9th Sep 2015 06:36
LONDON (Alliance News) - Hargreaves Lansdown PLC on Wednesday reported a 6% drop in pretax profit as margins came under pressure, with the fall attributed to the fund supermarket's move to cut charges for clients, lower interest margins on client cash and lacklustre stock markets.
The fund supermarket, which sells financial products to retail clients, said it made a GBP199.0 million pretax profit in the year ended June 30, compared with GBP209.8 million in the prior year. The company raised its dividend for the year to 33 pence per share from 32.0p.
Net revenue, a closely watched measure of year-on-year comparative performance, increased by 0.8% to GBP294.2 million from GBP291.9 million.
The increase in net revenue was due to a rise in assets under administration to GBP55.2 billion from GBP46.9 billion over the year, net new business inflows of GBP6.1 billion, 84,000 new active clients and transaction volumes. That was partly offset by low interest rates, changes to fund pricing and lower annuity income.
The company's net operating profit margin (on net revenue) fell to 67.3% from 71.3%.
"We are delighted with another year of great growth for Hargreaves Lansdown, against a backdrop of stock market angst and low investor confidence," Chief Executive Ian Gorham said in a statement.
Gorham welcome the effect of new pensions freedoms introduced by the UK Government that removed the effective requirement for people to buy annuity products providing guaranteed income in retirement with their pension pots.
"The new freedoms have put pensions back on the public's radar and helped us to a further 13% growth in clients and 18% in assets during the year; assets have now passed GBP55 billion and client numbers are now approaching 750,000," Gorham said.
The chief executive said that Hargreaves Lansdown intends a return to "healthy" profit growth in the new financial year, even after considering expenditure on new services.
In the wake of new rules designed to improve transparency and professionalism in the field of financial advice, the company is now looking to deliver new cash and peer-to-peer lending services to clients, with the development on track. Gorham expects to bring it to market in the second half of 2016.
"Given the success of our fund management business, further fund launches are planned, alongside a number of other improvements to the already excellent services we offer within the group," Gorham said.
By Samuel Agini; [email protected]; @samuelagini
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