August 7, 2018 / 6:56 AM / 10 months ago

Sentiment, costs take shine off Hargreaves Lansdown FY

LONDON (Reuters) - Waning confidence among investors and rising costs took the shine off a record-breaking year for British fund supermarket Hargreaves Lansdown (HRGV.L), sending its shares more than 3 percent lower on Tuesday.

Brexit, political flux elsewhere in Europe and rising global trade tensions all took their toll in recent months, mirroring the experience of a number of asset and wealth managers.

“Confidence globally is higher than Europe, is higher than the UK. But across the board, certainly towards the end of the year... you can see the impact of that confidence,” Chief Executive Chris Hill told Reuters.

Hargreaves, which offers a range of investment services including fund management and share trading to UK retail investors, said total assets rose 16 percent to a record 91.6 billion pounds in the year to the end of June.

While buoyed by record net inflows of 7.6 billion pounds and market gains, some analysts said the flows had lagged forecasts.

Calling the results a “slight miss”, KBW analyst Jonathan Richards said a slowdown in net sales growth to 9.5 percent from 11.5 percent a year earlier suggested the company’s growth momentum “seems to be slowing”.

“Overall the company’s organic growth in the period was not dissimilar to other asset managers in the space with significantly lower valuations,” he wrote in a note to clients, flagging a ‘market perform’ rating and 1,580 pence price target.

“Whilst we believe that Hargreaves will continue to grow strongly, the current valuation seems too optimistic,” he added.

At 0755 GMT, shares in Hargreaves were trading down 3.5 percent at 2,042 pence, the second biggest faller on the blue-chip FTSE 100 .FTSE.

The rise in assets and increased share dealing helped revenues climb 16 percent to 447.5 million pounds, it said in a statement.

However, costs rose 25 percent as the firm invested in staff, marketing and technology.

As a result, pretax profit during the period rose 10 percent to 292.4 million pounds, underpinning a total dividend for the year of 40 pence a share, up 38 percent and bolstered by the reinstatement of a special dividend of 37 million pounds.

Reporting by Simon Jessop; Editing by Ben Martin and Keith Weir

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