Hargreaves' profits boost

Jun 30 2009 By The Journal

PUNTERS wading back into the stock market since March have set up investment manager Hargreaves Lansdown for better than expected profits.

The firm enjoyed a bumper fourth quarter on the back of higher dealing volumes and the positive impact of the market, with the FTSE 100 23% above its lows nearly four months ago.

Bristol-based Lansdown’s shares rose 5% after it primed investors for profits just above £69.1m in the year to June 30.

Hargreaves’ Vanguard ‘fund supermarket’ platform for investors increased by 15% to £10.6bn during April and May, the firm said.

The group’s overall revenues for the 11 months to May 31 were also around 10% ahead of the previous year. Last week the FSA regulator published a consultation on new rules on financial advisers, although Hargreaves believes it will be largely unaffected by the changes.

This is because the vast bulk of its Vanguard business is ’execution-only’ – carrying out the instructions of clients without offering advice.

"We can see nothing in the draft rules that will be overtly damaging to our business model," chief executive Peter Hargreaves said.

Numis Securities analyst James Hamilton said: "We expect continued strong organic growth to drive yet another year of record profitability...

"(The firm) has the highest margin and the strongest growth profile of the wealth managers we cover."