22nd Feb 2024 10:48
(Alliance News) - Hargreaves Lansdown PLC's earnings were somewhat of a mixed bag on Thursday, with a rise in assets under administration overshadowed by a decline in net new business and a caution on tough market conditions.
Shares in the company slumped 7.9% to 742.18 pence each in London on Thursday morning.
In the six months to December 31, the first half of the firm's financial year, net new business totalled GBP1.0 billion, down 38% from the GBP1.6 billion achieved a year prior.
HL explained: "Our gross inflows to the platform were up year on year, however, our outflows were up too, meaning that overall, our net new business came in at GBP1.0 billion."
It said outflows were the highest in "products that our clients use for more transient saving and investing".
Assets under administration amounted to GBP142.2 billion, a rise of 12% from GBP127.1 billion a year earlier and up 6% since June.
Revenue for the half-year amounted to GBP368.2 million, a rise of 5.2% on-year from GBP350.0 million. Pretax profit, however, fell 7.6% to GBP182.5 million from GBP197.6 million. Underlying pretax profit, however, rose 4.5% to GBP221.5 million from GBP211.9 million.
HL lifted its interim dividend by 3.9% to 13.2p from 12.7p.
Shore Capital Markets analyst Vivek Raja said the results were "mixed", noting a beat on underlying pretax profit, but a miss at the statutory level. Underlying pretax profit came in ahead of consensus of GBP215 million, Raja noted. Statutory pretax profit missed consensus of GBP195 million.
"Strategically we think HL is doing the right thing though investors will need patience," Shore's Raja said.
HL warned on the "current uncertain economic environment is likely to remain and weigh on investor confidence". Though it said it "is a financially robust business".
Edison analyst Neil Shah commented: "Looking ahead, HL does face uncertainty in an economic environment with dampened investor confidence. However, continued execution of their strategy will position them well to navigate these challenges and capitalise on any growth opportunities."
By Eric Cunha, Alliance News news editor
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