Profit jumps at Hargreaves Lansdown despite Woodford scandal

Profit before tax at investment platform Hargreaves Lansdown climbed 12 per cent in the first half of its financial year to hit £171m.

Net new business fell nine per cent to £2.31bn in the six months to 31 December compared to the same period the previous year.

Total assets under administration grew 22 per cent from £85.9bn at the end of 2018 to £105.2bn at the end of 2019.

Read more: Investors in Neil Woodford’s frozen flagship fund get first payout

Revenue grew nine per cent to £257.9m in the first half, compared to the same period the previous year.

Chief executive Chris Hill said: “The first half of our financial year was another period of growth. Despite market challenges, the resilience of our business, continued execution of our strategy and our focus on ensuring the right outcomes for clients, means we have seen growth and increased market share through the period.

Read more: Investors in Neil Woodford’s frozen fund to incur £10m in charges

“We are confident that the diversified nature of Hargreaves Lansdown, our continued investment where we see opportunity and market leading client offering, mean that we are well placed to help our clients prosper, whilst delivering strong and sustainable returns for shareholders.”

Shares fell four per cent in early trading to 1,805p.

Shore Capital analysts said: “Today’s statement acknowledges that Q2 was tough, with weak investor sentiment but also notes that client activity has picked up since the general election with signs of increased net flows into retail funds.”

Hargreaves Lansdown has come under attack recently for its connections with fund manager Neil Woodford.

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The company was a major supporter of Woodford’s now-suspended equity income fund, which it continued to recommend to investors right up until it was gated on 3 June after becoming overwhelmed by withdrawals.

The gating of the fund affected over 290,000 Hargreaves Lansdown investors – about a quarter of the its total.

This week it emerged that investors in the frozen fund face steep losses, with a first payout released this week of between 43.6p to 58.9p per share.

This represents 74 per cent of the current fund value of the Woodford Equity Income Fund, now known as the LF Equity Income Fund, and is the result of the offloading of the most liquid — and therefore easiest to sell — holdings. 

Shore Capital said: “Today’s results statement notes that client retention was 93.3 per cent in H1, similar to HL’s normal levels, which indicates there hasn’t been any mass exodus on the back of Woodford.

“We are big fans of the HL business model and think that investors should not underestimate the power of convenience that its slick platform and high service levels provide.”