Hargreaves Lures New Customers in Year Clouded by Woodford

(Bloomberg) --

Hargreaves Lansdown Plc attracted new clients in a year that ended with the U.K.’s biggest online investment platform caught up in the tumult surrounding Neil Woodford’s decision to freeze his flagship fund.

The platform got 133,000 new clients for the 12-month period ended June 30, the company said in a statement on Thursday. This compares with the 137,000 new clients it signed up for the 12-month period ended June 30, 2018. Hargreaves rose as much as 6.7% in London trading.

Hargreaves Lansdown has come under intense scrutiny for its longstanding backing of U.K. stock picker Woodford. The platform said in June that 291,520 clients either own shares in the LF Woodford Equity Income Fund or are exposed to it indirectly. Woodford shocked the financial world that month when he froze withdrawals in his flagship fund, citing an inability to sell holdings quickly enough to meet redemption requests.

“I have apologised to all clients who have been impacted by the recent problems around the Woodford Equity Income Fund, because we all share their disappointment and frustration,” Chief Executive Officer Chris Hill said in the statement. “I am determined that we learn from events such as these.”

Net new business totaled 7.3 billion pounds ($8.9 billion) in the period, more than the 6.9 billion pounds forecast in a company-compiled analyst consensus.

The firm’s assets under administration rose to 99.3 billion pounds from the 91.6 billion pounds as of June 30, 2018. The firm’s net revenue rose to 480.5 million pounds from 447.5 million pounds the previous year. That’s below a company-compiled average of 484.1 million pounds by 15 analysts.

Hargreaves removed Woodford’s flagship fund from one of its “favorite” lists after he froze redemptions and also sold its stake in a smaller Woodford fund as the Oxford-based manager came under fire from regulators, politicians and long-time backers. The company also waived its platform fee for clients who held the suspended fund. It estimates loss of revenue to be at about 360,000 pounds per month while the fund remains closed, according to the statement.

Hill and Chief Financial Officer Philip Johnson won’t take bonuses for 2019 in the wake of the Woodford fund suspension, according to the statement. Other executives including Research Director Mark Dampier and Chief Investment Officer Lee Gardhouse will also forgo their bonuses for the same period, according to a spokesman for the company.

To contact the reporter on this story: Suzy Waite in London at swaite8@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Ambereen Choudhury

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