Hargreaves Lansdown (HL.) delivered another impressive performance in the year to June, pushing profits and assets under management to record levels. And maintaining a top-quality service for its clients has also paid off for the pensions and investment planning specialist, with customer numbers up 76,000 at 507,000. Moreover, shareholders have been rewarded with another special dividend of 8.91p a share.
Regulatory changes are working to the company's advantage, with its advisory service already operating on a fee-based principle, and revenue from the its discretionary advice service grew 25 per cent to £34.1m.
Overall, total assets under administration jumped 38 per cent to £36.4bn, with operating margins up from 63.1 per cent to 65.8 per cent. Once again the Vantage trading platform remained the key driver. Revenue there grew by 22 per cent to £227m, with assets boosted by organic growth and new client money. One issue worth noting is that margins in the Vantage business fell from 81 to 75 basis points, primarily reflecting the lower interest rates earned on deposits, with the 12-month Libor rate halving over the year to 0.92 per cent. Furthermore, if rates remain at this level, lower revenue on cash balances - accounting for around 10 per cent of assets under administration - will squeeze margins lower still.
Analysts at Numis forecast current year pre-tax profits of £223m and EPS of 36.4p, up from £195m and 31.7p, respectively, in 2013.
| HARGREAVES LANSDOWN (HL.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 999p | MARKET VALUE: | £4.74bn | |
| TOUCH: | 998-1,000p | 12-MONTH HIGH: | 1,041p | LOW: 615p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 32 | |
| NET ASSET VALUE: | 41p | NET CASH: | £178m** | |
| Year to 30 Jun | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2009 | 73 | 11.2 | 7.3 |
| 2010 | 86 | 13.2 | 8.6 |
| 2011 | 126 | 19.8 | 12.9 |
| 2012 | 153 | 24.2 | 15.8 |
| 2013 | 195 | 31.7 | 20.7* |
| % change | +28 | +31 | +31 |
Ex-div: 11 Sep Payment: 27 Sep *Excludes special dividends: 2.807p in 2009, 3.3p in 2010, 5.96p in 2011, 6.84p in 2012 and 8.91p in 2013 **Excludes £19.8m of restricted cash | |||
