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HL’S INVESTMENT CASE

Society’s Challenge

As a nation we need to build a stronger culture of saving and learn to invest with confidence. That will bring long-term benefits to individuals and society.

We’re focused on helping clients make good financial decisions throughout their life and have the proposition to support them.

£2.4trn HL’s addressable market

Opportunities in a growing market

We have a consistent track record of growing clients, assets and market share in the UK direct to consumer (D2C) platform market. This market is now valued at £210 billion, but our sights are set on a bigger target. We’ve identified an addressable market for HL of £2.4 trillion – across the private wealth and cash market.

HL’s addressable market £2.4trn
HL’s market share of the UK D2C platform market (Platforum July 2020) 41.1%
AUA (Correct as at 30 June 2020) £104bn
Net New Business (Year ended 30 June 2020) £7.7bn
92.8% HL Client Retention

Client Focus

We listen to our clients, we understand what they need and what motivates them. This relationship means we offer clients the service and products they’re looking for.

Our proposition supports clients throughout their life. From Junior and Lifetime ISAs, personal and workplace pensions, general investment and cash savings accounts to financial advice if they need it. Once a client joins HL they tend to stay and this is reflected in our high client retention levels.

As our clients' lifelong financial partner we see wealth consolidation on to our platform. Net new business comes from both new and existing clients - through transfers of investments held elsewhere and from utilising annual tax allowances via lump sum contributions and regular savings.

Happy and engaged clients become our greatest advocates to win new clients.

HL Client Retention (Year ended 30 June 2019) 92.8%
HL Clients (Correct as at 30 June 2020) 1.4m
249m Digital Visits

Our own technology

We have a deserved reputation for providing innovative, easy to use and secure technology.

We own and develop our IT infrastructure ourselves, this means we can put what we learn from our clients into practice – enhancing and personalising the service we offer.

Technology ensures we’re a scalable business and we can reinvest productivity gains into the business.

Digital visits (Year ended 30 June 2020) 249m
93.1% HL Asset Retention

Resilient business model

Our revenues are diversified and largely recurring - underpinned by high client and asset retention ratios.

We have a track record of profitable growth and with technology at the core of our business - we are scalable. We continue to maintain a high profit margin, whilst investing in opportunities for growth.

We are highly cash generative, have a strong balance sheet, no debt and retain a significant surplus of capital over and above our regulatory requirement.

Net Revenue (Year ended 30 June 2020) £550.9m
Percentage of HL’s revenues that are recurring (Year ended 30 June 2020) 73%
Operating profit margin (Year ended 30 June 2020) 61%
HL Asset Retention (Year ended 30 June 2020) 92.1%

Long term value for stakeholders

We recognise the challenges the UK faces with saving and investing, and we continue to invest in the business to address them, providing rewarding careers for our employees.

We help clients secure a more prosperous future and we use our scale and influence to secure discounts and improvements for them.

Ultimately, we are good at what we do, and this supports a progressive dividend policy, with an ordinary dividend pay-out ratio of 65% across market cycles and potential for special dividends.

5 year compound annual growth rate in diluted earnings per share (2016-2020) 15%
Ordinary dividend pay-out ratio across the market cycle 65%
5 year compound annual growth rate in dividends per share (2016-2020) 11%