Hargreaves Lansdown has reported a fall in profits for the first half of its financial year, down from £188.4m to £151.2m.
Revenues at the group were also down from £299.5m a year ago to £291.9m. However, bosses have confirmed that the Bristol-based firm is ready for growth and the number of active clients increased by 48,000.
Chris Hill, the chief executive officer of Hargreaves Lansdown, said: “In the first half of this financial year, we saw a gradual return to the office and calmer markets which led to more normalised share trading levels, albeit still higher than before the pandemic.”
“As the market leader, with a stronger than ever 43.3% market share, now is the right time to target the broader wealth management market and set a new standard for how the UK saves and invests,” he added.
The group increased its dividend 3% to 12.26 pence per share.
At the time of writing, shares were down over 20% (0859GMT).
HSBC profit rose sharply in 2021 as credit impairment charges were released and the bank’s Asian operations was higher levels of profitability.
HSBC released 2021 profit after tax that rose $8.6bn to $14.7bn, and reported profit before tax up $10.1bn to $18.9bn.
The main element in HSBC’s jump in profit was a dramatic shift in provision in bad debts in 2020 that started to slowly be reversed in 2021. HSBC’s impact of impairment charges in 2021 was a net release of $0.9bn, compared with an $8.8bn charge in 2020.
Although HSBC’s profit rose sharply, their revenue fell 2% to $49.6bn as lower global interest rates hit Net Interest Margins. HSBC’s Net Interest Margin fell 1.2% in 2021.
HSBC’s Asia operations were a significant contributor to profit, providing $12.2bn reported profit before tax. Asian wealth and trade markets have been an area of focus for HSBC.
HSBC UK bounced back with profit before tax increasing by $4.5bn to $4.8bn.
Their strong resurgence in profitability has provided the bank with confidence to announce a $1bn share buyback, although some market participants were expecting more.
HSBC declared an interim dividend of $0.18 per share, making a total for 2021 of $0.25 per share.
“We made good progress against our strategy in 2021, which contributed to a strong financial performance that was supported by the global economic recovery. All of our regions were profitable and we saw growth in the fourth quarter of 2021 in many of our business lines,” said Noel Quinn, Group Chief Executive.
“We have good momentum coming into 2022 and are confident that we can continue to execute against our strategy. We also remain cognisant of the potential impact that further Covid-19-related uncertainty and continued inflation might have on us and our clients.”
Further property deals by Hargreaves Services (LON: HSP) provide further indications of the underlying value of the land and property assets in the balance sheet. At the moment, the contracts are conditional, and they will not have an immediate effect on the figures.
The larger deal is for the development and sale of two large distribution units, which will be 191,000 square feet and 375,000 square feet respectively, at the 50%-owned Unity site. Detailed planning permissions are required for the sites and that should be obtained by the end of the year. The deal will be fully completed within 1...
Sylvania Platinum (LON: SLP) is one of the most cash generative companies on AIM. Even after paying dividends the cash pile is increasing and management has plans to spend some of it on further increases in production. There could be news about potential new projects in the summer.
The group has six chrome beneficiation and platinum group metal processing plants in the Bushveld complex in South Africa, plus mining rights for projects on the northern limb of the Bushveld complex.
Production and metals prices both fell in the first half of the year to June 2022. There was a temporary suspension ...
Tristel share price fell as much as 17% on Monday afternoon post Half-Yearly report.
The market reacted to a disappointing Tristel update, sending their shares sharply lower as earnings fell due to normalisation of purchasing activity by the NHS.
Tristel’s reported revenues have dropped 7% as compared to H1 of 2021. This caused a profit before tax to drop to £1m as compared to £2.4m from the corresponding period of 2021.
Paul Swinney, the Chief Executive is not displeased by Tristel’s performance and has commented on their plans to make a comeback in the markets. They have refocused their business from Anistel and Crystel which was their animal health and Pharma products. They are focusing on their carbon dioxide technology and maintaining the hospital market whilst getting ready to enter the North American market.
“We are getting closer to entering the North American market, preparing to launch Duo Ophthalmology in Canada before the end of the year. In the USA we have re-commenced state-by-state registration of Duo Ultrasound under our EPA approval and are confident we will complete the FDA De Novo submission for Duo by June this year,” commented Paul Swinney, Chief Executive.
Sylvania Platinum has released its half-year financial statement for the end of 2021.
The Platinum Group Metal (PGM) producer reported net revenue generated for its HY2 period totalling $69.1 million, against a significantly higher HY1 2021 revenue of $84.9 million.
The company had experienced a few reported setbacks, including the shutdown of its Lesedi operations through Q1 which were further exacerbated by water shortages which continued into Q2.
The plant recorded alternative water supplies following the end of Q2, and added that it had sourced a new water supply via additionally installed boreholes. It also reported the commissioning of a newly constructed tailings dam facility that is set to prevent additional water shortages.
“Through the continuous efforts of our employees and operations that drive sustainable production, and assisted by the strong PGM basket price, the Company continues to generate sufficient cash to fund both expansion requirements and to return value to shareholders,” said Sylvania’s CEO Jaco Prinsloo.
“As a result, I am pleased to announce that, in addition to the annual dividend paid during the period, the Board has approved the payment of a second Windfall Dividend of 2.25p per Ordinary Share, payable in early April 2022.
“As with the first Windfall Dividend paid in April 2021, this dividend payment is based on excess cashflow generated from PGM prices achieved above long-term broker consensus prices for these metals for the 2021 calendar year.
“Actual achieved production, metal prices, ZAR exchange rate, as well as our share of mineral royalties, corporate and dividend withholding taxes have been taken into account in the determination.”
Sylvania Platinum currently holds multiple mineral asset and opencast mining operations including shallow mining projects Volspruit and Grasvalley on its northern limb, alongside four “hot spot” PGM targets located to the extreme north of its northern Bushveld Igneous Complex.
Having traded largely positive on Monday morning, the FTSE 100 began to slip around lunchtime and the selling accelerated on Monday afternoon in thin trade following the reports by Interfax.
“Joe Biden has cautiously agreed to the talks with Vladimir Putin, brokered by France’s Emmanuel Macron, following urgent phone calls on Sunday. As the details of the summit are thrashed out, shivers of trepidation at the prospect of war in Eastern Europe are still likely to cause fresh ripple effects on stock movements this week,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
AstraZeneca
Despite most FTSE 100 shares trading on the red on Monday, AstraZeneca marched higher on news of successful trials of breast cancer treatment Enhertu.
“Today’s historic news from DESTINY-Breast04 could reshape how breast cancer is classified and treated. A HER2-directed therapy has never-before shown a benefit in patients with HER2-low metastatic breast cancer,” said Susan Galbraith, Executive Vice President, Oncology R&D, AstraZeneca.
AstraZeneca shares were the FTSE 100’s top riser gaining 2.7%.
Polymetal & Evraz
The gold price has rallied significantly throughout the the Ukraine-Russia crisis but the higher prices were not enough to support Polymetal share on Monday which sank over 8%.
Polymetal has precious metals operations across Russia and the threat of increased tensions in the region is denting sentiment around the stock, despite a rise in gold prices.
Dechra Pharmaceuticals also slipped after the group said revenue grew 15.9% at Constant Exchange Rates, helping underlying operating profit grow 22.0%.
The Synairgen (LON:SNG) share price fell back to pre-Covid levels at one point on Monday following the disappointing phase III data for the SPRINTER trial for SNG001 use in hospitalised Covid-19 patients. The share price has recovered since then, but it has still lost four-fifths in one day. There is cash in the bank, but Synairgen’s fortunes need to be reassessed.
The headline data for the trial did not meet primary or secondary endpoints. finnCap believes that the disappointing results may be due to the changing nature of Covid strains, and the treatment currently used. This has chang...
Cadence Minerals shares rose in early trade on Monday following the 84% NPV increase of their Yangibana Rare Earth joint venture.
Cadence Minerals shares were 2.7% higher at the time of writing following the announcement on Monday.
The operator of the Yangibana project, Hastings Technology Metals, said on Monday the post-tax NPV of their joint venture with Cadence Minerals had increased 84% to $A1,012 million.
The Life of Mine (LoM) pre-tax Free Operating Cashflow also enjoyed a sharp jump with a 71% increase to $A4,376 million.
The updated study now forecast production of 3,400tpa of NdPr Oxides which Hastings say is capable of supplying up to 8% of forecast global NdPr demand.
Cadence Minerals own 30% of three mining licenses and six exploration licenses at the Yangibana project in Australia.
“Today is a significant milestone for the Hastings team that is the result of an extensive amount of work carried out over a number of years. The updated project economics tell a story of a world-class rare earths project that will be capable not only of delivering up to 8% of global NdPr demand for a period of at least 15 years but generate significant, long-term value for all shareholders,” said Hastings Technology Metals’ Executive Chairman Charles Lew commented.
“The Hastings team has done a tremendous job since 2017 to optimise and de-risk the Yangibana project, both technically and commercially, to make it an even more compelling investment proposition. Since its discovery in 2014, we were always confident in the quality of the rare earths resource endowment at Yangibana. As it turned out, the steady progress we have made over the years has converged with a strong global rare earths magnet market underpinned by the global energy transition and electric mobility. As the updated project economics demonstrate, Yangibana will be a financially and operationally robust, long-life project.”
In addition to the Yangibana project, Cadence Minerals also has investments in Iron Ore through the Amapa project and various Lithium assets.
by Alex Crooke, Co-Head of Equities – EMEA and Asia Pacific | Portfolio Manager
The old investment adage about not putting all your eggs in one basket is probably as old as investing itself. In fact, it would be no surprise to learn that the philosophy emerged at the same time as some of the earliest boom and bust cycles where particular investments went from zero to hero and back again in a very short space of time. Think money mania in the 1720s; tulip mania in the 1830s; railway mania in the 1840s. Unfortunately, it also seems that history has a habit of repeating itself. As an investing species, we don’t often learn much – what was the great financial crisis of 2008 if it wasn’t an ill-fated investment in a single asset class – the mortgage. In this article, we look at how the Bankers Investment Trust, has navigated the tricky market environment to deliver solid returns for investors.
However, one thing has changed since the dawn of investing in 1720. Crises no longer tend to be just parochial matters affecting a single or small number of countries. As the world has become ever more connected, more global, so have the crises. None more so than the recent and, sadly, ongoing global COVID pandemic. Markets around the globe were universally affected, with the effects of restrictions and lockdowns changing not only our movements but also our buying habits, with subsequent knock-on effects on the companies we buy from. Airlines and holiday companies were out, whilst pharmaceuticals and grocers either plummeted or soared.
What is also clear is that when the panic sets in, logic is thrown out of the window too. So, whilst portfolios exposed to these kinds of companies plummeted in late February/early March 2020, so too did non-correlated assets. Who would have thought the share prices of things like music rights, or the nuclear power industry would also have fallen? But fall they did – the sell-off was indiscriminate as investors scrambled to find ‘safe’ assets like cash and bonds.
Source: Bloomberg 31/12/2021
So, what can the average investor take away from the chaos of 2020/1 as we look forward to a new year? Well, it’s hard to argue that in such extreme circumstances having a globally diversified portfolio would totally have shielded you from the volatility we saw at the beginning of 2020. However, what is also true, is that some countries have bounced back better than others. For example, in the UK, the FTSE 100 went from 7,674 on 3rd March 2020 to 4,994 just 20 days later – a fall of 36%. Since that low, the FTSE 100 has gone up by 73%, which sounds healthy until you compare the rebound in other countries – Italy and Germany are up over 95%, whilst France is closer to 100%. In the US, the numbers are staggering: the S&P 500 has grown 104% since its low in March 2020, and the NASDAQ is up a whopping 115%.
The same story of differing fortunes also applies when you look across the sectors. Some of the best performing sectors in the US in 2021, were those that saw negative results in 2020. For example, the energy and real estate sectors were the worst performing in 2020, but were the best performing 2021. Meanwhile, the tech sector bucked the trend performing strongly in both years as growth stocks remained in vogue due to the threat of renewed lockdowns. In the UK, the Travel and Leisure sector is still 25% lower than its pre-Covid peak2, whereas the Pharmaceuticals sector is basically back where it started. Meanwhile, the Electronics sector has surged ahead, up 31% over its pre-Covid level.
The reasons for these differences are harder to decipher in some cases than the numbers are to read. Clearly, the Travel and Leisure sector continues to be on its knees as we refrain from foreign holidays, and the airlines got hit with the double whammy of grounded planes and soaring fuel prices. But when it comes to country-level recoveries, it’s perhaps harder to fathom. Despite a largely successful vaccine rollout, the UK just hasn’t done well. Perhaps the lingering and persistent cough that is Brexit is still at play? Indeed, supply chain issues persist, driving inflation to over 5%, but that is not just a UK phenomenon. According to data from the Organization for Economic Co-operation and Development, the UK’s GDP is projected to be nearly 3.4% smaller in 2021 than in 2019, while Japan and Germany are projected to be 3% and 2% smaller, respectively3. In contrast, the Chinese economy is projected to have grown 10.6% larger for the whole of 2021, compared to 2019 – despite its own difficulties handling covid-19.
Whatever the reasons, markets are now in a more normal place – what some are calling the “new normal”. As such, the arguments for not having all your proverbial eggs in one basket seem as good as ever. One such solution is the Bankers Investment Trust, part of the Janus Henderson range of investment trusts. The Trust invests in large and medium-sized companies across the globe that offer attractive growth and income opportunities for shareholders looking for long term returns. It is managed by Alex Crooke, whose role is to decide where to allocate capital – to take advantage of some of those regional/sectorial differences we have discussed. Once the money is allocated globally, the Trust comprises of concentrated regional portfolios run by regional specialists whose sole role is stock selection across sectors.
2021 hasn’t been a year without challenges for the Trust. Inflation, supply chain issues, the tapering of central bank support for economies, combined with rising energy prices and labour shortages, have been headwinds for all global investment vehicles. However, Alex and the team have been expecting these headwinds and have continued to invest in line with the themes they identified over 12 months ago. For example, looking to find cyclical companies that will benefit from the global economic recovery as countries ease lockdown restrictions. In addition, Alex has been reducing exposure to overvalued companies where valuations may be at risk as volatility increases. A great example here is the technology sector in the US market, which is trading significantly higher than its 20-year average.
In Asia, China has proved a challenge too. Beijing has adopted a “Zero Covid” policy and is not only enforcing lockdowns but it is shutting down entire cities to try and eliminate the virus. This has disrupted activity within the services sector, especially contact intensive businesses such as hotels and restaurants. Meanwhile, major Chinese tech companies took a hit early on in the year after Beijing embarked on an unprecedented regulatory clampdown on the sector. Finally, sentiment towards China soured further as the property scandal revealed cracks in the country’s housing market – estimated to be around 29% of China’s GDP.4 This has led Alex to take a more measured approach to the country.
So how has this approach performed overall in a diversified portfolio since the start of 2020? Despite the challenging market environment, the Trust has returned 27% (including dividends) reinvested.5 At the same time, investors have also benefitted from a rising dividends, in fact, the Trust has increased its dividends every year for the past 55 years – making it an AIC Dividend Hero.
Regarding the outlook for 2022 and beyond, the team remains optimistic as economies continue to recover. This confidence is also reflected in announcements from central banks signalling their intentions to reduce their quantitative easing and raise interest rates. The recovery in corporate earnings is also encouraging with global dividends expected to return to their pre-pandemic levels in 2022. That being said, risks still remain with inflation the key concern. So far companies have managed to pass on costs to consumers; however, the question is how sustainable this is moving forward as prices continue to rise. In addition, there will be challenges around rising energy prices for both consumers and businesses and how this will affect energy usage – a critical component of the economy. The ongoing impact of Covid on economic activity and supply chain is also likely to restrict economic growth in the short term. Though growth is expected to be more moderate this year compared to last year Alex and the team believe that there is still further upside for markets this year. As such, they are hard at work figuring out which companies will benefit from the prevailing market environment.
Discrete year performance % change (updated quarterly)
Share Price
NAV
30/09/2020 to 30/09/2021
11.0
18.6
30/09/2019 to 30/09/2020
9.1
6.5
28/09/2018 to 30/09/2019
8.1
6.6
29/09/2017 to 28/09/2018
11.5
12.4
30/09/2016 to 29/09/2017
27.6
19.4
All performance, cumulative growth and annual growth data is sourced from Morningstar.
Cyclical stock – A cyclical stock is a stock that’s price is affected by macroeconomic or systematic changes in the overall economy. Cyclical stocks are known for following the cycles of an economy through expansion, peak, recession, and recovery. Most cyclical stocks involve companies that sell consumer discretionary items that consumers buy more during a booming economy but spend less on during a recession. Quantitative easing – An unconventional monetary policy used by central banks to stimulate the economy by boosting the amount of overall money in the banking system.
Disclaimer
References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe, or purchase the security. Janus Henderson Investors, one of its affiliated advisors, or its employees, may have a position mentioned in the securities mentioned in the report.
Not for onward distribution. Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions. Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.
Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which investment products and services are provided by Janus Capital International Limited (reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Equity Partners Limited (reg. no.2606646), (each registered in England and Wales at 201 Bishopsgate, London EC2M 3AE and regulated by the Financial Conduct Authority) and Henderson Management S.A. (reg no. B22848 at 2 Rue de Bitbourg, L-1273, Luxembourg and regulated by the Commission de Surveillance du Secteur Financier).
