No slowdown at Hargreaves Lansdown

February 9, 2012
By

Bristol-based wealth manager Hargreaves Lansdown has bucked the recession with a first half 16% rise in revenue to a record £112.9m – and record pre-tax profits of £72m, up 28%.    Total net business inflows for the six months to December 32 was £1.16b while assets under administration totalled £23.4bn

Chief executive Ian Gorham said: "This record result has been achieved despite the continued backdrop of economic uncertainty both at home and abroad.  Investor confidence has deteriorated during the last 12 months.  Total UK net retail sales of funds have fallen to levels only previously seen during the credit crunch of 2008.  The UK is also courting a double-dip recession and the average member of the UK investing public feels poorer today than a year ago.

"In spite of unfavourable conditions and lower investment values, we continued to see healthy net business inflow, only marginally down on our record previous year, and we welcomed 16,000 new clients to the Vantage service. In addition to delivering record revenues and profits we have improved our competitiveness, reduced charges and improved the functionality of our systems. Our range of services and products have been increased and improved in line with our "investment supermarket" strategy. Lower stockbroking fees and ISA management charges were introduced from 1 August 2011, which has led to a rise in our share of the UK stockbroking market during the period. We have continued to see flows of business from competitors which is an emphatic confirmation of our strong market position."
 
He added that there is no doubt that the economic environment remains challenging but Hargreaves Lansdown – a FTSE 100 company – is confident its unique business model will continue to show itself to be extremely robust.
 
The results were bang in line with expectations, according to brokers Peel Hunt although it has maintained its hold rating and 450p target price on the shares, saying that the stock is trading a big premium to its peers. 

"Although market conditions were challenging during the period, Hargreaves continues to deliver an impressive trading performance.  New business in the period was £1.16bn, lower than the comparable year but a good performance nonetheless," said analyst Stuart Duncan 

While the broker expects a three-year compound earnings growth of 19%, higher than the sector average, some issues still remain: "against this, the uncertainty remains the potential impact of changes to the charging structure as a result of the FSA’s latest thinking on platform remuneration. With little clarity emerging, we therefore retain our hold recommendation for now," said Stuart Duncan. 

The shares were down 1.94% or 8.9p at 451.1p at lunchtime.

 

 

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