REG - Hargreaves Lansdown - Trading Statement

Hargreaves LansdownAnnouncement

17/10/2022 07:00

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RNS Number : 0192D  Hargreaves Lansdown PLC  17 October 2022

Trading update

17 October 2022

 

Hargreaves Lansdown plc today issues a trading update in respect of its first
quarter ended 30 September 2022.

 

 

Highlights

 

·      Continued strategic delivery with Active Savings performing well,
our US Fund to launch on 1(st) 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 1(st) 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."

 

Trading performance

 

·    Active client growth of 17,000 in the quarter (FY2022: 23,000) driven
by net new clients in the SIPP, ISA and Active Savings accounts. Client
retention at 92.2% is marginally ahead of the last full year (FY2022: 92.1%)
as is asset retention at 91.9% (FY2022: 91.8%).

·    Net new business of £0.7 billion in the quarter (FY2022: £1.3bn),
reflects moderated flows being seen across the market; Active Savings
continues to perform well and has been the recipient of the majority of net
new flows.

·   Closing AUA of £122.7 billion reflects adverse market movement across
the quarter of £1.8 billion with negative performance in September offsetting
July's positive movement.

·    Total revenue in the quarter of £162.9 million (FY2022: £142.2m) up
15% as the increase in net interest margin, more than offsets the reduction in
share dealing volumes and the revenue impact of lower year-on-year AUA.

·    Share dealing volumes have averaged 700,000 per month in the quarter
(FY2022: 861,000) with volumes modestly increasing on a monthly basis.

 

Strategic Progress

 

Throughout Q1 we have continued to progress our FY2023 areas of focus with
specific delivery in our Growth and Client Service & Efficiency strategic
pillars including:

 

·      HL US Fund ready to launch on 1(st) November, UK Income fund to
follow in the second quarter.

·      Active Savings reached £5.3 billion AUA in the period with 73%
of Q1 flows being new money to HL.

·      Delivered first stage of vendor optimisation programme, enabling
cost savings in line with plan.

·     Miguel Baptista joined as our Chief Data Officer from Howden Joinery
Group Plc, bringing data capability critical for our future personalised
service.

·      Phase one of the Amazon Connect Service Platform to go live on
the second quarter.

·   First in-house developed Amazon Web Services (AWS) solution delivered to
the cloud which will enable greater efficiencies in our Pension Transfers
process

 

Outlook

 

As we progress through this year, given the uncertain economic environment and
market conditions, we remain focused on cost control and investment
discipline. We are raising our FY2023 revenue margin guidance to 49-52 bps;
cash margin guidance increased to 130-150 bps and shares margin guidance
decreased to 30-35 bps. All other guidance remains unchanged.

 

We look forward to sharing more on our progress against our strategic
initiatives as part of our interim results on 15(th) February 2023.

 

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    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, clients and share dealing volumes

 

 Key metrics                                               3 months to 30 September 2022  2 months to 30 June 2022  4 months to 30 April 2022  3 months to 31 December 2021  3 months to 30 September 2021
 Revenue (£m)                                              162.9                          95.4                      196.5                      148.9                         142.2
 Net new clients                                           17,000                         2,000                     42,000                     25,000                        23,000
 Total                   active clients                    1,754,000                      1,737,000                 1,734,000                  1,693,000                     1,667,000
 Client Retention Rate (%)                                 92.2                           90.9                      91.8                       92.8                          92.6
 Asset Retention Rate (%)                                  91.9                           91.8                      91.4                       92.2                          92.1
 Share dealing volumes per month                           700,000                        755,000                   927,000                    908,000                       861,000

 

Assets under administration

 

 AUA (£billion)                     3 months to 30 September 2022  2 months to 30 June 2022  4 months to 30 April 2022  3 months to 31 December 2021  3 months to 30 September 2021
 Opening AUA                        123.8                          132.3                     141.2                      138.0                         135.5
 Net new business - platform        -                              0.1                       2.3                        0.7                           0.9
 Net new business - Active Savings  0.7                            0.6                       0.2                        0.3                           0.4
 Total net new business             0.7                            0.7                       2.5                        1.0                           1.3
 Market movements and other         (1.8)                          (9.2)                     (11.4)                     2.2                           1.2
 Closing AUA                        122.7                          123.8                     132.3                      141.2                         138.0

 

 Closing AUA (£billion)   As at 30         September 2022          As at 30            As at 30         April 2022          As at 31         December 2021          As at 30          September 2021

                                                                    June 2022
 Funds                    57.4                                     58.2                62.9                                 69.0                                    67.8
 Shares                   45.2                                     45.9                50.7                                 55.2                                    53.7
 Cash                     14.8                                     15.0                14.6                                 13.1                                    12.9
 HL Funds                 7.8                                      8.0                 8.5                                  9.1                                     9.1
 Active Savings           5.3                                      4.6                 4.0                                  3.8                                     3.5
 Double count(1)          (7.8)                                    (7.9)               (8.4)                                (9.0)                                   (9.0)
 Total                    122.7                                    123.8               132.3                                141.2                                   138.0

 

 Average AUA (£billion)   3 months to 30 September 2022  2 months to 30 June 2022  4 months to 30 April 2022  3 months to 31 December 2021  3 months to 30 September 2021
 Funds                    59.8                           60.0                      63.5                       68.3                          68.0
 Shares                   47.5                           47.7                      51.5                       55.2                          53.9
 Cash                     14.8                           14.9                      14.1                       13.0                          12.6
 HL Funds                 8.1                            8.2                       8.6                        9.1                           9.1
 Active Savings           5.1                            4.4                       3.9                        3.7                           3.4
 Double count(1)          (8.1)                          (8.1)                     (8.5)                      (9.0)                         (9.1)
 Total                    127.2                          127.1                     133.1                      140.3                         137.9

 

(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.

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