15th Oct 2013 07:52
LONDON (Alliance News) - Hargreaves Lansdown PLC Tuesday said its assets under management rose during its first quarter and said the GBP3 billion Royal Mail flotation, which occurred after the end of the quarter, had resulted in "immense" client participation.
First quarter revenue rose 13%, driven by the higher level of Vantage assets under administration compared to the same period in the previous year. Vantage is the UK's largest direct-investment platform.
Hargreaves also registered increased stockbroking commission from higher dealing volumes, which offset a fall in interest revenue resulting from significantly lower term-deposit rates.
Assets under administration rose to GBP39.3 billion as of September 30, an increase of 38% on the same point last year, and a 8% increase over the quarter.
Net new business totalled GBP1.26 billion, which, along with improved investor confidence and improved stock markets, drove the increase in assets under management.
Hargreaves Chief Executive Ian Gorham said the stockbroker has seen "immense" participation in the flotation of Royal Mail, though it was prohibited from disclosing details immediately. Gorham said that although there was interest from existing clients, a "large proportion" of Royal Mail clients were new clients and also new investors, whom he expects Hargreaves to retain.
The net new clients gained as a result of the Royal Mail flotation will be reported in the second quarter, Hargreaves said, while new clients over the first quarter totalled 20,000, a 186% increase over the same quarter last year.
Although a number of clients experienced reduced service around the Royal Mail share offer period as a result of the increased demand, Gorham downplayed the effects of the reduced service.
"A minority of clients experienced a reduction in service around the Royal Mail Share Offer period primarily because of the sheer demand to participate through Hargreaves Lansdown. We consider there are no notable financial implications, but we do not underestimate the inconvenience caused to some clients, and have apologised to clients who experienced delays," Gorham said.
Total operating revenues for the three-month period were GBP77.9 million, compared with GBP68.7 million during the same quarter last year.
Assets under administration at Vantage, through which the stockbroker offers individual savings accounts and self-invested personal pensions, increased by 8.0% to GBP37.0 billion in September from GBP34.2 billion in June.
Looking forward, the company said that it will announce the new pricing structure for clients holding funds in the second quarter. "On a cautionary note, the reduction of interest deposit rates continue to impact interest margin revenue and thus act as a short term, but material, headwind for revenue and profit." the company added.
Hargreaves Lansdown shares were Tuesday quoted at 1,024.03 pence, up 15.03 pence, or 1.5%.
By Samuel Agini; [email protected]; @samuelagini
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