Hargreaves Lansdown (HL.) maintained its formidable reputation for gathering private investor assets in the six months to 31 December, increasing total funds under administration by 13 per cent to a record £49.1bn. But regulatory changes have left the fund supermarket and retail stockbroker struggling to maintain its margins on those assets, so profits fell slightly - precipitating a 6 per cent correction in the shares on results day.
Active client numbers grew by 23,000 to 675,000 over the period. That's about half last year's number even if you exclude the 32,000 new clients that took part in the Royal Mail flotation. Even so, the new business offset the impact of the lower charges introduced last March in the wake of the Retail Distribution Review, so that revenues (net of commissions) edged 1 per cent higher.
But profit growth lagged. That's partly because lower interest rates depressed interest income on client funds, following regulatory changes that restricted the use of term deposits for client money to just 30 days; short-period investments attract lower interest rates.
Yet the group could also benefit from regulation: notably the pension changes that start in April. It is launching its own Hargreaves Lansdown Retirement Planner service in preparation.
Analysts at Numis Securities are forecasting full-year pre-tax profit of £227m and EPS of 37.5p (from £210m and 34.5p in 2013-14).
| HARGREAVES LANSDOWN (HL.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 992p | MARKET VALUE: | £4.71bn | |
| TOUCH: | 992-994p | 12-MONTH HIGH: | 1,499p | LOW: 827p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 40p | NET CASH: | £154m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 158 | 104 | 17.1 | 7 |
| 2014 | 197 | 102 | 16.9 | 7.3 |
| % change | +25 | -2 | -1 | +4 |
Ex-div: 12 Mar Payment: 10 Apr | ||||
