Hargreaves Lansdown Regulatory News (HL.)

9 Apr 2008 07:00

Hargreaves Lansdown PLC09 April 2008 Interim Management Statement Hargreaves Lansdown Plc The following statement is unaudited except where reference is made to figurespublished in the Report and Financial Statements for the year ended 30 June2007. Certain figures contained in this report have been subjected to roundingadjustments. Accordingly, in certain instances the sum of the numbers in acolumn contained in this document may not conform exactly to the total figuregiven for that column. Hargreaves Lansdown Plc ('the Group') is pleased to publish today its InterimManagement Statement as required by the UK Listing Authority's Disclosure andTransparency rules. This statement is in respect of the period from 1 January2008 to 31 March 2008. Assets Under Administration During the third quarter, the FTSE All Share fell by 11 per cent from 3286.67 to2927.05. Despite the less favourable market conditions, Hargreaves Lansdownsuffered less than a 2 per cent drop in asset values and had £10.7 billion oftotal assets under administration as at 31 March 2008. This remains £0.5 billionahead of the 30 June 2007 value of £10.2 billion. 31 Mar 31 Dec 30 Sept 30 June 2008 2007 2007 2007 £'bn £'bn £'bn £'bnAssets Under Administration (AUA) Vantage 9.6 9.8 9.5 9.1 Other 0.2 0.2 0.2 0.2AUA Total (*) 9.8 10.0 9.7 9.3Assets Under Administration and Management (AUM) Portfolio Management Service (PMS) 0.9 0.9 0.8 0.8 Multi-manager funds excluding PMS 0.4 0.5 0.5 0.5AUM Total 1.3 1.4 1.3 1.3Less: Multi-manager funds included in both AUA and AUM (0.4) (0.5) (0.5) (0.5)Total Assets Under Administration 10.7 10.9 10.6 10.2 31 Mar 31 Dec 30 Sept 30 June 2008 2007 2007 2007 £'m £'m £'m £'m(*) includes the following values of shares in Hargreaves 681 697 811 805Lansdown plc The value of assets held within the Vantage service, the Group'sdirect-to-private investor fund supermarket and wrap platform, dropped by just2% from £9.8 billion at 31 December 2007 to £9.6 billion at 31 March 2008despite the market decline of 11%. This can be attributed to strong businessinflows which have compensated for the negative impact of the market during theperiod. The third quarter leading up to the tax year-end on 5 April istraditionally the most important in the financial year from the perspective ofgathering assets. In the full tax year ended 5 April 2008, new ISA contributionsincreased by 2% to £430 million, compared to £420 million for the tax year ended5 April 2007. In addition, the Group continued to attract transfers of PEP andISA assets into its Vantage service. Investments into SIPPs (includingtransferred business and basic tax relief) were approximately £1.16 billion inthe tax year ended 5 April 2008, 53% more than the £0.76 billion raised in theprevious tax year. There have been further inflows of investments outside taxshelters. The number of active Vantage clients at the 31 March 2008 was around 237,000compared with 227,000 as at 31 December 2007. The value of assets held inHargreaves Lansdown's managed services, namely its Portfolio Management Service(PMS) and range of multi-manager funds, dropped from £1.4 billion as at 31December 2007 to £1.3 billion as at 31 March 2008. This figure includes £0.4billion (31 December 2007: £0.5 billion) of Hargreaves Lansdown multi-managerfunds administered through Vantage. Revenue Operating Third Quarter Third Quarter Increase 9 Months 9 Months IncreaseRevenue Year Ending Year Ended Ended Ended 30 June 2008 30 June 2007 31 March 2008 31 March 2007 £'million £'million £'million £'million Vantage 17.7 13.5 31% 51.9 35.9 45%Advisory 3.8 2.9 31% 10.8 8.1 33%Discretionary 2.5 1.9 32% 7.6 5.1 49%Third Party 4.1 6.2 -34% 12.0 14.8 -19%Stockbroking 1.3 1.5 -13% 4.0 4.4 -9%Central Services 0.4 0.4 - 1.2 1.3 -8% Total 29.8 26.4 13% 87.5 69.6 26% Note: In addition to the above operating revenue, the Group received £2.3m ofinterest on its own cash in the 9 month period ended 31 March 2008 compared to£0.8m for the same period in the previous year. This can be attributed to highercash balances held throughout this period compared to the previous year. In theGroup's previous interim management statement, covering the first quarter of theyear ending 30 June 2008, this interest was included in the divisional revenuefigures. The Vantage, Advisory and Discretionary divisions continue to generate higherrevenues in the third quarter compared to the same period last year as a resultof higher average asset values during the period. In the 9 month period ended 31March 2008, these areas accounted for 80% of revenue, compared to 72% for theyear ended 30 June 2007. These divisions continue to drive the business forwardby generating recurring, higher quality, earnings for the Group. The Financial Practitioners division continues to service the needs of itsclients and introduced £94m into the Portfolio Management Service (PMS) duringthe third quarter, compared with £74m for the same period in the previous year.No additional advisers have been added during this period. The Group's revenue from Third Party Business is primarily made up of commissionearned on corporate pension business, the renewal commission earned oninvestments sold through Hargreaves Lansdown but held outside of its nominee andthe broking of annuities. The value and timing of revenue earned on corporatesolutions business is the least predictable of all of the divisions. This yearhas proved to be difficult so far, with intense competition and indecision inthe marketplace. As previously advised, the revenue from third partyinvestments is expected to continue its gradual decline as more clients chooseto transfer their assets onto the Vantage platform. The Personal Life andPensions division remains the only growth area in Third Party Business so farthis year, driven by strong annuity sales. The revenue from term assurance hasdeclined and the Group is no longer actively marketing in this area. The level of stockbroking revenue is dependent on general levels of marketactivity. An increased dealing charge for certificated share trades wasintroduced on 1st January 2008 and in advance of this, clients were encouragedto deposit their shares into the Vantage Share Account. As a result, the 13%drop in stockbroking revenue for the period was not unexpected. Finally, revenue from the Central Services division includes interest on someclient cash accounts, together with revenue from subscription and informationservices. Commenting on the Interim Management Statement, Peter Hargreaves, ChiefExecutive, said: "It has been a remarkable period for financial markets. World stock markets havebeen more volatile than in most people's memories and at the same time we haveseen banks bailed out on both sides of the Atlantic. There is also concern aboutproperty prices, both commercial and residential." "It is pleasing to report that despite the market creating poor tradingconditions for the tax year ended 5th April 2008, we have taken more into ourISA and our SIPP than in the previous year. The full benefit of assets gatheredthis year will be reflected in the 2009 financial year, in the form of a fullyear of revenue. Our results continue to demonstrate the resilience of theHargreaves Lansdown business model." "We expect market conditions to remain challenging but will continue to innovateand exploit any opportunities the market presents. As always, our asset values,revenues and profitability will be impacted by the performance of the market." " Irrespective of what market conditions prevail, we endeavour to provide ourclients with the best service, the best prices and the best information." This information is provided by RNS The company news service from the London Stock Exchange