Key financial data

For management and reporting purposes, Hargreaves Lansdown's operations are divided into the following three business units: Vantage, Discretionary and Third Party/Other Services. These are described further in the Business Units section.

In the financial year ended 30 June 2011, the contribution of each of the business units to Group revenue was as follows:

Summary assets under administration or management

The following table shows the change in the Group's assets under administration or management from 30 June 2007 to 30 June 2011.

Current trading and prospects

Comments from Ian Gorham, Chief Executive (13 October 2011):

The first quarter is traditionally our quietest period and tends to not be a strong indicator of the company’s annual performance. Nevertheless, the quarter’s results have been encouraging in a difficult period. Net new business, revenues and client acquisition all show a healthy increase on the same period in 2010 despite the FTSE All Share index decreasing by 14% in the period and the investing landscape being dogged by volatility and macro-economic uncertainty. By comparison, the same quarter last year saw a 12.7% increase in the same index. The fall in stock markets during the first quarter has understandably led to a decrease in the value of assets under administration.

This time last year I noted the prospect of fears of a double dip, doom and gloom, cuts, and public sector union threats. One year on and despite a temporary recovery on the markets in between, the same threats exist and indeed have now been exacerbated by the sovereign debt worries of countries in the European Union and potential slowing economic growth in other key areas of the world.

Given these challenging times for investors it is encouraging that our business inflows during the first quarter have been resilient. Our £0.68 billion in total net new business exceeds the record start to last year of £0.55 billion. The continued growth in active clients and the increased values and volumes of business they transact with us has helped to increase operating revenue. In addition, in line with our strategy of improving earnings quality, we have increased the percentage of recurring revenue to 79% in the quarter.

Future stock market levels and investor confidence will have a significant part to play during the remainder of our financial year. In September we have seen clients and potential clients may be delaying their investment decisions. Unlike many asset management companies Hargreaves Lansdown does not experience net outflows when clients change asset  allocation. Where Hargreaves Lansdown clients do sell or switch investments, assets tend to remain on our Vantage platform. This endorses both our service levels and the value of our Vantage model with its benefits to clients who are able to make their investment decisions whilst retaining the convenience of their tax wrappers all in one place. Nevertheless, whilst uncertainty remains about sovereign debt and default and a possible second recession, it is increasingly likely the retail investor will feel they need more pounds in their pocket and may continue to defer new investment decisions.

The measures that our government, the European Union and other world leaders introduce, in order to reduce countries deficits and restore political stability will no doubt be a key factor in determining whether and when confidence returns to the financial markets. In the meantime we will continue to build on our investment supermarket strategy, providing clients with the breadth of assets and quality services they want at competitive prices.

Already this year we have successfully improved the functionality of our stockbroking service and lowered the dealing tariffs. This has helped to win both new clients and new business from existing clients. November will see the launch of the Junior ISA where those under the age of 18 can save £3,600 per tax year into an account with us. To date we have seen over 12,000 people registering an interest in this account. We also continue to progress our Corporate Vantage offering.

These positive results need to be seen in context, being delivered in a difficult period in stock markets. I believe that in spite of the current economic uncertainties the company remains well placed to continue to grow client numbers and assets. We remain as focused as ever on the needs of our clients while continuing to invest in long term initiatives to seize on opportunities afforded by our ever growing reputation.