Hargreaves profits are up as chief steps down

Hargreaves profits are up as chief steps down

Hargreaves Lansdown posted increased profits before tax as its chief executive Ian Gorham announced plans to stand down by the end of September 2017.

The Bristol-based company announced today (7 September) it made a profit of £218.9m in the year to 30 June 2016 - up 10 per cent on the previous year.

Net revenue was also up - by 11 per cent - to £326.5m while assets under administration increased by 12 per cent to £61.7bn.

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Mr Gorham said: “High client satisfaction drove strong client recruitment and retention, with associated additional fees and income.

“Client equity trading volumes during the year were considerably higher, up 9 per cent at 3.7m, driven particularly by speculation and volatility around the EU referendum, with a record 63,000 trades conducted on 24 June 2016.

“This additional trading drove higher stockbroking commission.

“We are well positioned to take advantage of the structural opportunity for growth in the savings and investments market.

“I believe the group is in excellent hands and that shareholders and clients shall be best served by new zest being applied to the group’s activities. Now is the correct time for natural succession, as we look forward to an exciting future.”

Mr Gorham said he would stand down no later than 30 September 2017, at which point he would have been chief executive for more than seven years.

Chris Hill, currently the chief financial officer, will become deputy chief executive from 1 October 2016 with the intention that he will be confirmed as chief executive following Mr Gorham’s departure.

Addressing the effect of Britain’s vote to leave the European Union, Mr Gorham said that while the long-term implications are unknown, Hargreaves “remains confident” about the future.

He said: “Hargreaves Lansdown is the largest business of its kind in the UK and not dependent on any single asset class or investment to prosper. The requirement for individuals and corporates to commit to long-term savings remains.”

The FTSE 100 company did see a decrease in net new business inflows over the year, which increased by £6bn compared to £6.1bn the previous year.

Hargreaves has previously been critical of the Financial Services Compensation Scheme levy, and over the course of the year it saw its bill increase again, this time by 25 per cent to £5.5m.

Peter Lenardos, an analyst with RBS Europe, said the results were “strong”.

He said: “A confident outlook and increased levels of client retention - from an already high level - reinforce our full year 2017 and full year 2018 forecasts, which are above consensus expectations.”