Hargreaves Lansdown (HL.)

[idpickering]

Trading update.

Highlights

· Continued strategic delivery with Active Savings performing well, our US Fund to launch on 1st November and the pilot launch of the first of our digital Augmented Advice tools on track for the second quarter.

· Net new business of £0.7 billion in the period and closing Assets under Administration ("AUA") of £122.7 billion.

· Net new client growth of 17,000 in the period, taking us to 1,754,000 active clients, with client retention rate of 92.2%.

· Revenue for the period of £162.9 million, up 15% (FY2022: £142.2m) driven by higher revenue on cash.

· Raising FY2023 revenue margin guidance to 49-52bps from 44-47bps.

Chris Hill, Chief Executive Officer, commented:

"The impact of the challenging macroeconomic and geopolitical backdrop on asset values, client confidence and propensity to invest has been seen across our industry. Against this backdrop we have delivered £0.7 billion of net new business and welcomed a further 17,000 net new clients in the quarter, reflecting both the diversified nature of our platform and also the trust clients place in us. Our focus remains on helping new and existing clients navigate these tough times and engaging with them to help improve their financial resilience. Cash savings are high on the agenda for clients and we have seen a further £0.7 billion of net flows into Active Savings leading to a record £5.3 billion of assets. Although flows into risk based investments remain subdued, both client and asset retention rates remain strong and in line with last year.

We are on track for both our new US Fund launch on 1st November and the pilot launch of our Augmented Advice proposition later this calendar year as we build delivery momentum against our strategic roadmap.

I have been really pleased to see HL recognised, for the first time, as 31st on the list of the UK's most valuable 75 brands, according to Kantar's reputable BrandZ ranking. This is testament to the success of the brand awareness campaigns we have delivered and the emphasis we place on building long-term relationships with clients and our wider stakeholders. In addition we welcome confirmation from the FCA that they will be undertaking a holistic review of the advice and guidance boundary, which we have been encouraging for several years and will hopefully enable us to do more to help our clients, particularly through Augmented Advice and the investment solutions we are developing."

https://www.investegate.co.uk/hargreave ... 00090192D/

Ian.

[monabri]

and yet.....down 7%. Possible court case "lawsuit" linked to Woodford's funds.

https://www.telegraph.co.uk/business/20 ... -woodford/

"Hargreaves Lansdown has been hit by a multi-million pound lawsuit on behalf of thousands of investors for promoting the former star stockpicker Neil Woodford’s failed equity income fund.

Claims management firm RGL filed the lawsuit in London’s High Court on behalf of 3,200 investors, a figure which it said was growing daily.

The lawsuit alleged that Hargreaves continued to promote the once star fund manager’s LF Woodford Equity Income Fund (WEIF) up until the day it collapsed. It did so despite admitting to being aware of its troubles since 2017, RGL claimed."

[simoan]

and yet.....down 7%. Possible court case "lawsuit" linked to Woodford's funds.

https://www.telegraph.co.uk/business/20 ... -woodford/

"Hargreaves Lansdown has been hit by a multi-million pound lawsuit on behalf of thousands of investors for promoting the former star stockpicker Neil Woodford’s failed equity income fund.

Claims management firm RGL filed the lawsuit in London’s High Court on behalf of 3,200 investors, a figure which it said was growing daily.

The lawsuit alleged that Hargreaves continued to promote the once star fund manager’s LF Woodford Equity Income Fund (WEIF) up until the day it collapsed. It did so despite admitting to being aware of its troubles since 2017, RGL claimed."

I think the price is down more because the CEO is leaving with the underwhelming trading update. IMHO it is starting to look very good value on a longer term view for such a high quality company with no debt, particularly as it will benefit from higher interest rates and has a sustainable 5% dividend yield as a cherry on top.

[idpickering]

Results for the year ended 30 June 2023.

Highlights:

· Net new business of £4.8 billion

· Assets Under Administration, up 8% to £134.0 billion driven by net new business and positive market movement

· 1,804,000 active clients, an increase of 67,000 in the year

· Profit before tax increase of 50% to £402.7 million

· Underlying profit before tax increase of 47% to £438.8 million

· Ordinary dividend up 4.5% at 41.5 pence per share

https://www.investegate.co.uk/announcem ... ts/7763256

Ian (No holding).

[simoan]

I thought todays results looked pretty good and it was interesting to hear the thoughts of the new CEO. IMHO if you use one of the listed brokers, it is really worth reading their results. As both a customer and shareholder of HL I find it essential, and the dividend more than pays my fees for a year!

We've seen low interest rates for so long that it's easy to forget how the broker business model should work i.e. when people stop share trading and hold cash reserves in a high interest rate environment, the drop off in dealing commissions is compensated by the increase in interest received on cash balances. That has certainly been the case for HL in the past year; today we learn they have £503m of net cash on the balance sheet in addition to customer cash holdings all earning interest. So there is at least a partial natural hedge to the profits. It's also interesting to see large inflows into their Active Savings Product and the launch of their first Cash ISA should also help going forwards. HL is a quality act with net cash, a very high ROE, a PER of about 11 and with a 5.2% dividend yield. IMHO there are worse places to be invested.

On the Woodford complaint front, the latest news is:

The Group operates in a highly regulated environment and, in the ordinary course of business, provides information to various regulators and authorities as part of informal and formal requests and enquiries. In addition, the Group receives complaints or claims in relation to its services from time to time brought by clients, investors or other third parties. These may be notified to the Group or directly to third parties, such as the Financial Ombudsman Service in the case of client and investor complaints investigated and not upheld by the Group. These include enquiries, complaints and a threatened claim relating to the LF Equity Income Fund (formerly the Woodford Equity Income Fund).

The Company received a letter purporting to be a pre-action letter from a law firm in March 2021. In June 2021, the Company rejected all the claims made for lack of a substantive basis of claim. The Company is aware that the law firm has since filed a claim form with the court against both Link Fund Solutions Limited and Hargreaves Lansdown Asset Management Limited ("HLAM") for an unspecified amount in October 2022. As at the date of issuing these financial statements, the law firm has not yet confirmed that it has secured sufficient funding to progress the claim, HLAM has not been served with the claim form and no timetable has been set for the conduct of any claim.

All the best, Si

[monabri]

I see HL have pushed back the XD and Pay dates...quite a bit.

previous years
XD 23 September 21 : Pay 20 October
XD 22 September 22 : Pay 24 October

latest
XD 16 November 23 : Pay 15 December

So, the dividend might have increased by 5% but we have to wait longer.

[simoan]

I see HL have pushed back the XD and Pay dates...quite a bit.

previous years
XD 23 September 21 : Pay 20 October
XD 22 September 22 : Pay 24 October

latest
XD 16 November 23 : Pay 15 December

So, the dividend might have increased by 5% but we have to wait longer.

Does this really matter? As a customer it matters very little given it's just a timing issue, and as a shareholder it means they can get more interest on the cash to increase profits Sounds like a good business decision to me. If I was running the company I'd be doing the same. I assume the new CEO is maybe behind this change.

[Dod101]

I see HL have pushed back the XD and Pay dates...quite a bit.

previous years
XD 23 September 21 : Pay 20 October
XD 22 September 22 : Pay 24 October

latest
XD 16 November 23 : Pay 15 December

So, the dividend might have increased by 5% but we have to wait longer.

Does this really matter? As a customer it matters very little given it's just a timing issue, and as a shareholder it means they can get more interest on the cash to increase profits Sounds like a good business decision to me. If I was running the company I'd be doing the same. I assume the new CEO is maybe behind this change.

Of course it matters if you are a shareholder. An even better business decision would be not to pay a dividend at all, by your logic. Were I a shareholder I would be asking them what is going on.

Dod

[scrumpyjack]

Perhaps it is so that if the Lawsuit lands, well funded, they can cancel the dividend and keep their powder dry

[simoan]

Does this really matter? As a customer it matters very little given it's just a timing issue, and as a shareholder it means they can get more interest on the cash to increase profits Sounds like a good business decision to me. If I was running the company I'd be doing the same. I assume the new CEO is maybe behind this change.

Of course it matters if you are a shareholder. An even better business decision would be not to pay a dividend at all, by your logic. Were I a shareholder I would be asking them what is going on.

Dod

I think it's your logic that's wrong, because a company with truly excess cash beyond the needs of the business should always pay a dividend IMHO. But let's not prolong the discussion, as your input is straying way off topic for this forum. It's typical of people that only invest for dividends to concentrate on stupid minutiae like the date a dividend is paid.

[Dod101]

Of course it matters if you are a shareholder. An even better business decision would be not to pay a dividend at all, by your logic. Were I a shareholder I would be asking them what is going on.

Dod

I think it's your logic that's wrong, because a company with truly excess cash beyond the needs of the business should always pay a dividend IMHO. But let's not prolong the discussion, as your input is straying way off topic for this forum. It's typical of people that only invest for dividends to concentrate on stupid minutiae like the date a dividend is paid.

I do not invest in HL nor do I have an account with them so I am free of any bias but a shareholder and a customer sees things differently obviously. I note that one of the founders even got uptight about HL not so long ago. Anyway, I do not follow HL but do not deny that they are great at generating income for their shareholders. It may of course come back to haunt them.

Dod

[simoan]

I think it's your logic that's wrong, because a company with truly excess cash beyond the needs of the business should always pay a dividend IMHO. But let's not prolong the discussion, as your input is straying way off topic for this forum. It's typical of people that only invest for dividends to concentrate on stupid minutiae like the date a dividend is paid.

I do not invest in HL nor do I have an account with them so I am free of any bias but a shareholder and a customer sees things differently obviously. I note that one of the founders even got uptight about HL not so long ago. Anyway, I do not follow HL but do not deny that they are great at generating income for their shareholders. It may of course come back to haunt them.

Dod

In terms of company news we are discussing here, I only ever view things from s business perspective because that’s how I always invest. To moan about when the dividend is paid is frankly ridiculous. If the company delays paying a £136m dividend payment by a couple of months it generates around £1m of high margin additional revenue in the current half year. As a shareholder that’s a good thing because you own a share in all profits generated by the company.

[77ss]

[..... It's typical of people that only invest for dividends to concentrate on stupid minutiae like the date a dividend is paid.

I agree that the exact date of dividend payment is of very minor significance.

I have never looked at HL, but out of curiosity, prompted by this thread, I had a look at its total return over the past 5 years.

According to Fundsmith it is -57.85% over this period and has shown a negative TR over each and every one of the past discrete 5 years.

The future is unknowable of course, but I don't feel tempted.

[simoan]

[..... It's typical of people that only invest for dividends to concentrate on stupid minutiae like the date a dividend is paid.

I agree that the exact date of dividend payment is of very minor significance.

I have never looked at HL, but out of curiosity, prompted by this thread, I had a look at its total return over the past 5 years.

According to Fundsmith it is -57.85% over this period and has shown a negative TR over each and every one of the past discrete 5 years.

The future is unknowable of course, but I don't feel tempted.

We're straying off topic now. Five years ago HL was on a PER of ~30 and a dividend yield of ~2%. You could easily make a case for it being overpriced back then. Valuation is everything in investing and hence I have only bought in recently. BTW I have no idea what Fundsmith has to do with the performance of HL, but let's leave it there as we are now way OT for this thread which is to discuss the recent results only.

[monabri]

I agree that the exact date of dividend payment is of very minor significance.

I have never looked at HL, but out of curiosity, prompted by this thread, I had a look at its total return over the past 5 years.

According to Fundsmith it is -57.85% over this period and has shown a negative TR over each and every one of the past discrete 5 years.

The future is unknowable of course, but I don't feel tempted.

We're straying off topic now. Five years ago HL was on a PER of ~30 and a dividend yield of ~2%. You could easily make a case for it being overpriced back then. Valuation is everything in investing and hence I have only bought in recently. BTW I have no idea what Fundsmith has to do with the performance of HL, but let's leave it there as we are now way OT for this thread which is to discuss the recent results only.

The TR on Hargreaves over the last 5 years is indeed c-58% (and that is from HL's own website nevermind any other source). From memory, HL were flagged up of interest on simoan's GMS ("Give Me Strength") analysis. I bought in earlier than simoan and have not been that happy with the outcome to date. That's tough for me but that's how it is - my timing was poor. Still a good company IMHO.

edit GMS analysis August 21: viewtopic.php?p=436210#p436210

I bought into HL based on what I thought was a good company (metrics) along with an ordinary growing dividend peppered with the odd special - just the timing was wrong. I think simoan was lookng at HL with a different viewpoint - a company that was fundamentally sound but was being marked down (smell of Woodford?) with a view to recovery.

[idpickering]

Trading Statement.

https://www.investegate.co.uk/announcem ... nt/7825701

Ian (No holding).

[idpickering]

HARGREAVES LANSDOWN PLC (HL): CHAIR SUCCESSION

The Board of HL is pleased to announce the appointment of Alison Platt to the role of Chair of the Board and as a Non-Executive Director of HL, subject to customary regulatory approvals.

Alison will succeed Deanna Oppenheimer, who will be stepping down from her role as Chair of the Board and a Director of HL at HL's Annual General Meeting (AGM) on 8 December 2023. She will have served as Chair for six years.

https://www.investegate.co.uk/announcem ... ge/7908907

Ian (No holding).

[yorkshirelad1]

Hargreaves Lansdown to exit FTSE 100
Wednesday November 29 2023, The Times
https://www.thetimes.co.uk/article/hargreaves-lansdown-to-exit-ftse-100-3jnnzqlwk
http://archive.today/2023.11.29-003948/https://www.thetimes.co.uk/article/hargreaves-lansdown-to-exit-ftse-100-3jnnzqlwk

[yorkshirelad1]

Hargreaves Lansdown chairwoman to quit a year after facing revolt
Thursday November 30 2023, The Times
https://www.thetimes.co.uk/article/hargreaves-lansdown-chairwoman-to-quit-a-year-after-facing-revolt-3g7swfqcc
http://archive.today/2023.11.30-013803/https://www.thetimes.co.uk/article/hargreaves-lansdown-chairwoman-to-quit-a-year-after-facing-revolt-3g7swfqcc

The chairwoman of Hargreaves Lansdown is leaving the wealth manager little more than a year after coming under fire from its co-founder and biggest investor. Deanna Oppenheimer, 65, will step down from the board at the group’s annual meeting on Friday next week and will be replaced next year by Alison Platt, 61, a former boss of Countrywide who was ousted from the estate agency in 2018 after two profit warnings.

[monabri]

https://www.investegate.co.uk/announcem ... rt/8050058

Half Year Report.

A quality company with a shareprice that would scare a professional downhill skier. A shorters favourite.

"Highlights

· AUA up 6% since 30 June 2023 to a record £142.2 billion (H1 2023: £127.1bn)

· Net New Business of £1.0 billion (H1 2023: £1.6bn)

· Revenue up 5% to £368.2 million (H1 2023: £350.0m)

· Underlying Diluted Earnings per Share 34.6p (H1 2023: 35.5p); Interim Dividend increased 4% to 13.2p (H1 2023 12.7p)

· Business-wide review largely complete; tangible progress against initial priorities and clear plan moving forward"