Hargreaves Lansdown surges on record profits and AUM

Hargreaves Lansdown has reported record revenue, profits and assets under administration in the six months to the end of December.

In its latest trading update, the Bristol-based firm said pre-tax profits were up 30% to £93.7 million on revenue gains of 24% to £140.3 million. Total assets under administration rose 30% year-on-year by £7 billion to £30.4 billion, a 16% increase from 30 June 2012.

This helped it overcome what ended up as a £4.8 million Financial Services Compensation Scheme levy payment for the full calendar year. Co-founder Peter Hargreaves (pictured) expressed outrage in 2011 after the firm was hit by a £3 million FSCS levy.

But shrugging this aside and on the back of its solid numbers, its last before the impact of the retail distribution review (RDR) kicks in, Hargreaves has announced an interim dividend rise of 24% to 6.3 pence per share, up from 5.1p at the end of June.

‘Hargreaves Lansdown's results demonstrate that a reputable company can, even in this climate, add genuine benefit to the UK economy and public, whilst paying its taxes in full,’ said chief executive Ian Gorham.

‘Focusing on clients, Hargreaves Lansdown is helping UK retail investors to build their personal wealth. Funds, shares and other investments are a great way to save - more people should be encouraged to buy them.’

The firm added 21,000 new clients, up 31% on the 16,000 attracted in the same period last year. Gorham stressed the firm is continuing to invest in the business with costs rising by 15% year-on-year as its headcount rose from to 637 to 717 with or 62, or 78%, of the new additions being brought in to bolster its IT development, web, pensions, Funds Library and Corporate Vantage teams.

Gorham estimates that Hargreaves now has a 28% share of the fund supermarket landscape and pointed to ongoing growth potential despite the uncertain macro outlook as more and more investors take a ‘DIY approach’ to investing.  

‘We note that (net) over 1,200 financial advisers left FSA authorisation in the 18 months to 31 December 2012, over 4% of the entire industry,’ he said. ‘We remain of the view that a general trend towards DIY investing is likely to be beneficial to our cause, as people discover the value and efficiency to be gained through self-directed activity and a Hargreaves Lansdown account.  Commensurately, visits to our website hl.co.uk have risen 26% on the comparative period for 2011.’

That said, on a slightly less positive note, the firm warned that if Libor remains at its current levels, a ‘greater impact will be felt’ on the returns from its £133 million cash on deposit next year.

At 7:30am, Hargreaves' shares were up 40p, or 5.76%, at 734.5p.