Hargreaves shares leap 15% on profits boost

(Update) Shares in Hargreaves Lansdown jumped 15% in early trading after the company reported a significant jump in profits and hiked its dividend.

The wealth manager was trading 64.3p higher at 496.3p, an increase of 14.9%, in early trading, although the shares remain significantly below the 580p seen prior to the FSA's platforms paper last month.

In August, a decision by the FSA to effectively press ahead with a ban on payments by fund managers to platform providers - payments which make up a third of Hargreaves' revenues - saw investors offload shares in the company en masse.

But investors sense value again this morning after Hargreaves posted strong full-year results and said it was confident regulatory changes will have little impact on the business.

In the 12 months to June, the business, which is in its 30th year, saw AUM rise 41% to £24.6bn. Revenue increased by 31% to £207.9m and underlying profit before tax rose by 42% to £129m.

That figure excludes a £3m bill paid by Hargreaves towards an interim levy issued by the Financial Services Compensation Scheme related to the failures of some investment firms, including Keydata.

The business welcomed some 50,000 new active clients on to its investment platform, Vantage, while net business inflows were up 6% to £3.5bn during what it said was a "difficult economic backdrop".

"These record results clearly demonstrate the strength of our business and confirmation of our strategy," said Ian Gorham, CEO.

"Such organic growth has been made possible by the ever growing reputation for client satisfaction attributed to the dedication and diligence of our staff who I thank for their continued valuable contribution.

"Even though the investment market faces economic uncertainty, I believe that the company is extremely well placed to build on the momentum that has been generated."

Hargreaves said it was disappointed the FSA's stance on payments from fund groups to platforms remains unresolved. The FSA said it will carry out more research into the impact of its rebate proposals, but is expected to ban them.

However, the company reiterated it was confident it will be able to adapt to any changes.

After reviewing the company's future cash requirements, the Board decided to increase the second (final) dividend and pay an ordinary dividend of 8.41p per share (2010: 0.58p) and an increased special dividend of 5.96p per share (2010: 1.70p) making the total dividend for the year 18.87p per share (2010: 11.88p).