UK direct-to-investor investment and online trading firm Hargreaves Lansdown PLC (LON:HL) today posted its financial results for the six months ended 31 December 2021.

Net new business for the first half of FY22 totalled £2.3 billion. This was driven by increased client numbers, continued wealth consolidation onto HL’s platform and inflows from existing clients.

The company introduced 48,000 net new clients to its services in the six months to 31 December 2021 (H1 2021: 84,000), growing its active client base by 3% to 1,693,000. During the 2021 calendar year, HL had an increase of 197,000 clients. The average age of new clients remains consistent with recent periods and they are behaving similarly to pre-Covid cohorts of new clients in terms of growing their AUA on the platform over time.

This increased population of quality clients underpins future growth, as they add new money to their accounts, particularly through the use of annual tax free allowances in the SIPP and ISA products. Over a period of time, clients also typically consolidate their investments through transfers onto HL’s platform.

Total AUA increased by 4% to £141.2 billion as at 31 December 2021 (£135.5bn as at 30 June 2021). This was driven by £2.3 billion of net new business (H1 2021: £3.2bn) plus positive stock market movements impacting asset values.

Revenue for the period was down 3% to £291.1 million (H1 2021: £299.5m), due to lower share dealing revenue as some of the more extreme trading volumes during Covid were not repeated and by lower interest on client money as the full impact of the emergency cuts to the base rate of interest were felt. Both of these factors were expected by management and were partly offset by higher average asset values and the benefit that brings in higher platform and management fees.

On an underlying basis the profit before tax fell by 13% to £163.5 million (H1 2021: £188.4m). On a statutory basis profit before tax fell by 20% to £151.2 million (H1 2021: £188.4m).

The Group will be undertaking an estimated £175 million of strategic investment cost to deliver future growth and operational efficiencies. In part, the funding for this investment will come from the suspension of any special dividends through FY22 and FY23 before HL looks to reinstate it from FY24 onwards. The Board, however, is confident that Hargreaves Lansdown has sufficiently strong financial, liquidity and capital positions to execute its strategy without constraints and hence has committed that the ordinary dividend will grow by at least 3% throughout the period to FY24.

Given the Group’s dividend policy, the Board has declared an increased interim dividend of 12.26 pence per share (H1 2021: 11.9 pence per share). The interim dividend will be paid on 1 April 2022 to all shareholders on the register at 4 March 2022.