Strategic report Governance Financial statements Other information SECTION 5: OTHER NOTES NOTES TO THE GROUP FINANCIAL STATEMENTS OTHER CONTINUED 5.7 Financial instruments contents continued This assumes the interest income has been earned evenly over the period and that rates have As a main source of revenue is based on the value of client assets under administration, the Group has remained constant over the period. an indirect exposure to price risk on investments held on behalf of clients. These assets are not on the Foreign exchange translation and transaction risk Group statement of financial position. The risk of lower revenues is partially mitigated by asset class • diversification. The Group does not hedge its revenue exposure to movements in the value of client Foreign currency risk is the risk that the Group will sustain losses through adverse movements in assets arising from these risks, and so the interests of the Group are aligned to those of its clients. currency exchange rates. With substantially all of the Group’s businesses currently operating within the UK, and therefore with minimal net assets and transactions of the Group denominated in foreign In addition, the Group acts as a private client investment manager, unit trust manager and agency currencies, the Group is not exposed to significant foreign exchange translation or transaction risk stockbroker on a matched basis so its exposure to market price movements in this capacity is limited and as such does not hedge any foreign current assets or liabilities. to when there is a trade mismatch or error, or if one matched counterparty fails to fulfil its obligations. Price risk The impact of these risks is minimised by limits and monitoring controls. • Price risk is the risk that a decline in the value of assets adversely impacts on the profitability of the Group as a result of an asset not meeting its expected value. The Group is exposed to price risk on investments, in corporate entities, held on the Group statement of financial position. At 30 June 2021, the fair value of investments recognised on the Group statement of financial position was £0.9 million (2020: £0.5 million). A 20% move in equity prices, in isolation, would have an impact of £0.1 million (2020:£0.1 million). Liquidity risk The Group is exposed to liquidity risk, namely the risk that it may be unable to meet its payment obligations as they fall due. The Group is highly cash generative and holds significant liquid assets. The Group actively maintains a proportion of cash balances on short term deposit to ensure that the Group has sufficient available funds for operations. The table below analyses the maturities of the undiscounted cash flows relating to financial liabilities of the Group based on the remaining period to the contractual maturity date at the end of the reporting period. At 30 June 2021 At 30 June 2020 0-3 months 3-12 months Over 1 year Total 0-3 months 3-12 months Over 1 year Total £m £m £m £m £m £m £m £m Trade and other payables: Trade payables 712.5 – – 712.5 637.1 – – 637.1 Other payables, including current lease liabilities 30.3 3.4 – 33.7 26.5 3.1 1.0 30.6 Non-current discounted lease liabilities – – 15.0 15.0 – – 19.9 19.9 Accruals 20.3 0.8 – 21.1 22.3 – – 22.3 Derivative liabilities at fair value through profit and loss – – – – 0.1 – – 0.1 Non-current provisions – – 2.7 2.7 – – 0.8 0.8 763.1 4.2 17.7 785.0 686.0 3.1 21.7 710.8 Included in the trade and other payables and the lease liabilities above are figures in respect of leases accounted for under IFRS 16. These include discounted cash flows in relation to leases over property as outlined in note 2.11. The undiscounted maturity profiles of these amounts is shown on the next page. 168 Hargreaves Lansdown Report and Financial Statements 2021