Hargreaves founders pocket £82m payout
Investment platform is rare Covid winner despite the company taking a hit in wake of Woodford debacle
THE billionaire founders of Hargreaves Lansdown are to pocket £82m of dividends after it brushed off the collapse of stock picker Neil Woodford’s investment empire to post a surge in quarterly profits.
Peter Hargreaves and Stephen Lansdown will be paid £63.4m and £18.6m respectively by the company, which they founded in a bedroom in 1981. The pair still own a combined 31.5pc of shares in the company they set up almost four decades ago and that has become the UK’S biggest investment platform.
Hargreaves Lansdown has emerged as a rare winner during the crisis, with profits up almost a quarter in the 12 months to June. It raised its payout to shareholders by nearly one third to 54.9p a share.
The FTSE 100 firm signed up a record 188,000 extra customers to take the total number of active clients to more than 1.4m.
Bristol-based investment platform Hargreaves is facing legal action from furious savers after it was caught up in the collapse of the Woodford funds, which it included on its best buy list for customers.
It has been forced to review its practices to avoid a repeat of the scandal, which has saddled Mr Woodford’s investors with massive losses.
Chris Hill, the chief executive, said it delivered a strong performance despite the challenges from Covid as markets tanked in March and April.
He added: “It was essential that we learn from the Woodford issue last year.” Hargreaves consulted with clients before launching a new funds shortlist last month, he said, adding: “We’ve taken our time to get this right.”
The firm – which looks after £104bn of customers’ cash – won an additional £7.7bn of new investments from clients, helping it to generate sales of £551m – a 15pc increase on the previous year.
The extra savings invested by clients outweighed the £3bn hit to the value of assets held by Hargreaves as markets tumbled. Pre-tax profits climbed 24pc to £378m as the firm managed to grow its share of the retail investor and share trading market.
The figures were boosted by the £39m sale of Fundslibrary, which provides funds data to the investment industry.
Frantic trading in volatile markets during the pandemic resulted in a 94pc rise in revenue for Hargreaves from share dealing, which more than offset a drop in management fees on the firm’s funds due to falling asset values.
Mr Hill said investors had been more engaged with their investments towards the end of the tax year on April 5, shortly after the national lockdown began. “People have been at home at tax year end and it’s caused them to think a lot more about managing their money over a longer time,” he said.
Despite the flurry of activity, Mr Hill said most clients had left their investments untouched as markets cratered and then rebounded.
“Through what happened in the market, the majority of investors didn’t actually do anything,” he said.
Mr Hill said the company did not furlough staff or make any redundancies, nor did it accept any taxpayer support to get through the crisis.
Its shares rose 2.2pc, or 40p, to close at £18.65 yesterday, valuing the firm at £8.85bn.