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Hargreaves Lansdown up as profits jump by a quarter as new client numbers soar

The FTSE 100-listed firm said it benefited from feverish trading in financial markets due to Brexit and, in March and April, the coronavirus pandemic

Hargreaves Lansdown PLC -
The total dividend for the year goes up by 31%

Hargreaves Lansdown PLC (LON:HL.) shares rose on Friday as it revealed profits rose by 24% in the year to end-June, 2020, as the investment platform operator signed up a record number of clients.

The FTSE 100-listed firm added a net 188,000 new clients over the year to take its total to 1.4mln. New business increased by 5% to £7.7bn while assets under management rose by a similar percentage to £104bn.

READ: Hargreaves Lansdown may have 'case to answer' over Woodford says law firm

Hargreaves Lansdown said it benefited from feverish trading in financial markets due to Brexit and, in March and April, the coronavirus pandemic.

Share dealing by clients jumped by 96% over the year with Hargreaves’ dealing revenue 94% higher. The wealth manager said its share of the execution-only stockbroking market rose to 39.5%.

Revenues overall for the year rose by 15% to £551mln, while profits were £378mln against £306mln a year ago.

The total dividend for the year has been hiked by 31% which comprises an 11% increase in the ordinary dividend and a 96% rise in the special payment.

Going forward, Hargreaves Lansdown said it will target younger savers and investors to maintain its momentum.

“We are already seeing an evolution of our service supporting clients from younger ages and across broader investment and savings options,” the group added.

In morning trading, Hargreaves Lansdown shares were 4.9% higher at 1,915p.

"Still a business to own for the longer term"

In a note to clients, analysts at Peel Hunt repeated an 'add' rating and 1,700p target price on Hargreaves Lansdown, pointing out that the group's full-year adjusted profits of £339.5mln were well ahead of their forecast of £322mln and also consensus, which was a little higher at £335mln.

They said: "The outlook statement talks about general uncertainties affecting investor sentiment but no change in long-term structural growth opportunity for HL. We will review our forecasts this morning. We are currently expecting PBT/EPS of £276m/46.9p (Eikon consensus stands at £288m/58.2p) and would expect this to move c5% higher given the tailwind from AuM levels."

"On our existing estimates, Hargreaves is trading on a Dec 21 EV/EBIT multiple of c29x. Still a business to own for the longer term," the Peel Hunt analysts concluded.

 -- Adds share price, analyst comment --

Quick facts: Hargreaves Lansdown PLC

Price: 1553.5 GBX

LSE:HL.
Market: LSE
Market Cap: £7.37 billion
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