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Remarkable things are happening at Hargreaves Lansdown (LSE:HL.). By his own admission, CEO Ian Gorham agrees that “The first quarter of the financial year is traditionally the quietest.” “However,” he went on to say this morning that, “We are pleased to report exceptional activity in the first quarter of the 2014 financial year.” HL’s share price rose 2.78%, an increase of 28.0 pence, to 1037.0 this morning following publication of its first quarterly report for the 2014 fiscal year that began on 1 July 2013.
Interim Management Statement
A brief review of HL’s interim management statement is all it will take for readers to agree with Gorham that this was truly a remarkable first quarter.
- Total assets under administration (AUA) at the end of FY13 were £36.4 billion. Three months later, the total AUA had grown to £39.3 billion, an increase of 8%. The increase year-on-year is an even more remarkable 38% growth over the £28.5 billion AUA at the end of September 2012.
- Net new business increase during Q1 2013 was £0.55 billion. Net new business for Q1 2014 grew by 129% to £1.26 billion.
- Share dealing volume increased by 62% compared to the same period last year.
- Operating revenue climbed 13% from £68.7 million in the previous Q1 to £77.9 million in Q1 2014.
Gorham added that HL has “maintained a strong cash and balance sheet position, free from debt and with a high level of surplus regulatory capital.”
My super-keen analytical mind tells me that’s no run-of-the-mill first quarter for any company.
But, what about the mail?
Most of the latest headlines about Hargreaves Lansdown have been swirling around its system crashing under the load of “unprecedented public interest” from investors wanting in on the conditional trading of Royal Mail shares ahead of its official listing. Gorham noted that “a large portion of our Royal Mail investors were new clients.” Although some will turn out to have used HL’s service only for this specific IPO, Gorham expects that many, if not most, will become regular clients. If this is true, Q2 ought to generate some very interesting results when published in January 2014.
At any rate, the trading system seems to have been restored and is presently operating with few, if any, problems. With the shares of Royal Mail (LSE:RMG) trading briskly (nearly 31 million shares by mid-afternoon) and HL’s system seemingly operating well, not only is investor confidence high on the Royal Mail (shares are currently trading at 482.0, up 46% over the original sell price), but it should also continue to be high on Hargreaves Lansdown as well. After all, HL did not become the UK’s largest stockbroker without a significant family of satisfied investors.
