8th Aug 2019 08:25
(Alliance News) - Fund supermarket Hargreaves Lansdown PLC on Thursday reported a rise in assets under administration in a "very challenging" financial year.
Hargreaves ended the financial year with GBP99.3 billion in total assets under administration, 8.4% ahead of the GBP91.6 billion reported at the same point last year.
"This growth came despite external challenges, including uncertainty over Brexit and the wider macro-economic outlook. Investor confidence was understandably volatile in the UK market overall and, by our own measures, it hit record lows in the second half of 2018 with the Investment Association reporting the worst quarter ever for net retail fund outflows in the fourth quarter of 2018," Hargreaves said.
Hargreaves said assets under administration at one point topped GBP100 billion during the financial year, marking the first time the company has hit the figure.
The financial services firm's net new business inflows slowed to GBP7.3 billion compared to GBP7.6 billion the year before.
Market movements added GBP400 million to total assets.
"We are pleased with the underlying strength and resilience of our business and our increase in market share," said Chief Executive Chris Hill.
"The second half of the financial year was particularly strong, supported by our best-ever tax year-end with clients continuing to use their ISA and SIPP allowances. Our Active Savings launched with a full tranche of term deposits and through considerable momentum, now has over GBP1 billion assets under administration. Our HL Select Global Growth Shares fund now has over GBP350 million assets under management and is our most successful Select fund launch to date."
During the year, Hargreaves added 133,000 clients, taking its total to a record 1.2 million.
In the financial year to June 30, Hargreaves' pretax profit increased by 4.6% to GBP305.8 million from GBP292.4 million the year before. The company's revenue rose by 7.4% to GBP480.5 million from GBP447.5 million.
Revenue margins on funds have been broadly stable following the completion of the retail distribution review, and the firm continues to expect them to remain at "similar levels" over the next 12 months. The revenue margin for the recently ended year was 41 basis points, flat on the year before.
"However, this guidance may be slightly impacted, depending on how long the current suspension on dealing in the Woodford Equity Income Fund lasts," said Hargreaves.
It took the decision to waive its platform fee where clients directly held this fund, with this loss of revenue estimated at GBP360,000 per month. Trading in the fund is likely to be suspended until early December, Hargreaves added.
Hargreaves noted its own business flows and service levels "have held up well" during the Woodford fallout.
"I have apologised to all clients who have been impacted by the recent problems around the Woodford Equity Income Fund, because we all share their disappointment and frustration. In these difficult times, we recognise the financial and personal impact the gating of the fund has had on them. Our priority is to support them, keep them informed and ensure that the fund reopens as soon as is practicable," said Hill.
Hill added: "I am pleased with the performance and progress we have made throughout a very challenging 2019. We recognise there are industry headwinds and that the environment continues to be difficult and we remain vigilant to these conditions. However, we are confident in the underlying strength of our business and we are well placed to help our clients prosper whilst continuing to deliver strong and sustainable returns for shareholders."
Hargreaves upped its ordinary dividend by 4.7% to 33.7 pence from the 32.2p distributed the year before. The company also declared a special dividend of 8.3p, 6.4% higher than last year's special payout.
As a result, Hargreaves' declared a total dividend for the year of 42.0p, 5% higher than the 40.0p paid out last year.
Shares in Hargreaves Lansdown were 3.5% higher in London on Thursday morning at 1,897.50 pence each.
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