More than £730m wiped off value of Hargreaves Lansdown as Neil Woodford scandal hung over firm
More than £730million was wiped off the value of Hargreaves Lansdown as the Woodford scandal hung over the firm.
The company revealed the amount of new cash savers gave it to manage during the six months to December 31 stood at £2.3billion – down 9 per cent from a year earlier.
Hargreaves has faced a backlash after continuing to recommend Neil Woodford’s toxic Equity Income Fund on its Wealth 50 best buy list right up to the moment it was suspended last June.
The suspension left more than 300,000 savers unable to access their cash – many who had invested in Woodford through Hargreaves.
Error: Hargreaves has faced a backlash after continuing to recommend Neil Woodford’s toxic Equity Income Fund on its Wealth 50 best buy list right up to the moment it was suspended
Amid signs that the scandal may have taken its toll, Hargreaves shares fell 8.2 per cent, or 154.5p, to 1725p yesterday, wiping £733m off its value. The slump reduced the combined stake of founders Peter Hargreaves and Stephen Lansdown by £295m.
However, a dividend of 11.2p a share cushioned the blow, handing Hargreaves, 73, £16.8million and Lansdown, 67, £4.6million.
The pair set up the company in Bristol in 1981 but are no longer involved in management. Analysts said the Woodford scandal had likely taken a toll on Hargreaves but the firm appeared to have contained the damage by freezing fees and slashing executive bonuses.
In its half-year update, Hargreaves also said it had gained 50,000 clients in the six months to December 31, taking its total to 1.27m. Profits increased by 12 per cent to £171.1million, after income from fees grew 9 per cent to £257.9million.
The figures may raise eyebrows among Woodford investors. Some £2.1billion of money trapped in the Equity Income fund was finally returned to investors this week – with some getting back as little as a third of their initial investment.
Hargreaves chief executive Chris Hill said Brexit uncertainty and last month’s General Election were responsible for the more cautious approach by savers.
Paul McGinnis, an analyst at Shore Capital, said that while the Woodford scandal had taken its toll, there had not been a ‘mass exodus’ of customers.
He added: ‘We think management actions, such as suspending fees on these holdings, lobbying in vain for Woodford to do the same, and forgoing director bonuses, will have helped mitigate the damage.’