Hargreaves Lansdown achieves record full-year results

4th Sep 2013 07:01

Hargreaves Lansdown's annual pre-tax profits rose 28 per cent to 195.2m pounds as the financial services company took on more clients and grew assets under administration (AuA). The FTSE 100 firm achieved a 22% jump in revenue to £292.4m for the year ended June 30th, driven by a 38% rise in AuA to £36.4bn. Diluted earnings per share climbed 30% to 31.4p.Net new business came to £5.1bn, up 59% from the prior year, with market movement and other factors adding a further £5bn. The investment group said it has seen its client base increased by 76,000 to 507,000 since June 2012 as it focused on areas of growth in private and occupational pensions, its investment supermarket and the internet.A tight control on costs and scalable operations contributed to rise in operating profit margin to 65.8% from 63.1% last year. Investment markets improved, with the average level of the FTSE All-Share index up 10.4% compared to a year ago, supporting market growth of £4.7bn in Vantage AuA and £0.3bn in portfolio management service (PMS).On the back of record results, the company rewarded shareholders by paying a second interim ordinary dividend of 14.38p per share, compared to 10.65p the previous year. The firm also increased its special dividend to 8.91p from 6.84p, bringing total dividends for the year to 29.59p, a 31% increase from last year's 22.59p."The group has enjoyed record new business flows and record new clients leading to a substantial increase in profits," said Chairman Ian Gorham. Its Corporate Vantage service, a platform used for company pensions, expanded with 78 schemes live or in implementation, up 66% from the year earlier, and assets rising 275% to above the £355m mark.Looking ahead, Gorham expects that while a more positive economic environment may be developing, short-term volatility will remain as markets react to the potential cutting of monetary stimulus. He said there was little prospect of higher interest rates on cash in the near future so equities and bonds remain good alternatives for potential higher income."In the 2014 financial year there will be some pressure on income earned from interest on cash deposits, caused by the current extremely low interest rates," Gorham added. "This has been exacerbated by the government's Funding for Lending scheme which has reduced deposit rates significantly."Commenting on the results analysts at Cannacord Genuity unveiled a new 1040p September 2014 target price based on a valuation of 26 times their 2014 estimates for the firm's earnings per share. They further explain that: "This 22% rise in target price reflects the roll forward of the date for the target price by six months and the confidence provided by the full year results."RD