Hargreaves Lansdown Plc will not pay a special dividend for the year ended June 30 as it needs to retain an additional £50 million of capital after the U.K. Financial Conduct Authority said it intends to reassess the company's capital requirements because of its strong recent growth in scale and complexity.
The U.K.-based investment firm noted that the revised assessment would mean that its regulatory capital surplus during 2018 is insufficient to meet its risk appetite if it were to continue to pay the special dividend, adding that its board decided to clarify its dividend policy and how it will be applied in its 2017 results. The policy targets a roughly 65% dividend payout ratio, which the company's board expects to meet in respect of the year to June 30, with excess cash returned to shareholders in the form of special dividends.
Shares in the company opened down 6.2% in Aug. 4 trading, and although they recovered some of the losses, shares were still down 4.27% at 1,324 pence apiece as of roughly 11:30 a.m. London time.
The company also provided some key earnings metrics ahead of the release of its final audited results Aug. 15, saying assets under administration are projected to rise 28% to £79.2 billion and net new business to increase 15% year over year to £6.9 billion. Unaudited pretax profit is projected to be up 21% to a range of £265 million to £266 million.