LONDON (Reuters) - Investment manager Hargreaves Lansdown (HRGV.L) posted a 58 percent rise in first-half profit and said it felt protected from its main risk — falling markets — as these might now have reached the bottom.
Underlying operating profit grew to 27.2 million pounds in the six months to end-December, while assets under administration rose by 45 percent to 10.9 billion pounds.
“The worst thing that could happen is if the markets continue to decline,” Chief Executive and co-founder Peter Hargreaves told Reuters on Tuesday.
“Our income is dependant on the value of the assets and also, as markets decline people are less prepared to invest.
“I would like to think that markets are pretty much at the bottom now,” he said in an interview.
The firm said in a statement: “Although the current conditions are not ideal, this is an opportunity for us to improve our market share and build for the future.”
“Since the end of our first six months trading we still continue to attract positive flows,” it added.
At 9:48 a.m., Hargreaves Lansdown shares were down 0.63 percent to 157 pence, slightly below the 160 pence at which they floated last May.
Investec Securities retained its “sell” recommendation on the stock. “While the company has shown good cost control, its ability to deliver forecast levels of earnings growth is reliant on asset and revenue growth, where the outlook is less than rosy,” it said in a research note.
Hargreaves said his firm tended to fare much better in downturns than the fund managers it is often compared with, because it holds much of its client assets in tax shelters such as self-invested personal pension schemes (SIPPs).
“If you sell the fund you’ve still got to leave the money in your SIPP. You can’t take any out unless you retire,” he said.
Besides asset management, Hargreaves Lansdown’s businesses include marketing funds direct to private investors, financial advice and stockbroking services.
“This year it will be important for us to facilitate the transfer to us of assets held by investors with other providers,” the firm said, adding that the accumulation of assets during the second half of its financial year had the greatest effect on its profits.
Hargreaves Lansdown has appointed Jonathan Davis as a non-executive director.
Editing by Quentin Bryar