9th Aug 2021 08:42
(Alliance News) - Hargreaves Lansdown shares plunged on Monday, after posting an annual performance which fell short of consensus expectations, despite adding a record number of new clients over the year.
In addition, the blue-chip fund supermarket warned that its enlarged customer base, together with planned investments, will result in additional costs for its current financial year.
Shares in the fund supermarket were down 8.2% at 1,505.50 pence on Monday in London, the worst performer in the FTSE 100 index.
For the financial year that ended June 30, revenue rose 15% to GBP631.0 million from GBP550.9 million the year before, but pretax profit was GBP366.0 million, down 3.0% from GBP378.3 million.
The revenue and profit figures missed consensus estimates from Jefferies of GBP636.7 billion in revenue and GBP383.0 million in pretax profit.
Hargreaves Lansdown's profit performance was hurt by the absence of a GBP38.8 million gain made the year prior relating to FundsLibrary Ltd.
On an adjusted basis, pretax profit increased 7.8% from GBP339.5 million the year before.
Revenue growth meanwhile, was driven by higher average asset levels and record share dealing volumes over the year, more than offsetting a fall in interest on client money.
The Bristol-based firm reported strong growth in assets under administration, which were up 30% to GBP135.5 billion from GBP104.0 billion. Net new business inflows were up 13% to GBP8.7 billion from GBP7.7 billion.
These also missed Jefferies' forecasts of GBP136.3 billion and GBP9.2 billion, respectively.
Over the financial year, Hargreaves added a record 233,000 net new clients, allowing the active client base to grow 17% to 1.65 million.
The company noted that it was seeing a change in the demographic mix of its clients, with 83% of new clients under the age of 55. Further, it said it saw high levels of engagement from the "trading phenomenon around GameStop and so-called meme stocks".
Hargreaves Lansdown declared a total dividend of 50.5 pence per share, down 8.1% from 54.9p paid out in financial 2020. HL also declared a special dividend of 12.0p.
Looking ahead, Hargreaves Lansdown said that, due to its enlarged client base, it expects to see stronger client activity in its current financial year compared to the 2020 financial year.
"With this continued investment in our people, proposition, service and technology as well as the cost of servicing an enlarged and growing client base, we expect 2022 costs to reflect this investment and continue to be broadly aligned to client growth," said Chief Executive Officer Chris Hill.
"Our focus is, as always, on our clients and their lifelong needs, not just their short-term interests. We have been able to capitalise on this extraordinary year - and enlarge our client base substantially - due to our previous investment decisions and confidence in the opportunity ahead. As the UK's market-leading digital wealth management service we have continuously advanced our service and broadened and strengthened our proposition, as client needs evolve, and the wealth market continues to broaden and digitise," Hill added.
By Dayo Laniyan; [email protected]
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