Hargreaves Lansdown (HL) doesn’t need an asset-rich balance sheet to generate oodles of cash. In the year to June, the investment platform provider’s post-tax cash generation came to £262m, equal to 64 per cent of shareholder equity at the start of the period.
It feels appropriate, therefore, that a low-cost gesture – executives’ forfeiture of their full-year bonuses – has been designed to placate a customer base disgruntled at the platform provider’s handling of the Neil Woodford fund gating saga.
Until recently, chief executive Chris Hill reckoned a mere deferral was the appropriate response. Realism, if not full-hearted contrition, now appears to have set in. “I have apologised to all clients who have been impacted by the recent problems because we all share their disappointment and frustration,” he says.
Shareholders can content themselves that business flows have held up. Though net new business dipped 4 per cent to £7.3bn during the year, £2.9bn of this arrived in the last two months, amid the unfolding Woodford crisis. That bodes well for this year’s earnings – market conditions of course permitting – as well as the operating margin, which dipped to 63 per cent in the year to June due to a 13 per cent jump IN expenses.
Peel Hunt upgraded its target price on these figures, and expect adjusted earnings of 57.7p per share in the 12 months to June 2020, rising to 66.6p in the following year.
HARGREAVES LANSDOWN (HL.) | ||||
ORD PRICE: | 1,969p | MARKET VALUE: | £9.34bn | |
TOUCH: | 1,969-1,972p | 12-MONTH HIGH: | 2,447p | LOW: 1,622p |
DIVIDEND YIELD: | 1.7% | PE RATIO: | 38 | |
NET ASSET VALUE: | 97p | NET CASH: | £179m |
Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
2015 | 395 | 199 | 33.2 | 21.6 |
2016 | 388 | 219 | 37.4 | 24.1 |
2017 | 386 | 266 | 44.7 | 29.0 |
2018 | 448 | 292 | 49.7 | 32.2 |
2019 | 481 | 306 | 52.1 | 33.7 |
% change | +7 | +5 | +5 | +5 |
Ex-div: | 26 Sep | |||
Payment: | 18 Oct | |||
*Excludes special dividends of 11.4p a share in 2015, 9.9p in 2016 and 7.8p in 2018 |