted in banks slashing the interest rates paid
to UK savers. This fiasco now makes equity investment even more
attractive, as the yields available on equities and bonds far
outstrip those available on cash. If this scenario persists, we
consider the long term effect on asset gathering likely to be
beneficial. However, in the short term, it will also reduce revenue
from cash margin across the savings and investment industry,
including that received by Hargreaves Lansdown.
If LIBOR rates remain low then a greater impact will be felt in
the following financial year as our deposits will be gradually
replaced on significantly lower rates.
Hargreaves Lansdown is the UK's no.1 investment supermarket with
an estimated 28% of the UK market share. Recent research proved
Hargreaves Lansdown is both the dominant and fastest growing
company in an exciting market. As we continue to grow we remain
focused on our mission "to help investors make more of their
investments by providing the best information, the best service and
the best prices." Hargreaves Lansdown is well placed to deliver
long term future growth through focusing on the needs of
investors.
Board changes
On 5 September 2012 Hargreaves Lansdown announced that
co-founder and non-executive director Stephen Lansdown, had given
notice that he would step down from the Board of Hargreaves
Lansdown plc at the Group's Annual General Meeting, which he duly
did on 23 November 2012. We thank Stephen for his contribution to
the company that bears his name proudly. The Board now comprises
eight directors, including five non-executive directors, all of
whom are independent. This more than satisfies the requirements of
the UK Corporate Governance Code, and we believe we have a strong
Board in place.
Ian Gorham
Chief Executive
Financial Review
Financial performance
The Group achieved a profit before tax of GBP93.7m, a 30%
increase compared to H1 2012, consequent to increased levels of
AUA. Revenue for the six months to 31 December 2012 was up 24%.
Continued cost control and scalable operations contributed to the
operating margin which increased to 65.6% (H1 2012: 63.0%). This,
together with a lower rate of corporation tax, combined to increase
the diluted earnings per share from 11.3 pence to 15.0 pence per
share.
% movement Unaudited Unaudited Audited
6 months 6 months Year
ended ended to
31 December 31 December 30 June
2012 2011 2012
(H1 2013) (H1 2012) (FY 2012)
GBP'million GBP'million GBP'million
Revenue +24% 140.3 112.9 238.7
Administrative expenses +14% (47.0) (41.3) (83.3)
FSCS levy (1.2) (0.5) (4.8)
Operating profit +30% 92.1 71.1 150.6
Investment revenue and
other gains 1.6 0.9 2.2
Profit before taxation +30% 93.7 72.0 152.8
Taxation (22.5) (19.0) (39.5)
------------- -------------- ------------
Profit after taxation +35% 71.2 52.9 113.3
------------- -------------- ------------
Total revenue
Revenue growth has been strong in all three divisions. A
significant contribution to the 24% growth in revenue has come from
organic growth in AUA from new clients and new business from
existing clients in the current period and previous year. An
improvement in markets has also been beneficial, with the average
level of the FTSE All-Share index being 7% higher during the six
months to 31 December 2012 compared to H1 2012. The percentage of
revenue which is recurring in nature has remained at 81%.
Revenue by division Unaudited Unaudited % increase
6 months 6 months
ended ended
31 December 31 December
2012 2011
GBP'million GBP'million
------------------------------ ------------- ------------- -----------
Vantage 109.9 87.0 +26%
------------------------------ ------------- ------------- -----------
Discretionary and Managed 15.4 13.2 +17%
------------------------------ ------------- ------------- -----------
Third Party & Other Services 15.0 12.7 +18%
------------------------------ ------------- ------------- -----------
Total Revenue 140.3 112.9 +24%
------------------------------ ------------- ------------- -----------
Assets Under Administration (AUA) and new business inflows
During the period the value of total AUA has increased by 16% to
GBP30.4 billion. The Group achieved net new business inflows of
GBP1.65 billion, and the positive impact of the market and other
growth factors increased client assets by a further GBP2.5 billion.
Total assets under administration can be broken down as
follows:
31 December 31 December 30 June
2012 2011 2012
GBP'billion GBP'billion GBP'billion
------------------------------------- ------------- ------------- -------------
Vantage Assets Under Administration
(AUA) 28.5 21.9 24.6
------------------------------------- ------------- ------------- -------------
Assets Under Administration
and Management (AUM)
------------------------------------- ------------- ------------- -------------
Portfolio Management Service
(PMS) 1.8 1.5 1.6
------------------------------------- ------------- ------------- -------------
Multi-manager funds held
outside of PMS 0.9 0.7 0.8
------------------------------------- ------------- ------------- -------------
AUM Total 2.8 2.2 2.4
------------------------------------- ------------- ------------- -------------
Less: Multi-manager funds
(AUM) included in Vantage
AUA (0.9) (0.7) (0.8)
------------------------------------- ------------- ------------- -------------
Total Assets Under Administration 30.4 23.4 26.3
------------------------------------- ------------- ------------- -------------
Net new business generated within PMS was GBP99 million (H1
2012: GBP51 million.) Net new business in the Vantage ISA, SIPP and
other Vantage nominee accounts was GBP0.4 billion, GBP0.7 billion
and GBP0.4 billion respectively (H1 2012: GBP0.3 billion, GBP0.5
billion, GBP0.3 billion). The increase in new business was
attributable to an increased number of Vantage clients (up by 5%
since June 2012) combined with new subscriptions and transfer
business from existing clients. Client and asset retention both
remained very high for the period.
The average new contribution into a Vantage SIPP so far this
year has reduced by 3%, with 29% more clients contributing to their
SIPP than in H1 2012. The average subscription in the Vantage
Stocks and Share ISA increased by 2%, with a 32% increase to the
number of clients subscribing.
As at 31 December 2012, the value of assets within the Vantage
ISA was GBP11.3 billion (30 June 2012: GBP10.0 billion), Vantage
SIPP was GBP8.8 billion (30 June 2012: GBP7.6 billion) and other
Vantage nominee accounts was GBP8.4 billion (30 June 2012: GBP7.0
billion).
Clients have decreased their cash weightings during the period
as investor sentiment began to improve and world markets rallied.
The composition of assets across the whole of Vantage at 31
December 2012 was 11% cash (30 June 2012: 12%), 33% stocks and
shares (30 June 2012: 31%), and 56% investment funds (30 June 2012:
57%).
The overall revenue margin earned on Vantage AUA increased
slightly from 79bps to 81bps, primarily as a result of higher
interest rates earned on deposits placed last year. As noted in the
above Chief Executive's statement, deposit rates started to reduce
at the start of the financial year and are now significantly lower
than last year. As a result of this the revenue margin on cash
balances is expected to reduce in the second half of the financial
year and, if rates remain at this level, to reduce again in the
2014 financial year before levelling out.
Total administrative expenses
We continue to maintain a strong focus on cost control and
efficiency. Operating expenses increased by 14% to GBP47.0 million,
principally in three areas: increased spend on marketing incentives
responding to the challenges and opportunities of the current
market and economic conditions; an increase in loyalty bonus
payable in line with the rise in value of the related client
assets, and a 17% increase in staff costs. Staff numbers have
increased as we continue to recruit specialist resource ensuring we
are committed to expanding the business and delivering our long
term initiatives. The average number of staff (full-time
equivalents, including directors) during the six months ended 31
December 2012 was 693 (H1 2012: 643). As at 31 December 2012 we
employed 717 staff. Despite the increase in staff numbers the
compensation ratio (ratio of staff costs to revenue) has actually
fallen by 1% to 17.4%.
Unaudited Unaudited Increase
6 months ended 6 months ended %
31 December 31 December
2012 2011
GBP'million GBP'million
Staff costs 24.4 20.8 +17%
Commission payable 9.0 8.1 +11%
Marketing and distribution
costs 5.6 4.6 +22%
Office running costs 2.1 2.2 -5%
Depreciation, amortisation
and financial costs 1.3 1.2 +8%
Other costs 4.6 4.4 +5%
Operating expenses 47.0 41.3 +14%
FSCS levy 1.2 0.5 +140%
---------------- ----------------
Total administrative expenses 48.2 41.8 +15%
---------------- ---------------- ---------
Taxation
The charge for taxation in the income statement increased in
line with higher profits to GBP22.5 million from GBP19.0 million.
The effective tax rate fell from 26.0% in H1 2012 to 23.9% in the
current period. The reduction in the effective tax rate has
resulted from the standard UK corporation tax rate falling from 26%
to 24% as from 1 April 2012. In total, taxation of GBP1.5 million
has also been credited directly to equity and relates to
share-based payments.
Dividend
The Board has declared an interim dividend of 6.3 pence per
share (H1 2012: 5.1 pence). The interim dividend will be paid on 11
April 2013 to all shareholders on the register at 15 March 2013.
This amounts to a total interim dividend of GBP29.5 million.
An arrangement exists under which the Hargreaves Lansdown
Employee Benefit Trusts (the "EBTs") have agreed to waive all
dividends. As at 31 December 2012 the EBTs held 6,235,370
shares.
Capital expenditure
Capital expenditure totalled GBP1.2 million for the six months
ended 31 December 2012, compared with GBP0.5 million for the same
period in the previous financial year. Capital expenditure
consisted mainly of IT hardware
Liquidity and capital resources
The Group is soundly financed with a strong balance sheet and no
borrowings. This is an important strength which in addition to
being attractive to clients provides both resilience and
flexibility. The Group is highly cash generative and the cash
conversion ratio measured by the operating cash flows as a
percentage of operating profits remained high at 100% in H1 2013
compared to 105% in H1 2012.
Group cash balances excluding restricted cash totalled GBP133.0
million at the end of the period. The only significant cash outflow
from profits has been the final and special dividends totalling
GBP81.7 million paid during September 2012, and the GBP8.7 million
purchase of additional shares by the EBTs to offset in part
potential EPS dilution from the vesting of share options.
The Group continues to hold a level of capital that provides
significant headroom over the regulatory minimum. At 31 December
2012, the regulated companies had Tier 1 capital of GBP65 million
which provided excess regulatory capital of approximately GBP57
million. Further disclosures are published in the Pillar 3 document
on the Group's website at www.hl.co.uk.
Related party transactions
No related party transactions that materially affect the
financial position or performance of the Group have taken place
during the period, and there have been no material changes to the
related party transactions described in the last Annual Report and
Accounts.
Going concern
The interim report and condensed financial statements are
prepared on a going concern basis as the directors are satisfied
that, at the time of approving the interim report and condensed
financial statements, the Group has the resources to continue in
business for the foreseeable future.
Principal risks and uncertainties
The principal risks and uncertainties which could impact the
Group were detailed on pages 24 to 27 of the Group's Annual Report
and Financial Statements 2012, a copy of which is available on the
Group's website www.hl.co.uk. These are not expected to change in
the second half of the 2013 financial year, and they are regularly
reviewed by the Board.
Responsibility Statement
The directors confirm that to the best of their knowledge:
a) the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting;
b) the interim management report includes a fair review of the
information required by the Disclosure and Transparency Rules (DTR)
4.2.7R - "indication of important events during the first six
months and description of principal risks and uncertainties for the
remaining six months of the year"; and
c) the interim management report includes a fair review of the
information required by DTR4.2.8R - "disclosure of related party
transactions and changes therein".
On behalf of the Board
Tracey Taylor
Group Finance Director
5 February 2013
Independent Review Report to Hargreaves Lansdown plc
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 December 2012 which comprises the Condensed
Consolidated Income Statement, the Condensed Consolidated Statement
of Comprehensive Income, the Condensed Consolidated Statement of
Changes in Equity, the Condensed Consolidated Balance Sheet, the
Condensed Consolidated Statement of Cash Flows and related notes 1
to 19. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
December 2012 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
Bristol, United Kingdom
5 February 2013
Condensed Consolidated Income Statement
Unaudited Unaudited
6 months 6 months Audited Year
ended 31 ended 31 to
December December 30 June
2012 2011 2012
Note GBP'000 GBP'000 GBP'000
Revenue 8 140,314 112,880 238,741
------------------------- ---- --------- --------- ------------
Total operating income 140,314 112,880 238,741
Administrative expenses (46,986) (41,285) (83,355)
FSCS costs* (1,240) (516) (4,774)
------------------------- ---- --------- --------- ------------
Operating profit 92,088 71,079 150,612
Investment revenues 9 1,438 875 2,229
Other gains and losses 10 182 1 (2)
------------------------- ---- --------- --------- ------------
Profit before tax 93,708 71,955 152,839
Tax 11 (22,469) (19,041) (39,520)
------------------------- ---- --------- --------- ------------
Profit for the period 71,239 52,914 113,319
------------------------- ---- --------- --------- ------------
Attributable to:
Equity holders of the
Company 70,837 52,774 112,960
Non-controlling interest 402 140 359
------------------------- ---- --------- --------- ------------
71,239 52,914 113,319
Earnings per share
(pence)
Basic earnings per
share 13 15.1 11.4 24.2
Diluted earnings per
share 15.0 11.3 24.1
All income, profits and earnings are in respect of continuing
operations.
* FSCS costs are those relating to the running of and the levies
issued under the Financial Services Compensation Scheme.
After the balance sheet date, the directors declared an ordinary
interim dividend of 6.3 pence per share payable on 11 April 2013 to
shareholders on the register at 15 March 2013.
Condensed Consolidated Statement of Comprehensive Income
Unaudited Unaudited
6 months 6 months Audited
ended 31 ended 31 Year to
December December 30 June
2012 2011 2012
GBP'000 GBP'000 GBP'000
Profit for the period 71,239 52,914 113,319
Other comprehensive income for the
period:
(Decrease)/increase in fair value
of available-for-sale investments (160) (4) 30
------------------------------------- --------- --------- --------
71,079 52,910 113,349
------------------------------------- --------- --------- --------
Attributable to:
Equity holders of the Company 70,677 52,770 112,990
Non-controlling interest 402 140 359
------------------------------------- --------- --------- --------
71,079 52,910 113,349
Condensed Consolidated Statement of Changes in Equity
Attributable to the owners of the Company
---------------------------------------------------------------------------------------------
Shares
held
Share Investment Capital by
Share premium revaluation redemption EBT EBT Retained Non-controlling Total
capital account reserve reserve reserve reserve earnings Total interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2011 1,897 8 130 12 (16,529) 10,294 134,989 130,801 66 130,867
Profit for the
period - - - - - - 52,774 52,774 140 52,914
Other
comprehensive
income:
Net fair value
gains
on
available-for-sale
assets - - (4) - - - - (4) - (4)
Employee Benefit
Trust:
Shares sold during
the period - - - - 274 - - 274 - 274
EBT share sale net
of tax - - - - - (205) - (205) - (205)
Employee share
option
scheme:
Share-based
payments
expense - - - - - - 1,142 1,142 - 1,142
Deferred tax effect
of share-based
payments - - - - - - (2,610) (2,610) - (2,610)
Tax relief on
exercise
of share option - - - - - - (1) (1) - (1)
Dividend paid - - - - - - (66,548) (66,548) - (66,548)
-------------------- -------- -------- ------------ ----------- ----------- --------- ---------- ---------- ---------------- ----------
At 31 December
2011 1,897 8 126 12 (16,255) 10,089 119,746 115,623 206 115,829
-------------------- -------- -------- ------------ ----------- ----------- --------- ---------- ---------- ---------------- ----------
At 1 July 2012 1,897 8 160 12 (14,029) 10,014 158,932 156,994 425 157,419
Profit for the
period - - - - - - 70,837 70,837 402 71,239
Other
comprehensive
income:
Net fair value
gains
on
available-for-sale
assets - - (160) - - - - (160) - (160)
Employee Benefit
Trust:
Shares sold during
the period - - - - 2,970 - - 2,970 - 2,970
Shares acquired in
the year (8,655) (8,655) (8,655)
EBT share sale net
of tax - - - - - 3,159 - 3,159 - 3,159
Employee share
option
scheme:
Share-based
payments
expense - - - - - - 1,139 1,139 - 1,139
Deferred tax effect
of share-based
payments - - - - - - 1,376 1,376 - 1,376
Tax relief on
exercise
of share option - - - - - - 76 76 - 76
Dividend paid - - - - - - (81,712) (81,712) - (81,712)
-------------------- -------- -------- ------------ ----------- ----------- --------- ---------- ---------- ---------------- ----------
At 31 December
2012 1,897 8 - 12 (19,714) 13,173 150,648 146,024 827 146,851
-------------------- -------- -------- ------------ ----------- ----------- --------- ---------- ---------- ---------------- ----------
The share premium account represents the difference between the
issue price and the nominal value of shares issued.
The investment revaluation reserve represents the change in fair
value of available-for-sale investments held by the Group, net of
deferred tax.
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 (loss)/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 25% shareholding in Library
Information Services Limited, a subsidiary of the Company.
Condensed Consolidated Balance Sheet
Unaudited Unaudited Audited
at 31 at 31 at 30
December December June
2012 2011 2012
Note GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 1,333 1,333 1,333
Other intangible assets 396 257 168
Property, plant and equipment 5,563 6,374 5,792
Deferred tax assets 4,657 5,675 2,939
-------------------------------- ---- --------- --------- --------
11,949 13,639 10,232
Current assets
Trade and other receivables 15 166,066 101,639 142,606
Cash and cash equivalents 15 148,586 112,075 157,719
Investments 14 985 2,165 2,228
Current tax assets 17 12 17
-------------------------------- ---- --------- --------- --------
315,654 215,891 302,570
-------------------------------- ---- --------- --------- --------
Total assets 327,603 229,530 312,802
-------------------------------- ---- --------- --------- --------
Current liabilities
Trade and other payables 16 157,648 94,459 136,952
Current tax liabilities 22,827 19,121 18,154
-------------------------------- ---- --------- --------- --------
180,475 113,580 155,106
-------------------------------- ---- --------- --------- --------
Net current assets 135,179 102,311 147,464
-------------------------------- ---- --------- --------- --------
Non-current liabilities
Provisions 277 121 277
-------------------------------- ---- --------- --------- --------
Total liabilities 180,752 113,701 155,383
-------------------------------- ---- --------- --------- --------
Net assets 146,851 115,829 157,419
-------------------------------- ---- --------- --------- --------
Equity
Share capital 17 1,897 1,897 1,897
Share premium account 8 8 8
Investment revaluation reserve - 126 160
Capital redemption reserve 12 12 12
Shares held by Employee Benefit
Trust (19,714) (16,255) (14,029)
EBT reserve 13,173 10,089 10,014
Retained earnings 150,648 119,746 158,932
-------------------------------- ---- --------- --------- --------
Equity, attributable to equity
shareholders of the parent 146,024 115,623 156,994
Non-controlling interests 827 206 425
-------------------------------- ---- --------- --------- --------
Total equity 146,851 115,829 157,419
-------------------------------- ---- --------- --------- --------
The condensed consolidated financial statements of Hargreaves
Lansdown plc, registered number 02122142, were approved by the
board of directors on 5 February 2013, signed on its behalf and
authorised for issue by:
Tracey Taylor
Group Finance Director
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited
6 months 6 months Audited
ended ended Year to
31 December 31 December 30 June
2012 2011 2012
Note GBP'000 GBP'000 GBP'000
Net cash from operating activities,
after tax 18 73,592 56,152 122,549
------------------------------------------- ---- ------------ ------------ --------
Investing activities
Interest received 1,438 875 2,158
Dividends received from investments - - 71
Proceeds on disposal of available-for-sale
investments - - 42
Proceeds on disposal of plant and
equipment - 2 2
Purchases of property, plant and
equipment (827) (419) (998)
Purchase of intangible fixed assets (363) (79) (104)
Proceeds on disposal of investments 1,264 71 -
------------------------------------------- ---- ------------ ------------ --------
Net cash from investing activities 1,512 450 1,171
------------------------------------------- ---- ------------ ------------ --------
Financing activities
Purchase of own shares (8,655) - -
Proceeds on sale of own shares 6,130 70 2,220
Dividends paid (81,712) (66,548) (90,172)
Net cash used in financing activities (84,237) (66,478) (87,952)
------------------------------------------- ---- ------------ ------------ --------
Net (decrease)/increase in cash
and cash equivalents (9,133) (9,876) 35,768
Cash and cash equivalents at beginning
of period 157,719 121,951 121,951
------------------------------------------- ---- ------------ ------------ --------
Cash and cash equivalents at end
of period 148,586 112,075 157,719
Notes to the Condensed Consolidated Financial Statements
1. Basis of preparation
The Interim Financial Statements for the six months to 31
December 2012 have been prepared using accounting policies
consistent with International Financial Reporting Standards (IFRSs)
and in accordance with the International Accounting Standard (IAS)
34 Interim Financial Reporting and the disclosure requirements of
the Listing Rules. 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.
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, Deloitte
LLP, and their report appears earlier in this document. The
financial information for the year ended 30 June 2012 has been
derived from the audited financial statements of Hargreaves
Lansdown plc for that year, which have been reported on by Deloitte
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 2012 as
were applied in the Audited Annual Financial Statements for the
year ended 30 June 2012.
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 Practitioners. 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 smaller proportion of asset
values and because of other revenue streams and market effects,
overall Group revenue is less seasonal than new business inflows.
In the year ended 30 June 2012, 53% 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 of Executive Directors.
The 'Vantage' division represents all activities relating to the
Vantage service, our direct to investor fund supermarket and wrap
service.
The 'Discretionary and Managed' division is focused on the
provision of managed services such as our Portfolio Management
Service 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 2012
and 2011, 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.
Vantage Discretionary Third Group Consolidation Consolidated
and Managed Party/ Adjustment
Other
Services
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months ended 31 December
2012
Revenue from external
customers 109,912 15,386 15,016 - - 140,314
Inter-segment revenue - 2,164 - - (2,164) -
---------- -------------- ---------- --------- -------------- -------------
Total segment revenue 109,912 17,550 15,016 - (2,164) 140,314
---------- -------------- ---------- --------- -------------- -------------
Depreciation and amortisation 831 144 216 - - 1,191
Interest revenue - - - 1,438 - 1,438
Other gains - - - 181 - 181
Reportable segment profit
before tax 73,527 10,120 8,754 1,307 - 93,708
---------- -------------- ---------- --------- -------------- -------------
Reportable segment assets 150,400 18,174 6,200 164,960 (12,131) 327,603
Reportable segment liabilities (121,410) (11,583) (12,582) (45,156) 9,979 (180,752)
---------- -------------- ---------- --------- -------------- -------------
Net segment assets 28,990 6,591 (6,382) 119,804 (2,152) 146,850
---------- -------------- ---------- --------- -------------- -------------
6 months ended 31 December
2011
Revenue from external
customers 87,047 13,156 12,677 - - 112,880
Inter-segment revenue - 1,851 - - (1,851) -
---------- -------------- ---------- --------- -------------- -------------
Total segment revenue 87,047 15,007 12,677 - (1,851) 112,880
---------- -------------- ---------- --------- -------------- -------------
Depreciation and amortisation 807 124 212 - - 1,143
Interest revenue - - - 875 - 875
Other gains - - - 1 - 1
Reportable segment profit
before tax 55,359 8,774 7,195 627 - 71,955
---------- -------------- ---------- --------- -------------- -------------
Reportable segment assets 84,144 9,283 7,928 131,630 (3,455) 229,530
Reportable segment liabilities (62,380) (6,751) (8,950) (36,923) 1,303 (113,701)
---------- -------------- ---------- --------- -------------- -------------
Net segment assets 21,764 2,532 (1,022) 94,707 (2,152) 115,829
---------- -------------- ---------- --------- -------------- -------------
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 6.3 pence per share (H1 2012: interim dividend 5.1p)
amounting to a total dividend of GBP29.5 million (2012: GBP23.6
million) 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 2012, the Group acquired
property, plant, equipment and software assets with a cost of
GBP1.2 million (H1 2012: GBP0.5 million, year to 30 June 2012:
GBP1.1 million).
Capital commitment
At the balance sheet date, the Group had no significant capital
commitments (31 December 2011: nil, 30 June 2012: nil).
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 24 to 27 of the Group's Annual Report and Financial
Statements 2012, 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, and they are regularly considered by the Board.
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 2012 the value of such assets on the Group balance sheet
was GBP149 million (at 31 December 2011: GBP112 million). A 100bps
(1%) 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 not on the Group balance sheet.
7. Staff numbers
The average number of employees of the Group (including
executive directors) was:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended to 30
31 December 31 December June
2012 2011 2012
No. No. No.
----------- ------------- ------------- --------
Employees 693 643 657
----------- ------------- ------------- --------
8. Revenue
Revenue represents income receivable from financial services
provided to clients, interest on settlement accounts 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:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended to 30
31 December 31 December June
2012 2011 2012
Revenue from services: GBP'000 GBP'000 GBP'000
Recurring income 114,345 90,898 192,609
Transactional income 22,642 20,367 42,479
Other income 3,327 1,615 3,653
------------------------ ------------- ------------- --------
Total operating income 140,314 112,880 238,741
------------------------ ------------- ------------- --------
9. Investment revenues
Unaudited Unaudited Audited
6 months 6 months Year
ended ended to 30
31 December 31 December June
2012 2011 2012
GBP'000 GBP'000 GBP'000
Interest on bank deposits 1,438 875 2,158
Dividends from equity investment - - 71
---------------------------------- ------------- ------------- --------
1,438 875 2,229
---------------------------------- ------------- ------------- --------
10. Other gains
Unaudited Unaudited Audited
6 months 6 months Year
ended ended to 30
31 December 31 December June
2012 2011 2012
GBP'000 GBP'000 GBP'000
Gain/(loss) on disposal of current
assets 182 1 (2)
------------------------------------ ------------- ------------- --------
11. Tax
Unaudited Unaudited Audited
6 months 6 months Year
ended ended to 30
31 December 31 December June
2012 2011 2012
GBP'000 GBP'000 GBP'000
The tax charge for the period is based
on the anticipated effective rate of
tax for the year to 30 June 2013 of
23.86% (30 June 2012: 26.03%).
Current tax 22,811 19,209 39,959
Deferred tax (342) (168) (439)
---------------------------------------- ------------- ------------- --------
22,469 19,041 39,520
---------------------------------------- ------------- ------------- --------
In addition to the amount charged to the income statement,
certain tax amounts have been credited/(charged) directly to equity
as follows:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended 31 to
31 December December 30 June
2012 2011 2012
GBP'000 GBP'000 GBP'000
Deferred tax relating to share-based
payments 1,376 (2,610) 5,617
Current tax relief on exercise of share
options 76 (1) (4,636)
----------------------------------------- ------------- ---------- ---------
1,452 (2,611) 981
----------------------------------------- ------------- ---------- ---------
12. Dividends paid
Unaudited Unaudited Audited
6 months 6 months Year
ended ended to 30
31 December 31 December June
2012 2011 2012
GBP'000 GBP'000 GBP'000
Amounts paid and recognised as distributions
to equity holders in the period:
2012 Final dividend of 10.65p per share 49,756 - -
2012 Special dividend of 6.84p per 31,956 - -
share
2012 Interim dividend of 5.1p per share - - 23,624
2011 Final dividend of 8.41p per share - 38,947 38,947
2011 Special dividend of 5.96p per
share - 27,601 27,601
---------------------------------------------- ------------- ------------- --------
Total 81,712 66,548 90,172
---------------------------------------------- ------------- ------------- --------
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 to waive all
dividends.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended to 30
31 December 31 December June
2012 2011 2012
Number of shares held by the Hargreaves
Lansdown Employee Benefit Trust (HL
EBT) 6,235,370 11,108,038 7,263,396
Representing % of called-up share capital 1.31% 2.34% 1.53%
------------------------------------------- ------------- ------------- ----------
13. Earnings per share (EPS)
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 issue during the period,
including ordinary shares held in the EBT reserve which have vested
unconditionally with employees.
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended to 30
31 December 31 December June
2012 2011 2012
Earnings (all from continuing operations) GBP'000 GBP'000 GBP'000
Earnings for the purposes of basic
and diluted EPS being net profit attributable
to equity holders of the Company 70,837 52,774 112,960
------------------------------------------------ ------------- ------------- --------
Earnings for the purpose of basic and
diluted EPS 70,837 52,774 112,960
------------------------------------------------ ------------- ------------- --------
Number Number Number
Number of shares
Weighted average number of ordinary
shares for the purposes of diluted
EPS 471,324,485 468,767,423 469,424,156
Shares held by HL EBT which have not
vested unconditionally with employees (3,747,563) (5,461,307) (2,304,199)
---------------------------------------- ------------ ------------ ------------
Weighted average number of ordinary
shares for the purposes of basic EPS 467,576,923 463,306,116 467,119,957
---------------------------------------- ------------ ------------ ------------
Pence Pence Pence
Basic EPS 15.1 11.4 24.2
Diluted EPS 15.0 11.3 24.1
---------------------------------------- ------------ ------------ ------------
14. Investments
Unaudited Unaudited Audited
6 months 6 months Year
ended ended to
31 December 31 December 30
2012 2011 June
2012
GBP'000 GBP'000 GBP'000
At beginning of period 2,228 2,240 2,240
Sales (1,264) (71) (42)
Net increase/(decrease) in value of
available-for-sale investments 21 (4) 30
-------------------------------------- ------------- ------------- --------
At end of period 985 2,165 2,228
-------------------------------------- ------------- ------------- --------
Comprising:
Current asset investment - UK listed
securities valued at quoted market
price 244 1,424 1,487
Current asset investment - Unlisted
securities valued at cost 741 741 741
-------------------------------------- ------------- ------------- --------
GBP244,000 (31 December 2011: GBP279,000, 30 June 2012:
GBP308,000) of investments are classified as held at fair value
through profit and loss and GBP741,000 (31 December 2011:
GBP1,886,000, 30 June 2012: GBP1,920,000) 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 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 where the directors believe that this is not
significantly different to fair value, with a fair value adjustment
recognised upon disposal of the investment.
15. Other financial assets
Unaudited Unaudited Audited
6 months 6 months Year
ended ended to 30
31 December 31 December June
2012 2011 2012
Trade and other receivables GBP'000 GBP'000 GBP'000
Trade receivables 126,949 72,025 105,654
Other receivables 48 475 91
Prepayments and accrued income 39,069 29,139 36,861
-------------------------------- ------------- ------------- --------
166,066 101,639 142,606
-------------------------------- ------------- ------------- --------
Trade 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,
certain balances with clients, Stock Exchange member firms and
other counterparties totalling GBP111.8 million (31 December 2011:
GBP60.2 million, 30 June 2012: GBP93.4 million) are included in
trade receivables.
Unaudited Unaudited
6 months 6 months Audited
ended 31 ended 31 Year to
December December 30 June
2012 2011 2012
Cash and cash equivalents GBP'000 GBP'000 GBP'000
Cash and cash equivalents 148,586 112,075 157,719
Comprising:
Restricted cash - client settlement
account balances 15,476 10,354 12,644
Restricted cash - balances held by Hargreaves
Lansdown EBT 153 450 2,695
Group cash and cash equivalent balances 132,957 101,271 142,380
Cash and cash equivalents comprise cash held by the Group and
institutional cash funds with near-instant access. Included in cash
and cash equivalents are amounts of cash held on client settlement
accounts as shown above.
At 31 December 2012 segregated deposit amounts held by the Group
on behalf of clients in accordance with the client money rules of
the Financial Services Authority amounted to GBP3,080 million (31
December 2011: GBP2,615 million, 30 June 2012: GBP2,922
million).
16. Other financial liabilities
Unaudited Unaudited Audited
6 months 6 months Year
ended ended to 30
31 December 31 December June
2012 2011 2012
Trade and other payables GBP'000 GBP'000 GBP'000
Current payables
Trade payables 127,097 70,846 107,206
Social security and other taxes 4,407 1,654 7,615
Other payables 11,854 12,425 7,806
Accruals and deferred income 14,290 9,534 14,325
--------------------------------- ------------- ------------- --------
157,648 94,459 136,952
--------------------------------- ------------- ------------- --------
In accordance with market practice, certain balances with
clients, Stock Exchange member firms and other counterparties
totalling GBP126.4 million (31 December 2011: GBP69.9 million, 30
June 2011: GBP105.6 million) are included in trade payables.
Accruals and other payables principally comprise amounts
outstanding for trade purchases and ongoing costs.
17. Share capital
Unaudited Unaudited Audited
6 months 6 months Year to
ended ended 30 June
31 December 31 December 2012
2012 2011
Issued and fully paid: GBP'000 GBP'000 GBP'000
Ordinary shares of 0.4p 1,897 1,897 1,897
----------------------------------- ------------- ------------- ------------
Shares Shares Shares
Issued and fully paid:
Number of ordinary shares of 0.4p 474,318,625 474,318,625 474,318,625
----------------------------------- ------------- ------------- ------------
The Company has one class of ordinary shares which carry no
right to fixed income.
18. Notes to the cash flow statement
Unaudited Unaudited Audited
6 months 6 months Year to
ended ended 30 June
31 December 31 December 2012
2012 2011
GBP'000 GBP'000 GBP'000
Profit for the period after tax 71,239 52,914 113,319
Adjustments for:
Investment revenues (1,438) (875) (2,158)
Other gains - (1) (71)
Income tax expense 22,469 19,041 39,520
Depreciation of plant and equipment 1,051 1,025 2,186
Amortisation of intangible assets 140 118 229
(Profit)/loss on disposal (182) - 2
Share-based payment expense 1,139 1,142 2,136
Increase in provisions - 62 218
--------------------------------------- ------------- ------------- ---------
Operating cash flows before movements
in working capital 94,418 73,426 155,381
(Increase)/decrease in receivables (23,460) 74,539 33,572
Increase/(decrease) in payables 20,696 (72,980) (30,487)
--------------------------------------- ------------- ------------- ---------
Cash generated by operations 91,654 74,985 158,466
Income taxes paid (18,062) (18,833) (35,917)
--------------------------------------- ------------- ------------- ---------
Net cash from operating activities
after tax 73,592 56,152 122,549
--------------------------------------- ------------- ------------- ---------
19. Related party transactions
The Group has a related party relationship with its
subsidiaries, and with its directors and members of the Executive
Committee (the "key management personnel"). There were no material
changes to the related party transactions during the financial
period; transactions are consistent in nature with the disclosure
in note 26 to the 2012 Annual Report.
Directors, Company Secretary, Advisers and Shareholder
Information
EXECUTIVE DIRECTORS
Ian Gorham
Peter Hargreaves
Tracey Taylor
NON-EXECUTIVE DIRECTORS
Michael Evans
Chris Barling
Jonathan Bloomer
Dharmash Mistry
Stephen Robertson
COMPANY Secretary
Judy Matthews
AUDITOR
Deloitte LLP, Bristol
SOLICITORS
Burges Salmon LLP, Bristol
PRINCIPAL BANKERS
Lloyds TSB Bank plc, Bristol
BROKERS
Barclays
Numis Securities Limited
REGISTRARS
Equiniti Limited
Registered Office
One College Square South
Anchor Road
Bristol
BS1 5HL
Registered number
02122142
WEBSITE
www.hl.co.uk
DIVIDEND CALENDAR 2012/13
First dividend Second dividend
(interim)
Ex-dividend date* 13(th) March 11(th) September
2013 2013
Record date** 15(th) March 13(th) September
2013 2013
Payment date 11(th) April 30(th) September
2013 2013
* Shares bought on or after the ex-dividend date will not
qualify for the dividend.
** Shareholders must be on the Hargreaves Lansdown plc share
register on this date to receive the dividend.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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