Proactive Investors - Run By Investors For Investors

Post-Brexit trading boost helps Hargreaves Lansdown report strong half-year profits but shares fall

The FTSE 100-listed firm saw its pre-tax profits increase by 21% to £131.0mln for the six months to December 31, up from £108.1mln a year earlier, as net revenues rose 16%.
Brexit flags
However, its net business inflows fell by 16% to £2.34bn, down from £2.77bn

A boost from post-Brexit trading saw investment platform Hargreaves Lansdown PLC (LON:HL.) report strong gains in half-year profits, but is shares fell as net new business inflows were down on the previous year, missing forecasts.

The FTSE 100-listed firm saw its pre-tax profits increase by 21% to £131.0mln for the six months to December 31, up from £108.1mln a year earlier, as net revenues rose 16% to £184.8mln, up from £158.8mln.

Hargreaves said the key contributors to profit growth were "significantly elevated" trading volumes since the Brexit vote last June, higher stock market prices generating additional revenue from charges, new revenue from new assets, and cost control.

The group’s total assets under administration at the end of its first-half were £70.0bn, up from £61.7bn at the start of the year.

However, its net business inflows fell by 16% to £2.34bn, down from £2.77bn a year earlier.

Numis downgrades ...

Broker Numis downgraded its rating for Hargreaves to 'hold' from 'buy' as the asset numbers were below its forecasts.

Numis said Hargreaves’ assets under administration were a little behind its £70.8bn forecasts, while net  inflows were short of its £2.9bn estimate.

The broker raised its full-year earnings forecasts, and upped its target price to 1,497p from 1,458p, but reduced its rating on valuation grounds.

By lunchtime, Hargreaves shares were down 2.5%, or 35p at 1,351p.

Diversification helps …

Hargreaves’ chief executive, Ian Gorham, said: “The diversified nature of the Hargreaves Lansdown business has enabled us to deliver significant growth in both revenue and profit.

“Despite macroeconomic uncertainties impacting investor confidence and net new business, clients continue to trust us with their money and benefit from our market-leading investment services.”

As previously announced, Gorham will step down as chief executive officer following the results, to be replaced by Chris Hill, the current chief financial officer. Philip Johnson will be appointed the group’s new CFO.

Hargreaves Lansdown is paying an interim dividend of 8.60p, up 10% on the previous year.

Take profits ...

Analysts at Liberum noted that the half-year results beat their forecasts, largely on better stockbroking income than expected, which they said “should drive consensus upgrades of the range 5%-10% in our view.”

But, the analysts added: “While we expect the shares to trade better in the near term, over the medium to longer term we continue to see structural headwinds facing the company - namely pricing pressure and meaningful competition - which underpin our negative stance on valuation."

They concluded: “We believe investors should take profits on any strength in the share price.”

 -- Adds further broker comment, updates share price --

View full HL. profile View Profile

Hargreaves Lansdown Timeline

Related Articles

CSE head office in Toronto
January 01 2019
Capital raised on the CSE set to increase over 500% by the end of 2018
December 05 2018
“I think we’re a different generation of bank that is a lot quicker on our feet, a lot quicker at reacting to what customers want and are a lot more attractive to the savings market,” PCF boss Scott Maybury said
March 12 2019
"Over the past 25 years, S&U has consistently demonstrated its ability to adapt to the kinds of economic and political uncertainty we all currently face," said chief executive Anthony Coombs.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use