Hargreaves Lansdown’s full-year pre-tax profit tanks 24%

Hargreaves Lansdown’s full-year pre-tax profit tanks 24%
Written by:
Wajeeh Khan
7th August, 10:02
  • Hargreaves Lansdown’s full-year pre-tax profit tanks 24% to £378.3 million.
  • The Bristol-based firm saw a 5% growth in its assets under administration.
  • The company's board declares a 26.3 pence per share of final dividend.

Hargreaves Lansdown (LON: HL) said on Friday that its annual earnings came in stronger on a year over year basis due to the Coronavirus pandemic that fuelled share trading in recent months. Its trading platform, consequently, registered thousand of new clients.

Shares of the company jumped about 2% in premarket trading on Friday and gained another 3% on market open. Hargreaves Lansdown is currently trading at £19.08 per share. In comparison, the stock had started the year 2020 at £19.61 per share, and the economic blow from COVID-19 had pushed it down to £11.58 per share in March.

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Hargreaves Lansdown sees a 5% growth in assets under administration

Hargreaves Lansdown faced novel challenges in 2019 as Neil Woodford’s chief fund collapsed. The British fund supermarket had been managing the fund for years. The company referred to the issue on Friday and commented:

“It is essential that we learnt from the experience surrounding the Woodford issue last year.”

Hargreaves latest financial update on Friday, however, hinted that it was still slightly under pressure due to the scandal. But the financial services company expressed confidence as it said:

“Post the UK general election result in December 2019 and into the COVID-19 period, dealing volumes increased to record levels on our platform at a time when the average AUA (assets under administration) was impacted by a significant market falls.”

The Bristol-based company saw a 5% growth in its assets under administration to £104 billion in the recently concluded financial year. But in the previous year, Hargreaves had recorded a faster 8% growth in AUA. From January to April in 2020, however, it reported an 8.1% decline in total assets.

Hargreaves’ board declares a 26.3 pence per share of final dividend

As per the company, it added 188K net new clients in fiscal 2019 that pushed its total to over 1.4 million active clients. It valued its net new business at £7.7 billion.

At £378.3 million, Hargreaves’ pre-tax profit tanked 24% in the twelve months that concluded on 30th June. The company’s board declared a 26.3 pence per share of final dividend on Friday. Combined with the interim dividend and special distribution, it paid out 54.9 pence a share this year that marks a 31% growth on an annualised basis.

At the time of writing, the British financial services firm has a market cap of £9.05 billion and a price to earnings ratio of 34.57.

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