As it reported a 5% fall in pre-tax profits, Hargreaves Lansdown said it had achieved a “…strong underlying performance in the face of known headwinds.”
The background was one of stock market angst and low investor confidence explained CEO Ian Gorham.
The headline figures showed net revenue for the year to 30 June, 2015, at £294.2m, up 1% from £291.9m in 2014, and profit before tax at £199m, down from £209.8m. Total assets under administration rose 18% to £55.2bn from £46.9bn and net new business inflows were down 5% from £6.1bn to £6.4bn.
CEO Ian Gorham told shareholders: “We are delighted with another year of great growth for Hargreaves Lansdown, against a backdrop of stock market angst and low investor confidence. The new freedoms have put pensions back on the public’s radar and helped us to a further 13% growth in clients and 18% in assets during the year; assets have now passed £55 billion and client numbers are now approaching 750,000. Hargreaves Lansdown remains the clear market leader in personal investing in the UK, and we thank all our clients for their continued support.”
Chairman Michael Evans added: “Our asset gathering abilities have meant that despite periods of low investor confidence during the year, we have delivered strong net new business flows underpinned by impressive numbers of net new clients. As a result, our assets under administration finished the year at a record level. Over the course of the year, we successfully navigated through the changes in the market place following the Retail Distribution Review.
“We have launched a number of new Hargreaves Lansdown Multi-Manager Funds, we were one of very few firms ready to offer clients the full range of pension freedoms on 6 April, and our new HL Portfolio + service was very well received by our clients. At the end of the year we were delighted to announce the acquisition of up to 7,000 clients and £370m of assets from J. P. Morgan Asset Management.
“We have taken big strides forward over the year supporting our people, with much attention on career development and talent management. We continue to be a financially strong organisation with a clean, robust balance sheet retaining a healthy margin over the regulatory capital adequacy requirements. Therefore after careful review of the company’s future cash requirements, the Board has decided to increase the total dividend for the year by paying a second interim ordinary dividend of 14.30p per share (2014: 15.39p) and an increased special dividend of 11.40p per share (2014: 9.61p) representing total dividends for the year of 33.0p per share (2014: 32.0p); an increase of 3%.
“Over the course of the year, Peter Hargreaves and Tracey Taylor stepped down as Executive Directors. Peter co-founded this great business in 1981 and his knowledge and expertise will be much missed by the Board. We are delighted that he remains an employee allowing the business to continue to benefit from his wisdom. Tracey had been with Hargreaves Lansdown for 15 years, serving as Chief Financial Officer for the last five years and was well respected in the City. On behalf of the Board I would like to thank both Peter and Tracey for their huge contribution to the business.
“In July 2015, we announced that we had selected a new independent Non-Executive Director whose appointment would be confirmed upon receipt of regulatory approval, and that Dharmash Mistry would be stepping down as a Non-Executive Director with effect from 31 August 2015.
“In August 2015, we announced the appointment of Chris Hill as Chief Financial Officer who, subject to regulatory clearance, should be starting with us in March 2016. In the meantime we continue to benefit from the services of a very well qualified interim Chief Financial Officer.
“Within the Executive Committee, we said goodbye to Nigel Bence after 22 years’ service contributing strongly to the risk, compliance and operational side of the business. In June 2015, we welcomed Vikki Williams as Chief Operating Officer. We have delivered strong underlying performance across our business, but in the face of known headwinds, we report a reduction in profits.
“These headwinds include this year being the first full year following the introduction of the Retail Distribution Review, the changes in the regulations concerning client money, precluding the use of term deposits over 30 days, to the detriment of both our clients and our shareholders, and an unexpected increase in our FSCS levy, which we continue to see as nothing more than a tax on well run businesses.
“The coming year will be a challenging one but we believe we are well set to return the Group to its growth trajectory, building on the new services and features delivered in 2015 to allow us to continue to thrive in our chosen markets.”