Hargreaves co-founder quits as profits surge

Investors of Hargreaves Lansdown shrugged off co-founder Stephen Lansdown's decision to step down on Wednesday as the company defied the economic gloom to report record levels of revenue, profits, assets under administration (AuA) and active client numbers in the year to June 30th.

Lansdown, who founded the company with Peter Hargreaves in 1981, will leave the board at the annual general meeting on November 23rd.

He said it is "the right time [...] to step down" though he will remain in "close touch" as a major shareholder. He still owns a 20% stake in the company worth around £600m.

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Shares were flat at 630.5p in afternoon trade.

Dividend raised as profits jump

Strong results from the company, whose services include fund management, stockbroking and financial advice, prompted it to hike its total dividend by 20% above last year to 22.59p per share.

"I am pleased to report that Hargreaves Lansdown has had another positive year. The group has continued to attract significant numbers of new clients and is reporting increased profits despite a year marked by economic and regulatory uncertainty," said Chairman Michael Evans.

Revenue increased by 15% from £207.9m to £238.7m, above the £234m consensus estimate. The company was able to improve its proportion of recurring revenue by three percentage points to 81%.

Meanwhile, pre-tax profits increased by 21% from £126.0m to £152.8m, compared with the £149m forecast.

Total AuA was 7% higher than the same period the year before at £26.3bn, up from £24.6bn previously, which the group put down to its "innovative services".

The number of active customers using the group's investment platform Vantage increased by 45,000 to 425,000 by June 30th.

However, net business inflows were £3.2bn during the period, down 9% year-on-year.

Storm clouds remain, says CEO

The firm said that concerns about the economy, the future of the euro and debt exposure of countries, banks and individuals have been consistent themes over the past year, which saw the FTSE All-Share index fall by 7%.

"As investor confidence is heavily influenced by stock market momentum, our continued strong growth is a testament to the diligence of our company in focusing on clients and investing in new and innovative services," said Chief Executive Ian Gorham.

However, he added: "It is difficult to see the economic storm clouds dissipating in the next 12 months. We believe austerity will continue despite the political clamour for countries to focus on growth. In time a more positive environment might develop, but we do not expect short term improvement."