AGM

2020 Annual General Meeting

Hello, I’m Chris Hill, Chief executive officer of Hargreaves Lansdown and I’m using this presentation to provide an update for our shareholders ahead of our Annual General Meeting on the 8th October.

I would like to open with some highlights from a year where we saw significant growth despite a unique and incredibly challenging external environment.

Video cuts to slide on Further Growth and Development in 2020

My theme for this page is on the importance of service, of resilience and the clear payback from disciplined investment.

The 2020 Financial year saw Brexit uncertainty, a General election, low investor confidence and then the onset of a global pandemic. Our strong delivery during this time was a resilient performance which highlighted the importance of the investment we have made in our client focused strategy.

Because, by maintaining our service, and providing the support that clients needed during this difficult time we have been able to deliver a record performance.

The scalability we have built into the platform has meant that we have been able to welcome and service a record number of new clients in the year, increase our market share, deliver record net new business flows and support record trading volumes.

Despite the challenges of this year, and the new ways of working we all have needed to embrace, we have continued to develop both our proposition and service – within that completing the sale of our Business to Business service FundsLibrary because it was no longer aligned with our wider strategy, and earlier this summer we relaunched our Wealth Shortlist and Fund Finder tool.

Through the right investment choices, and a clear strategy we continue to deliver the scalability, proposition and resilience to enable continued growth over the longer term.

This year has been challenging but we have delivered and I would like to take this moment to thank my colleagues for making this possible. Their hard work, commitment and ingenuity in managing the tremendous change that COVID-19 has brought has been inspiring and it’s allowed us to deliver the right outcomes for our clients and wider stakeholders throughout the period.

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In the year just closed the record growth we saw in clients and new business worked across to our financials enabling us to deliver 15% growth in revenue, and 11% growth in underlying profit before tax to almost £340m.

We delivered this record growth through consistent performance for clients through all of the challenge of the year. We did not seek government assistance, furlough any employees or enact any redundancies during the period.

We continue to have a robust balance sheet enabling us to have operated our dividend policy as usual in FY20, and declaring a special dividend generated from earnings and the one-off proceeds from the sale of FundsLibrary – leading to a total dividend of 54.9 pence per share.

Video cuts to slide on Strong and Successful Year

2020 has been a unique challenge for our business and the wider world, but throughout this we have continued to execute our client-focused strategy and we have driven great success.

The first half of the year was impacted by consistently low investor confidence, driven by the political uncertainty around Brexit and Trade wars. When I spoke back in January to the markets I said that we were confident that any certainty provided by the election result would improve investor confidence and lead to a strong performance through the second half.

This is exactly what happened over the rest of the year, where despite the ongoing pandemic and the significant challenge that this has brought to everyone, Hargreaves Lansdown delivered a performance of great strength.

Throughout this time we have listened carefully to our clients, delivering changes based on their feedback, in particular with our new Wealth Shortlist and Fund finder tool, and we have also used our insights to support them in the right ways to manage their finances during the difficulties of COVID-19.

It is through this client first strategy and approach that we have been able to continue to drive growth across Hargreaves Lansdown.

Video cuts to slide on Our Opportunity - Looking Ahead with Confidence

It is through the performance we have delivered this year and the clear strategy we continue to follow that I can say I am looking ahead with confidence, despite the ongoing uncertainty from the economy that the next year may well bring.

Our three fundamental drivers of growth have not changed:

• The market opportunity
• The importance of our relationship with clients
• And our client focused strategy – which is embedded within our culture and our values

Video cuts to slide on Our opportunity - Clients at the Centre of our Strategy

I have spoken to this slide before - it is absolutely fundamental to our approach and this has not changed. I talked earlier about our response to the difficulties the world has faced this year and how our clients remain at the centre of everything that we do.

At Hargreaves Lansdown we have a very clear purpose, to empower our clients to save and invest with confidence over the long term, and we enable this through a culture and value set that are focused on ensuring that we are helping our clients in the right ways to deliver the best outcomes for them.

HL’s role as a lifelong partner for clients is growing and we must continue to invest in and develop our proposition, capabilities and digital technology in line with our client focused strategy. We must provide an experience for clients that is appropriate to their evolving lifetime savings and investment needs.

Video cuts to slide on Delivering an outstanding client experience

So it is with this strategy, this culture and these values that we developed our approach to the COVID-19 pandemic. That approach delivered an outcome of resilience and strong results in dealing with record volumes - but our approach sets us up well for the future. From the outset we had two clear aims, to ensure the availability of the core services that our clients need, whilst also prioritising the safety and wellbeing of our colleagues.

Our success here relied on the investment that we have made in recent years, which enabled us to swiftly move the majority of our colleagues to work from home, adjust our approach to client contact to manage demand, improve our digital journeys and adjust our marketing to provide the educational content that clients needed during the recent market volatility.

We ensured that Hargreaves Lansdown was always available, thinking about and communicating and engaging with clients on those matters where they needed support.

In this too, we recognise how evolving the role of governance provides additional rigour and challenge to our decisions and results in better outcomes for all of our stakeholders.

We have made developments here, that not only have allowed us to react quickly to evolving situations like the COVID-19 pandemic. In this case strong governance allowed us to provide greater rigour and challenge to decisions ensuring we have been able to act with certainty and deliver the right outcomes throughout this time.

But we have also implemented a number of changes in this part of the year that underpin and ensure transparency for our long term proposition developments, such as the Wealth Shortlist and Fund Finder.

By investing in the right ways and making the changes that clients want most we build our relationship with clients through a service that delivers an outstanding experience no matter what the circumstances or their needs. That works both for the short term and over the long term.

Video cuts to slide on Positioned for Growth in an Attractive Market

The evolving nature of clients’ long term needs continues to get more pressing every year, and more than anything I think conditions like we have seen in 2020 have exacerbated this.

We recognise how complex the UK wealth landscape has become and the challenge that this brings in supporting people. Financial requirements are becoming increasingly complicated: as people live longer, as long term saving obligations move from companies to individuals and the low interest rate environment persists with added volatility and uncertainty.

In short, the market opportunity remains significant.

We have focused our investment on building scalability and capability with a strong client service ethos at the centre of it all in order to capitalise on this market opportunity. One way we can see the payback of this investment is the growth in our market share. Since 2016 our share of the D2C market has grown from 37.5% to 41.1%; in our addressable wealth market we have grown from a share of 6% in 2016 to 10% today and if we include cash, we have doubled our market share from 2% to 4%.

The complexity of the UK wealth landscape will continue over the long term, and we have an exciting opportunity to provide the service that our clients need in order to navigate this effectively.

Video cuts to slide on Targeted and effective investment

And it’s through our deep understanding of clients and their changing needs that we are consistently able to prioritise and respond and develop the capabilities that they most value and that can effectively address their financial needs over the long term. We have used this insight to fuel the changes that we have made to our capabilities in 2020 across service, technology and marketing.

Picking a few from this list, we have expanded our Active Savings Service to offer more banks and easy access products.

We have developed our investment solutions with more segregated mandates, development of retirement solutions and the Wealth Shortlist.

We have developed the mobile app functionality. The popularity of our mobile app continues to grow and represent an increasingly important feature for our clients. Of the 1.2m clients who logged in online, 43% did so through the app whilst 33% of online client initiated share trades came via the apps, that’s more than double last year. Developing digital capabilities further remains a priority for us and it is important that we remain agile and are continually anticipating and responding to changes.

Alongside this we continue to invest in making core journeys easier – this year we redesigned the user journey for online transfers to make it clearer and easier to use.

And as we raise awareness, this year, we launched our first omni-channel advertising campaign.

As clients financial needs continue to evolve, so does the way that they use our platform and service and we must continue to ensure that our offering reflects their needs across their entire lifetime.

Video cuts to slide on Lifelong Relationships with clients

This slide perhaps best brings it all together. It gives you an insight into our strategic ambitions and the direction of travel.

We have been focused on appealing to a broader demographic including a younger demographic; we have been broadening our product range so that we can service this broader demographic across its needs including from birth all the way to later in life.

The consequence of all of this is that since 2016 we have seen a big increase in clients across demographics and particularly in those age brackets that are still in the accumulation stage of their wealth journey.

Put very simplistically - clients are going to stay on our platform for longer; they are going to have a broader spectrum of product to meet their needs over their lifetime; and what all of that means from a shareholder perspective is that the lifetime value of the client is increasing.

When we invest in the platform, products, service, regulation and governance, we do so with the lens of ensuring that we service these clients well throughout their lifetime and ultimately this leads to an increase in the lifetime value of each client on our platform.

Looking at this year alone, we have welcomed a record 188,000 net new clients. Compared to previous years, these clients tended to be younger, joining us with slightly lower assets but that has brought with it the opportunity for us to support them throughout their accumulation journey and into retirement.

It’s the ability to support clients with the solutions and associated products that they need along their journey and throughout each important life stage that underpins our continued growth, flows and earnings.

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So the future for Hargreaves Lansdown is clear. By having the infrastructure, governance and proposition and service to thrive at scale we can support clients over the long term and through difficult market conditions like that we have seen this year.

By using our scale and insight we can gain an unparalleled understanding of investor behaviours and needs. This enables us to develop engagement with clients and then by delivering the right combination of proposition and service we can establish and maintain lifelong client relationships.

But we are not stopping. We will continue to innovate and build a tailored, diverse and effective offering for clients that will ensure their financial resilience over the long term and deliver them the right outcomes.

We have an opportunity to move our clients through a journey of first investing, to transferring other assets to our service, and ensuring that they are accessing their annual allowances, regularly saving into their accounts and finally to bringing more of their household saving all into one place with us.

This strategy delivers retention and growth for the long term and it’s how we deliver returns for all of our stakeholders.

Video cuts to slide on Looking to the Future

We are cognisant that in the near-term the UK economy continues to face a period of uncertainty as we work through the many issues arising from COVID-19. Unemployment levels have increased significantly whilst economic growth has decreased.

The near term impact on our clients and the wider investment community as a result is difficult to call. Client confidence may be impacted and in turn their investment decisions as well, and with interest rates at all-time lows, saving cash through Active Savings could also be unappealing.

However, we will focus on maintaining our service and engagement with our clients and developing the breadth and strength of our offering so as the landscape improves we are well positioned.

And it’s with this confidence in mind that I am looking further ahead and focused on our plans to execute and deliver on the key opportunities that I have outlined today.

Over the next few years the wealth industry will continue to develop in response to the changing requirements and challenges that people have in saving and investing alongside the pressing demands of everyday life.

We are thinking and planning ahead and responding to client feedback to ensure that we are leading the next phase of growth for Hargreaves Lansdown.

This underpins now why I’m here with confidence, current headwinds aside that will quite frankly impact everyone, but confident that we will emerge stronger and better positioned than the competition.

We are confident in delivering strong growth and returns through the cycle because firstly; the historic investment in our proposition and service has helped us build scale to service a growing client base and you can see the benefits of that investment already. Secondly, because we are listening directly to client feedback for what we develop next. And in that light, thirdly, we are proactively developing our proposition to reflect the feedback that clients want and that’s an outcomes based interaction that provides them with an educated choice that reflects their own particular circumstances.

And we have already started that journey.

We are thinking about multichannel development to create an unrivalled range of tools and solutions to help them to achieve better outcomes. And we are combining that with the continued intelligence and insight that we get from clients about what they need.

And these all ensure not only the retention of existing clients but the acquisition of more clients who realise the extent of our capabilities and how they provide the outcomes that address their needs.

And I combine all of this with a simple fact, by taking on clients at an early age and keeping them over a lifelong relationship, we enhance the delivery of value to them and to our shareholders.

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Thank you very much for listening that is the end of my presentation.