LONDON (ShareCast) - (ShareCast News) - Hargreaves Lansdown posted a 5% drop in operating profit for the year ended 30 June, although revenue nudged up, assets under administration rose 18% and the company boosted its dividend.
Pre-tax profit for the period fell to £199m from £209.8m last year, while revenue was up at 1% at £294.2m and assets under administration rose to £55.2bn from £46.9bn.

Hargreaves said that while clients and assets grew substantially, profit faced several headwinds, such as the company's decision to reduce charges for clients, which reduced revenue by around £20m versus 2014, lower interest margins on client cash, lower stock markets as the FTSE All Share fell 0.8% in the year and an unexpected temporary hiatus in foreign exchange trading income.

It also pointed to a charge for a contribution to the Financial Services Compensation Scheme to cover the failings of less reputable companies.

Hargreaves said the impact of these headwinds will be less pronounced, or in the case of the foreign exchange trading income will not be repeated at all, in 2016.

The net operating profit margin fell to 67.3% from 71.3% in 2014.

It said the year was characterised by continued substantial new asset and client flows into Hargreaves Lansdown's services, successful navigation of regulatory changes, and the announcement and implementation of new initiatives.

Chief executive Ian Gorham said: "We are delighted with another year of great growth for Hargreaves Lansdown, against a backdrop of stock market angst and low investor confidence. The new freedoms have put pensions back on the public's radar and helped us to a further 13% growth in clients and 18% in assets during the year; assets have now passed £55 billion and client numbers are now approaching 750,000."

Hargreaves has lifted the total dividend for the year by paying a second interim ordinary dividend of 14.30p per share and an increased special dividend of 11.40p, which represents total dividends for the year of 33p per share, up 3%.

Looking forward it said it intends 2016 to show a return to healthy profit growth, even taking into account expenditure on launching new services.

RBC Capital Markets, which rates the stock at 'underperform', said: "Today's results demonstrate that Hargreaves is performing in line with our expectations and consensus, that new initiatives remain on track as we expect and that acquisitions will continue to be important to Hargreaves going forward to drive scale."

Nomura, which rates Hargreaves at 'neutral', said the results were "good" and "further cement the group's position as the number one direct-to-consumer investment platform in the UK."

Still, within the broader UK asset gatherer space, its preference continues to be for St James's Place, which trades at a lower price-to-earnings ratio despite offering a higher yield and better earnings dividend growth prospects.

At 1054 BST, Hargreaves shares were up 5.7% at 1,179p.

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