The UK’s largest investment supermarket, Hargreaves Lansdown (LON:HL), has reported soaring growth across its assets under administration, revenue, profit and dividend.
For the year to 30 June 2012, the firm increased its assets under administration by 7 per cent to £26.3 billion, revenue by 15 per cent to £238.7 million, pre-tax profit by 21 per cent to £152.8 million, and dividend by 20 per cent to 22.59p per share.
Ian Gorham, the chief executive, celebrated the ‘excellent business growth’. He attributed the ‘record’ results to a ‘continued reputation for unparalleled client satisfaction and highly effective delivery’.
The company estimated that it holds 28.6 per cent of the UK’s direct investing market, with 425,000 investors using its Vantage investment platform.
Hargreaves Lansdown also used the release of its full-year results to issue a mixed forecast for its future.
‘It is difficult to see the economic storm clouds dissipating in the next 12 months’, Gorham warned. ‘We believe austerity will continue despite the political clamour for countries to focus on growth.’
But this, he argued, would present opportunities for investors. ‘There is little prospect of higher interest rates on cash in the near future, so equities and bonds remain good alternatives for potential higher income. The depressed levels of equity markets also offer patient investors the opportunity for future capital growth.’
The group intends to exploit this by developing its services. It has specified the introduction of ‘improved SIPP incentives and an online transfer service’ for 2013, as well as an iPad app.
The greatest danger to Hargreaves Lansdown remains additional regulation, even though it claimed the burden posed ‘an effective barrier to entry to new competitors’.
The second phase of the Retail Distribution Review (RDR), to be rolled out at the end of next year, will prevent platforms like Vantage from receiving commission for listing fund managers’ products. Instead, platforms will have to charge clients directly.
Hargreaves Lansdown nevertheless expressed confidence about the effect of the changes on its business, ‘provided they are applied fairly to all participants in the market and well communicated’.
The firm also stated that its co-founder and second-largest shareholder, Stephen Lansdown, will step down from the board after 31 years at the group.
The stock market was unmoved by the news, with Hargreaves Lansdown shares up less than half a per cent to 633.5p.