The group's innovative Vantage trading platform generated most of the asset manager's income, with 16,000 new clients taking the total to 396,000. The platform is attractive because it allows clients to hold and manage their investment products in one place, with a single dealing service and instant online access. Overall, Vantage attracted net inflows of £1.1bn in the period, although Vantage assets under administration slipped from £23.1bn at the June year-end to £21.9bn as a result of weaker conditions. Customer loyalty remains strong, however, and the proportion of group income generated from recurring revenue rose from 76 per cent to 81 per cent.
Costs did grow 9 per cent to £41.8m, reflecting compliance issues and the need to service more customers. But this was more than offset by a 16 per cent increase in group income to £112.9m, which helped boost the underlying operating profit margin from 60.5 per cent to 63 per cent.
Numis Securities expects full-year pre-tax profit of £150.6m, giving EPS of 24.1p (from £129m and 20.3p in 2011).
|HARGREAVES LANSDOWN (HL.)|
|ORD PRICE:||446p||MARKET VALUE:||£2.1bn|
|TOUCH:||446-447p||12-MONTH HIGH:||645p||LOW: 387p|
|DIVIDEND YIELD:||3%||PE RATIO:||20|
|NET ASSET VALUE:||24p||NET CASH:||£101m*|
|Half-year to 31 Dec||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 14 Mar
Payment: 11 Apr
*Excludes £10.8m of restricted cash
Hargreaves Lansdown usually benefits from a busier second half and, despite some investors deferring their investment decisions in the current climate, demand for savings plans is expected to grow further. Still, a forward PE ratio of 19 is hardly cheap and the group's prospects look thoroughly factored in for now. Hold.
Last IC view: Fairly priced, 485p, 1 Sep 2011