Hargreaves Lansdown delivers record AuA but misses forecasts in first half
Half-yearly results from fund manager and savings outfit Hargreaves Lansdown delivered record assets under administration (AuA) and increased client numbers, but shares dropped on Wednesday after revenue and profit figures missed City expectations.
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Looking ahead, while the company acknowledged that the upcoming UK general election in May will create some “detrimental uncertainty”, it assured that the last election had a “limited effect” on business volumes.
AuA totalled £49.1bn by 31 December 2014, up 4.7% since the start of the financial year on 30 June 2014, as the company recorded net business inflows for the six-month period of £2.25bn.
Active client numbers increased by 23,000 over the first half to 675,000, while client and asset retention “remained excellent” at 93.1%, the company said.
However, net revenues increased by just 1% year-on-year to £144.1m, shy of the consensus estimate of £145.5m, while pre-tax profit fell 2% to £101.9m as margins worsened, missing the £103.2m forecast.
The operating profit margin declined by 1.9 percentage points to 70.7% following the impact of changes to tariffs introduced after the Retail Distribution Review last March.
Nevertheless, Hargreaves lifted its interim dividend by 4% to 7.3p per share.
"In a muted six months for both stock markets and retail investing, Hargreaves Lansdown has managed to buck the trend with £2.25bn of net new assets and further growth in clients to 675,000,” said chief executive Ian Gorham.
“We now look forward to the important tax year end period, and the introduction of exciting new pension freedoms on 6 April 2015."
Analysts at Shore Capital said that while Wednesday's figures showed a slight improvement on a "very quiet" first quarter, "[Hargreaves] will still require a further uptick in the second half to meet full-year consensus".
The stock had fallen over 6% to 981.99p by 09:23.