REG - Hargreaves Lansdown - Trading Statement

Hargreaves LansdownAnnouncement

12/05/2022 07:00

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RNS Number : 1880L  Hargreaves Lansdown PLC  12 May 2022

Trading update

12 May 2022

 

Hargreaves Lansdown plc today issues a trading update in respect of the four
months ended 30 April 2022.

 

Highlights

 

·       Encouraging start on strategic initiatives launched at the
February Capital Markets Day, with early focus on cost savings and efficiency.

·       Client growth of 90,000 year to date; client retention rate
92.4% for the year to date.

·       Net new business of £2.5 billion in the period, £4.8 billion
year to date, closing Assets under administration ("AUA") of £132.3 billion.

·       Revenue for the period of £196.5 million (FY2021: £233.2m) in
line with expectations.

·       Reiterating FY2022 guidance whilst raising revenue margin on
cash to 30-35bps for FY22.

 

 

Chris Hill, Chief Executive Officer, commented:

 

"We are off to an encouraging start on the strategic initiatives we set out at
our Capital Markets Day, which will build our capability to innovate and scale
and enable us to take advantage of the growth in the wealth management sector.
Our initial focus is on driving efficiency and cost savings in our operations
whilst ensuring we maintain the market leading service our clients expect from
us particularly in these current uncertain times.

 

The challenging backdrop driven by unprecedented macro-economic and
geo-political events has impacted markets and investor confidence, in turn
leading to moderated flows and asset levels with net new business of £2.5
billion in this period. We saw a significant step up in flows in March and
April from our tax year end campaign which focused on the benefits of
long-term saving and investing, with £1.8 billion of tax wrapped inflows
leading to a record 747,000 clients contributing to their ISAs and pensions
this tax year."

 

Trading performance

 

·      Client growth at 90,000 year to date is in line with pre-Covid
levels (FY2019: 87,000) excluding direct book acquisitions; client retention
at 92.4% has remained broadly constant throughout the year (FY2021: 92.1%).

·      Net new business of £2.5 billion in the period, £4.8 billion
year to date reflects moderated flows being seen across the market. 2021 flows
benefited from improving market and investor confidence resulting from Covid
vaccine roll-out, investment of excess cash built up during lock down and
elevated interest in share trading.

·      Closing AUA of £132.3 billion incorporates adverse market
movement throughout the period driven partly by exposure to global equity
markets, particularly US technology stocks with the Nasdaq down 21% over the
period.

·      Share dealing averaged 45,000 deals per day in the period, in
line with expectations and guidance.

·      Our tax year end campaign "Switch your money on" focused on the
benefits of long-term saving and investing and helped clients maximise the
benefit of tax efficient investing despite the market environment. Across the
campaign period we saw £1.8 billion of inflows including £0.6 billion in the
first 5 days of April. Across tax year ending 5 April 2022, we have seen a
record 747,000 clients contributing to their ISAs and pensions.

·      Total revenue in the period of £196.5 million (2021: £233.2m)
was in line with expectations with the increase in net interest margin as a
result of base rate rises offsetting the revenue impact of lower AUA.

 

Strategic Progress

 

We have made an encouraging start against all strategic initiatives set out at
our Capital Markets Day, with our early focus on client service and
efficiency, which will deliver cost savings whilst improving our client
experience.

 

·      Pension transfer times (recorded by industry index Origo) reduced
from 43.3 days in April 21 to 21.2 days in April 22 - driving efficiency and
significantly improving the client experience.

·      Client Service NPS over our busiest period of the year, tax year
end, hit 54% - our highest score since early 2019.

·      65.2% of digitally active clients used the HL mobile app between
Jan and March (2021: 59.4%).

·      Our Trustpilot score reached 4.3, confirming our 'Excellent'
rating (2021: 3.7).

·      Active Savings offered 6 market leading rates over the second
half of April and added Santander International, bringing the number of
partner banks up to 15.

 

Outlook

 

As we head toward the end of our financial year, given the uncertain economic
environment and market conditions, we are focused on cost control and
investment discipline. We are reiterating our FY2022 guidance whilst raising
expected revenue margin on cash to 30-35bps for the full financial year as we
see the impact of base rate rises starting to come through.

 

We look forward to sharing more on our progress against our strategic
initiatives as part of our full year update on 5(th) August 2022.

 

Contacts:

 

 Investors                                Media
 James Found, Head of Investor Relations  Danny Cox, Head of Communications

 +44(0)7970 066634                        +44(0)7989 672071

 Amy Stirling, Chief Financial Officer    Nick Cosgrove / Caroline Daniel, Brunswick

                                          0207 404 5959

 

 

Forward looking statements

This announcement contains forward-looking statements with respect to the
financial condition, results and business of the Group. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events, and depend on circumstances, that will occur in the future. The
Group's actual results may differ materially from the results expressed or
implied in these forward-looking statements. Nothing in this announcement
should be construed as a profit forecast. This announcement is unaudited. This
statement should not be seen as a promotion or solicitation to buy Hargreaves
Lansdown plc shares. It should be remembered that the value of shares can fall
as well as rise and therefore you could get back less than you invested.

LEI Number: 2138008ZCE93ZDSESG90

Revenue and clients

 

 Key metrics           4 months to 30 April 2022  10 months to 30 April 2022  4 months to 30 April 2021  10 months to 30 April 2021
 Revenue (£m)          196.5                      487.6                       233.2                      532.7
 Net new clients       42,000                     90,000                      126,000                    210,000
 Total active clients  1,734,000                  1,734,000                   1,622,000                  1,622,000

 

Assets under administration

 

 Average AUA (£billion)   4 months to 30 April 2022  3 months to 31 December 2021  3 months to 30 September 2021  2 months to 30 June 2021  4 months to 30 April 2021
 Funds                    63.5                       68.3                          68.0                           65.7                      61.3
 Shares                   51.5                       55.2                          53.9                           52.6                      49.0
 Cash                     14.1                       13.0                          12.6                           12.7                      12.9
 HL Funds                 8.6                        9.1                           9.1                            9.0                       8.6
 Active Savings           3.9                        3.7                           3.4                            3.1                       3.0
 Double count(1)          (8.5)                      (9.0)                         (9.1)                          (8.9)                     (8.5)
 Total                    133.1                      140.3                         137.9                          134.2                     126.3

 

 

 Closing AUA (£billion)   As at 30         April 2022          As at 31         December 2021          As at 30          September 2021           As at 30         June 2021          As at 30         April 2021
 Funds                    62.9                                 69.0                                    67.8                                       66.6                                64.6
 Shares                   50.7                                 55.2                                    53.7                                       53.1                                52.3
 Cash                     14.6                                 13.1                                    12.9                                       12.6                                12.9
 HL Funds                 8.5                                  9.1                                     9.1                                        9.0                                 8.9
 Active Savings           4.0                                  3.8                                     3.5                                        3.1                                 3.0
 Double count(1)          (8.4)                                (9.0)                                   (9.0)                                      (8.9)                               (8.8)
 Total                    132.3                                141.2                                   138.0                                      135.5                               132.9

 

 

 Average AUA (£billion)   10 months to 30 April 2022  10 months to 30 April 2021
 Funds                    66.3                        57.0
 Shares                   53.3                        43.6
 Cash                     13.3                        13.1
 HL Funds                 8.9                         8.3
 Active Savings           3.7                         2.7
 Double count(1)          (8.8)                       (8.2)
 Total                    136.7                       116.5

(1) All HL Funds are held in Vantage or the Portfolio Management Service (PMS)
and are included in the Funds category of the table with the exception of a
small balance held off platform by third parties. To avoid double counting the
amount held in Vantage or PMS has been deducted.

 

 

 AUA (£billion)     4 months to 30 April 2022  3 months to 31 December 2021  3 months to 30 September 2021  2 months to 30 June 2021  4 months to 30 April 2021
 Opening AUA        141.2                      138.0                         135.5                          132.9                     120.6
 Net new business   2.5                        1.0                           1.3                            0.9                       4.6
 Market movements   (11.4)                     2.2                           1.2                            1.7                       7.9
 Founder transfer*  -                          -                             -                              -                         (0.2)
 Closing AUA        132.3                      141.2                         138.0                          135.5                     132.9

(*) Represents cash withdrawals from the disposal proceeds of a placement of
Hargreaves Lansdown plc shares by a founder during the period.

 

 

 

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