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Record profits at Hargreaves Lansdown

RESULTS: The investment climate remains tough, but Hargreaves Lansdown continues to attract new clients
February 9, 2012

Hargreaves Lansdown reported impressive half-year figures, with total income and pre-tax profits both reaching record levels, despite the tough trading climate.

IC TIP: Hold at 446p

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:446pMARKET VALUE:£2.1bn
TOUCH:446-447p12-MONTH HIGH:645pLOW: 387p
DIVIDEND YIELD:3%PE RATIO:20
NET ASSET VALUE:24pNET CASH:£101m*

Half-year to 31 DecPre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201056.38.84.5
201172.011.05.1
% change+28+25+13

Ex-div: 14 Mar

Payment: 11 Apr

*Excludes £10.8m of restricted cash