Hargreaves Lansdown registers 15% rise in revenue in FY21
UK direct-to-investor investment and online trading firm Hargreaves Lansdown PLC (LON:HL) today posted its final results for the year ended 30 June 2021.
Net new business for the year totalled £8.7 billion (2020: £7.7bn) driven by increased client numbers, continued wealth consolidation onto Hargreaves Lansdown’s platform and strong trading through the COVID-19 period.
The company’s market share of the UK execution only market for share dealing continued to grow, hitting a new high of 43.3%.
During the year to 30 June 2021, Hargreaves Lansdown introduced 233,000 net new clients (2020: 188,000 or 170,000 excluding direct book acquisitions) to its services and grew its active client base by 17% to 1,645,000. The average age of new clients is consistent with recent periods, albeit greater in scale, and they are behaving similarly to recent equivalent cohorts in terms of growing their AUA on the platform over time, diversifying their portfolios and using the tax wrapped accounts.
Total AUA increased by 30% to £135.5 billion as at 30 June 2021 (£104.0 bn as at 30 June 2020). This was driven by £8.7 billion of NNB plus positive market movement of £22.8 billion.
Revenue for the year was £631.0 million, up 15% (2020: £550.9m), driven by higher average asset levels and record share dealing volumes for the year. This increase compares to a decrease in the average FTSE All Share of 2.4%, showing the strength of the Group’s net new business performance over the past year and diversified revenue stream.
This more than offset a fall in interest on client money as the net interest margin was impacted by the emergency cuts in the base rate of interest in March 2020. In addition, the company no longer has the revenue derived from its FundsLibrary business, which was £4.8 million in the prior period, as it was sold in February 2020.
The Group’s underlying profit before tax, excluding the one-off gain from the sale of FundsLibrary in 2020, rose by 8% to £366.0 million (2020: £339.5m). Including the £38.8 million gain on disposal in the 2020 result the profit before tax fell 3%. Profits after tax declined by 5% to £296.3 million (2020: £313.2m) as the effective rate of corporation tax rate increased to 19.1% (2020: 17.2%).
The Board has declared a 2021 total dividend of 50.5 pence per share. Excluding the one-off return of 8.2 pence per share from the gain on disposal of FundsLibrary within the 2020 special dividend, this was 8% ahead of the like-for-like total dividend equivalent of 46.7 pence per share. This is in line with the growth in underlying earnings per share, reflecting the Board’s confidence in the prospects for the business.
The Board has chosen to recommend a total ordinary dividend of 38.5 pence per share and declare a higher special dividend of 12.0 pence per share in order to maintain the total dividend payout ratio at 81% (2020: 81%). Subject to the shareholder approval of the final dividend at the 2021 AGM, the final and special dividends will be paid on 20 October 2021 to all shareholders on the register at the close of business on 24 September 2021.