Hargreaves Lansdown inflows rise 23%, but results disappoint

Ian-Gorham-presenting-at-Platforum-conference-2013.jpg

Hargreaves Lansdown saw a 23 per cent rise in inflows in the second half of last year, but its earnings have disappointed markets.

Inflows rose to £2.77bn, up on the £2.25bn seen in the first half of last year. Overall Hargreaves posted a pre-tax profit of £108.1m, a 6 per cent increase onthe £101.9m profit seen at the same time in 2014.

In its interim results for the six months to 31 December, announced today, total assets under administration are at record levels up 20 per cent year-on-year, from £49.1bn to £58.8bn.

But the average subscription in the Vantage stocks and shares Isa fell by 6 per cent, with a 12 per cent decline in the number of clients subscribing. This has been attributed to “significant market volatility”, but Hargreaves says the run-up to the end of the tax year remains key for new Isa business.

However, the results fell short of market expectations, leading to a share price fall shortly after trading began. The share price fell 3.9 per cent in early trading.

“Overall this is a poor set of numbers with a miss on earnings and dividend due to lower margin and higher costs,” Bernstein analyst Edward Houghton said in a note to clients, seen by Reuters.

Some of the disappointment came from rising costs, as Hargreaves moves into new businesses. The firm is pressing ahead with plans to launch cash deposit and peer-to-peer lending services, which are planned for the autumn. The company says it can deliver these services without the need of a banking licence.

It is also planning to launch a High Income fund multi-manager fund later this year, having launched a Strategic Assets fund last week. Its multi-manager funds were a bright spot on the results, with inflows of £369m in the six months, up 35 per cent on the same period last year. Assets in the multi-manager funds now stand at £5.9bn.

Hargreaves chief executive Ian Gorham says: “Against a backdrop of fluctuating stockmarkets, Hargreaves Lansdown has continued to be the most popular destination for UK retail investors, with excellent new business for the period.

“In particular the pension freedoms continue to attract huge interest as we prepare for the important tax year-end period.”