Hargreaves Lansdown pre-tax profits up 9%

Hargreaves Lansdown has revealed a 9 per cent increase in pre-tax profits for the second half of 2009.

The firm has seen profits rise to £39.8m in six months to December 31, 2009, up from £36.5m in the last six months for 2008. The firm also has adjusted pre-tax profit figures of £42.1bn, an increase of 16 per cent from last, which exclude one-off costs for new offices.

Hargreaves Lansdown has also benefited from the bounce in market, with both its assets under administration and net business flows up more than 50 per cent. The firm also saw a 57 per cent adjusted operating profit margin.

Total assets under administration jumped 58 per cent from £9.9bn at the end of 2008 to £15.6bn at the end of last year, while new business flows stood at £1.4bn, up from £0.9bn 12 months earlier.

Assets on the firm’s Vantage platform rose from by £5.4bn in 2009 to stand at £14.4bn at the end of last year.

Revenue also jumped 14 per cent from £65.6m in 2008 to £74.6m last year, with its Vantage platform and discretionary revenues increasing by 22 and 16 per cent respectively. Third party and other services fell 14 per cent from £13.7m to £11.8m, something the group expects to continue as more people move their assets onto Vantage. Recurring revenues fell slightly from 72 to 71 per cent.

Diluted earning per share risen by 9 per cent from 5.5 to 6 pence per share. The group is also planning to pay as much of its dividend as possible in the current tax year given the 10 per cent increase in the top rate of tax and the impending general election. The board says it is to pay an interim dividend of 8 pence per share and a special dividend of 1.6 pence per share, payable to shareholders on March 26, 2010. This amounts to a total dividend of £44.6m.

Hargreaves Lansdown chairman Peter Hargreaves says the group is confident it can continue to produce profits but warns that the low interest rate environment will represent a challenge.

He says: “Twelve months ago a combination of the interest rates that were available and those which we had locked into were on average more than three times higher than current rates. During the next six months the effect of the lower interest rates will continue to present a challenge to maintaining our comparative profits. It shall represent a loss of income until we see rising interest rates.

“In summary we look forward to the next six months. The performance of our business will depend as much on our own skill and innovations as many external effects. Interest rates, the fear of higher taxes, stock markets, world events and our industry’s response to the retail distribution review will all play their part. The impending general election will also test us. In the past it has been during such times that we have flourished and improved our market share.”

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